The device, called Aakash, or "sky" in Hindi, is expected to sell for about $45 each, and subsidies will reduce that to $35 for students and teachers.
In comparison, the cheapest Apple /*iPad*/ tablet costs $499, while the recently announced Kindle Fire will sell for $199.
The Aakash's screen measures about 7 inches, which is smaller than the iPad.
The tablet is being distributed by India's Ministry of Education to college students who will be able to upload an application to listen to lectures.
Despite a growing tech industry and decades of robust economic growth, there are still hundreds of thousands of Indians with no electricity, let alone access to computers and information that could help farmers improve yields, business startups reach clients, or students qualify for university.
The launch of the tablet, which was attended by hundreds of students, followed five years of efforts to design a $10 computer that could bridge the country's vast digital divide.
Although the $10 goal wasn't achieved, the Aakash has a HD color screen and provides word processing, Web browsing and video conferencing. The Android 2.2-based device has two USB ports and 256 megabytes of RAM. Like the iPad, the Aakash has a touch screen.
Users will need Wi-Fi to go online.
The Associated Press contributed to this report.
