The elevated extension will include stations at Narela Sector A5, Kundli and Nathupur.
The Indian government will provide 80% of the funding required for the Rs 12.1bn ($US 186m) project, with the remainder coming from the state government.
Construction will start next year and the project will be completed in 2022.
The section is a continuation of the 21.7km Rithala - Narela extension of the Red Line, which is part of Phase 4 of the Delhi metro network. The addition of the extension to Kundli takes the total length of Phase 4 to 108.8km.
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