Surrogacy in India and Indian surrogates became increasingly popular amongst intended parents in industrialised nations because of the relatively low costs and easy access offered by Indian surrogacy agencies. Clinics charged patients between $10,000 and $28,000 for the complete package, including fertilization, the surrogate's fee, and delivery of the baby at a hospital. Including the costs of flight tickets, medical procedures and hotels, this represented roughly a third of the price of the procedure in the UK and a fifth of that in the US. Surrogate mothers received medical, nutritional and overall health care through surrogacy agreements.

In 2005, the government approved the 2002 draft of the National Guidelines for the Accreditation, Supervision and Regulation of ART Clinics in India, in 2002. Before commercial surrogacy was banned in 2015, India was a popular destination for surrogacy. The economic scale of surrogacy in India is unknown, but a study backed by the United Nations estimated the business at more than $400 million a year, with over 3,000 fertility clinics across India.

In 2013, surrogacy by foreign homosexual couples and single parents was banned. In 2015, the government banned commercial surrogacy in India and permitted entry of embryos only for research purposes. Shortly thereafter in 2016, a Surrogacy (Regulation) Bill was introduced and passed by Lok Sabha (Lower House), the lower house of the Indian parliament, proposing to permit only heterosexual Indian couples married for at least five years with infertility problems to access altruistic or unpaid surrogacy and thereby further banning commercial surrogacy. The 2016 bill lapsed owing to the adjournment sine die of the parliament session. The bill was reintroduced and passed by the Lok Sabha in 2019. The bill would require to be passed by the Rajya Sabha (Upper House), upper house of the Indian parliament and presidential assent before it becomes an act and thereby a law.

The legal history of commercial gestational surrogacy within India begins in the early 2000s, when assisted reproductive technologies began expanding rapidly, alongside a 2002 court decision that essentially legalized commercial surrogacy by removing major legal barriers and creating a permissive environment with minor explicit prohibition. From this, clinics and agencies began offering "surrogacy packages" to both native Indian and foreign clients. Surrogacy was promoted nationwide as a part of a wider tourism strategy. The Confederation of Indian Industry estimated that surrogacy generated more than $2 billion USD annually, with thousands of IVF clinics across the country.

From the 2000s through the early 2010s, India became the major global destination for transnational commercial surrogacy. This attracted heterosexual couples, single parents, and same-sex couples from abroad. At the same time, a series of very public cases including the deaths of egg donors and surrogates, disputes with visas and citizenship, and child abandonment fueled the Indians' concerns about exploitation, inadequate governmental oversight, and legal issues. Draft Assisted Reproductive Technology (ART) Bills were prepared in 2008, 2010 and 2014, and Indian Council of Medical Research guidelines were issued in 2005, but there was no comprehensive national statute for surrogacy that was enacted.

From July 2012 onwards, the policy direction began moving towards restriction. Visa rules for the international biological parents were tightened, and in November 2015 medical visas for surrogacy were suspended. This excluded foreign clients from accessing commercial surrogacy in India. In 2016 the Indian government introduced the Surrogacy (Regulation) Bill 2016, which proposed banning commercial surrogacy entirely while permitting only altruistic surrogacy for heterosexual married Indian couples who met the infertility criteria. Under this model, the Indian surrogates had to be women between the ages of 25-35, already be mothers to at least one child, and be close relatives of the commissioning couple. They could receive no payment but the reimbursement of insurance and medical expenses.

A revised Surrogacy (Regulation) Bill 2019 was passed by the Lok Sabha and referred to a Rajya Sabha Select Committee. Incorporating many of that committee's recommendations, the government introduced a further revised Surrogacy (Regulation) Bill 2020. While the bill retained an altruistic-only framework, it broadened eligibility by expanding access beyond married heterosexual couples to include certain categories of single women, specifically widows and divorcées between the ages of 35 and 45. The revised bill also loosened earlier restrictions by removing the proposed five-year minimum duration of infertility and modifying surrogate eligibility requirements to reduce barriers within procedure.

All of these legislative developments led into the Surrogacy (Regulation) Act 2021, which prohibited commercial surrogacy nationwide, restricted surrogacy to specified altruistic arrangements, defined eligibility criteria and established national and state boards to oversee and regulate clinics, and monitor compliance.