People in the know further said that the trials are likely to start next month.
The approval is a major relief for Huawei as there have been speculation over whether the company would be allowed in the 5G trials given it is facing scrutiny globally.
Commenting on the development Jay Chen, CEO, Huawei India said: "We thank the Indian government for their continued faith in Huawei. We firmly believe that only technology innovations and high quality networks will be the key to rejuvenating the Indian telecom industry.
"We have our full confidence in the Modi Government to drive 5G in India. We have our full confidence in Indian Government and industry to partner with best technology for India's own long term benefit and also for cross industry development. Huawei is always committed to India."
Communications Minister Ravi Shankar Prasad on Monday said that the government will give 5G spectrum to all market players.
The Department of Telecommunications (DoT) will provide trial spectrum to all telecom service providers. These operators can choose their partner vendors.
The in-priniciple nod for the trial run, however, does not assure an approval for commercial roll-out.
On Tuesday, the DoT will hold a meeting regarding the trials.
Earlier in the month, the DoT approved prices for the next spectrum auction which will put on offer around 6050 MHz of air waves specifically for 5G.
The Digital Communication Commission (DCC), the highest policy making body of the Telecom Ministry, on December 20 approved the spectrum auctions to be held in March-April while making no change in the reserve pricing of the radiowaves decided by the Telecom Regulatory Authority of India (TRAI).
The auction will see 5G spectrum sale for the first time.
( With inputs from IANS )