The 43-year-old, who is the first woman and first minority governor in her state's history, will address the country on January 12 after Obama's speech, congressional leaders said.
Obama is scheduled to deliver his last annual State of the Union address to a joint session of the US Congress on the night of January 12. Incidentally, the opposition Republican response to Obama's first State of the Union address was also by an Indian-American, Bobby Jindal - the Louisiana Governor whose second term ends on January 11.
"Nikki Haley has led an economic turnaround and set a bold agenda for her state, getting things done and becoming one of the most popular governors in America. In a year when the country is crying out for a positive vision and alternative to the status quo, Governor Haley is the exact right choice to deliver the Republican Address to the Nation," Ryan said.
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"Governor Haley knows the American Dream and wants to see every American share in it, and we're pleased that she will be delivering this year's Republican Address," McConnell said.
Haley said she is honoured to be asked by party leadership to deliver the Republican address to the nation.
Haley was re-elected to a second term in November last year. She is also only the second Indian-American Governor after Jindal.
In a statement, the Republican Party said Haley has delivered results to the people of South Carolina.