She said the decision was taken considering the impact of e-cigarettes on the youth.
A punishment of one-year imprisonment and a fine one lakh rupees has been proposed for first-time offenders.
E-cigarettes are battery-operated devices that produce an aerosol by heating a solution containing nicotine which is the addictive substance in combustible cigarettes.
The decision to prohibit e-cigarettes will help protect the population, especially the youth and children, from the risk of addiction through E-cigarettes.
The Union Cabinet also approved 78-day bonus for Railway employees. Information and Broadcasting Minister Prakash Javadekar said, 11.52 lakh employees, will benefit from the decision. He said this is a reward for productivity.