M. Natarajan, head of the Defence Research and Development Organisation (DRDO), said the 3,500-kilometre range (2,710-mile) Agni-III (Fire) missile would not be scrapped because of the flop.
"We are going ahead. We will conduct the re-trial of Agni-III next year," Natarajan told reporters in the southern Indian city of Chennai.
"There is no question of dropping the project," he said of the missile which can be tipped with a one-tonne nuclear warhead and aims to become the most lethal guided weapon system in India's arsenal.
An Agni-III prototype blasted off July 9 and after travelling vertically 12 kilometres (7.4 miles), veered off course and crashed into the sea without hitting its designated target.
The failure was attributed to a snag in a strapped-on solid fuel booster rocket. Natarajan said DRDO scientists were working to remove the glitches.
"We will transfer technology to units which are manufacturing components of the missile," he said, adding a new alloy being used in its casing would increase the missile's range further.
In May, India had said the Agni-III was ready but that New Delhi was observing "self-imposed restraint" before testing.
India is on verge of announcing the scrapping of its indigenously developed multi-purpose Akash (Sky) missile as nearly 20 years of unsuccessful tests have frustrated DRDO scientists.
The Agni is one of remaining four missile systems being developed by the DRDO under its Integrated Guided Missile Development Programme launched in 1983.
The others are nuclear-capable Prithvi (Earth), surface-to-air Trishul (Trident) and the anti-tank Nag (Cobra) missiles.
Nuclear-armed rivals India and Pakistan, who have fought three wars since independence in 1947, routinely carry out missile tests.
In May 1998, India conducted five nuclear tests, prompting Pakistan to conduct copycat testing.
The tit-for-tat blasts attracted a slew of US-led sanctions which India now admits hit its ambitious missile development programme.
India with an annual defence outlay of more than 14 billion dollars -- or 2.3 percent of its gross domestic product -- is the largest weapons buyer among emerging nations.

Copyright AFP (Agence France-Presse), 2006