The Asia/Oceania Group I tie will be held from January 31 to February 2 on the hard courts.
"All India Tennis Association (AITA) has decided that the Davis Cup Tie between India and Chinese Taipei will be held at Indore under and aegis of Madhya Pradesh Tennis Association," an AITA release said.
AITA has appointed Anand Amritraj as the new Davis Cup captain in place of S P Misra.
"It will be a great honour for Madhya Pradesh to host a Davis Cup for the first time in its history. MP Tennis Association is one of the very few state Associations which has its own tennis complex consisting of six synthetic flood courts, gym, swimming pool and medical facilities," Dhupar was quoted as saying in the release.
"MPTA is creating facilities for 3000 tennis fans to witness the Davis Cup and is confident that the house will be full for the Davis Cup tie," Dhupar said.