Officials from India's space agency confirmed that the mission had been a failure.
"There are indications that the cryogenic engine ignited but the vehicle was tumbling and controllability lost," said Dr. K Radhakrishnan, chairman of the Indian Space Research Organisation, adding that a steering engine failure appeared to have caused the problem.
"We saw the vehicle tumbling uncontrollably and it developed deviation. Two vernier engines would not have ignited."
Excitement had been building in the country at the prospect of becoming the sixth country to use cryogenic engines successfully, which would make it an attractive prospect for communications companies seeking to launch satellites for a relatively low cost.
The quest to develop an Indian cryogenic rocket engine has taken 18 years, and has cost $73 million.
That the rocket had been developed entirely indigenously had been a considerable source of pride for Indian scientists, who developed much of the technology while the country faced sanctions for carrying out a nuclear test in 1998.
The Indian space agency said that details of the flight data from the ill-fated rocket would be analysed to find out what went wrong, ahead of another test launch planned for later this year.