Madhya Pradesh's education minister Vijay Shah said the logic behind this decision was because teachers "should feel they are doing a great job" and so that they can be identified as government teachers.
"We are just designing a jacket so that teachers can be identified and they should feel they are doing a great job," he said.
The order, which will come into effect from the next academic year, has been criticised by the Congress, the main opposition party in the state.
The Congress attacked Mr Shah, saying the minister has ignored the real issues over the poor state of education and is instead only looking for ways to please the BJP's idelogical mentor, Rashtriya Swayamsevak Sangh or RSS.
"Sometimes they talk about saffron then orange or blue jacket when there is no black board! It seems they are not running a sarkaar but a circus," said KK Mishra, a Madhya Pradesh Congress spokesperson.
In a report tabled in parliament in 2016, Madhya Pradesh had received the dubious distinction of accounting for one-sixth of "single-teacher" schools in India.
In an NDTV investigation last year, many government schools in Madhya Pradesh's Shajapur, Aagar-Malwa and Shyopur districts were seen to have dilapidated buildings, leaky roofs, and dingy rooms.
Many other schools were seen to have computers gathering dust and teachers, who had responsibility of teaching only one subject, taking teaching responsibilities for as many as three or four subjects.