If the government can find a manufacturer, the Linux operating system-based computer would be the latest in a string of "world's cheapest" innovations to hit the market out of India, which is home to the 100,000 rupee ($2,127) compact Nano car, the 749 rupees ($16) water purifier and the $2,000 open-heart surgery.
The tablet can be used for functions like word processing, web browsing and video-conferencing. It has a solar power option too - important for India's energy-starved hinterlands - though that add-on costs extra.
"This is our answer to MIT's $100 computer," human resource development minister Kapil Sibal told the Economic Times when he unveiled the device Thursday.
In 2005, Nicholas Negroponte - cofounder of the Massachusetts Institute of Technology's Media Lab - unveiled a prototype of a $100 laptop for children in the developing world. India rejected that as too expensive and embarked on a multiyear effort to develop a cheaper option of its own.
More about the $100 Laptop:
Negroponte's laptop ended up costing about $200, but in May his nonprofit association, One Laptop Per Child, said it plans to launch a basic tablet computer for $99.
Sibal turned to students and professors at India's elite technical universities to develop the $35 tablet after receiving a "lukewarm" response from private sector players. He hopes to get the cost down to $10 eventually.
Mamta Varma, a ministry spokeswoman, said falling hardware costs and intelligent design make the price tag plausible. The tablet doesn't have a hard disk, but instead uses a memory card, much like a mobile phone. The tablet design cuts hardware costs, and the use of open-source software also adds to savings, she said.
Varma said several global manufacturers, including at least one from Taiwan, have shown interest in making the low-cost device, but no manufacturing or distribution deals have been finalized. She declined to name any of the companies.
India plans to subsidize the cost of the tablet for its students, bringing the purchase price down to around $20.
The project is part of an ambitious education technology initiative, which also aims to bring broadband connectivity to India's 25,000 colleges and 504 universities and make study materials available online.
So far nearly 8,500 colleges have been connected and nearly 500 web and video-based courses have been uploaded on YouTube and other portals, the Ministry said.