Federal Culture Minister Jagmohan visited Agra, where the Taj Mahal is located, on Sunday after ordering a halt to construction of the Heritage Corridor complex.
"I have directed the state government to stop work immediately and will see to it that this Heritage Corridor does not come up. I will not let it happen," he said.
Construction began in November on the $ 36 million Corridor project, a collection of upmarket shopping malls, restaurants and entertainment facilities, less than a kilometre from the 17th-century mausoleum.
The provincial Uttar Pradesh government argued that the Heritage Corridor was needed because of a directive by the Supreme Court ordering the closure of shops in front of the Taj Mahal. It had also barred heavy industry near the mausoleum.
The federal minister’s directive to stop the Corridor was praised by an official with the United Nations Educational Scientific and Cultural Organisation (UNESCO), which had voiced alarm about the project.
"At present the Taj is not on the 'World Heritage in Danger' list. But it could be if information and studies (by us) show the new complex would affect the authenticity and integrity of the site and have a negative visual impact," R.P. Perera, administrative and programme officer at UNESCO's New Delhi office, said.
The Taj Mahal was built by the heart-broken Moghul emperor Shah Jehan in memory of his beloved second wife who died during childbirth.
More than 10,000 artisans toiled for two decades to construct the mausoleum, which is visited by hundreds of thousands of people each year.
Some 800,000 overseas tourists -- a third of all foreign tourists to India -- visit Taj Mahal each year, bringing in some $ 680 million.