While the path to a commercial launch is fraught with political opposition, allowing GM crops is critical to Modi's goal of attaining self sufficiency in edible oils.
India spends more than $10 billion annually on vegetable oil imports and GM mustard - with yields 38% higher than normal varieties - will give Modi a chance to slash this bill.
The prime minister has already shown he is keen to push for technology in farming, which sustains more than two-thirds of India's population, by reversing an effective ban on field trials of GM food crops soon after taking office in 2014.
Earlier, as the chief minister of Gujarat state, he had backed the widespread adoption of GM cotton by farmers.
GM mustard is next on the country's radar. Results from safety tests conducted on the hybrid oilseed crop over the past decade were submitted to the government in September.
"I am hoping that its commercial launch happens," Deepak Pental, the main scientist behind the GM oilseed crop, told Reuters. "And the very fact that the ministry called a meeting (on Jan. 4) suggests they are serious. Also, if India's top scientist is writing to the PM then it surely is significant."
In a letter sent to Modi and seen by Reuters, Principal Scientific Adviser R. Chidambaram said GM food crops were widely prevalent globally and their use would only rise as changing weather patterns hit farm output. India already consumes oil derived from a GM rapeseed grown in Canada.
"India, in my opinion, should not hesitate to be the first introducer of new advanced technology, after convincing itself, of course, about its value to the users and the nation, its economic viability, its safety and environment friendliness," Chidambaram wrote in the letter sent in October.
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"GM food crops fall into this category." India's environment and forest ministry that is responsible for assessing GM crop applications said the 3,100-page mustard safety report was being evaluated, and that commercialisation would be preceded by a careful analysis of risks and benefits.
Safe and cheap
India's GM mustard makes use of three genes already incorporated in rapeseed hybrids in Canada, the United States and Australia and extensive biosafety tests have revealed no cause for concern, Pental said.
Also, oil derived from its seeds does not contain any of the proteins linked to the three genes used, he added.
While things are moving in the right direction, Pental acknowledged that overcoming opposition would be difficult.
Grassroots groups associated with Modi's Hindu nationalist Bharatiya Janata Party (BJP) have opposed GM crops fearing the reliance on expensive seeds patented by multinationals like Monsanto . Pental, however, said the mustard project was state-funded so seed prices would be reasonable.
Monsanto launched Bt cotton in India in 2002, selling seeds directly and licensing local producers. The GM cotton, which produces its own insecticide, has helped India become a leading producer and exporter of the fibre. Monsanto is also developing GM corn varieties.
Prabhakar Kelkar, the national general secretary of the farmers' body affiliated to BJP's ideological parent, the Rashtriya Swayamsevak Sangh, said the government should not go ahead until every seed variety was found to be foolproof.
"We'll make people aware of the ill effects, especially after pest attacks devastated GM cotton crops recently," said Kelkar. "But if the government approves then what can we do?"