The "unanimous" recommendation was passed in Mumbai by the All India Football Federation's technical committee headed by former India player Shyam Thapa. The technical committee's recommendation will now have to be ratified by the AIFF's executive committee.
The team has stayed undefeated in 13 matches, an unprecedented run that includes 11 wins and two draws.
Under the Englishman, the Indian team also achieved its best FIFA ranking since February 1996 as it was placed at No.96 in the rankings released last July.
"The members felt that the Indian senior national men's team met the dual strategic objectives of AIFF by qualifying for the AFC Asian Cup 2019 as well as by consistently achieving a top 15 FIFA ranking amongst Asian countries in the recent past," the technical committee said in a release.
It added, "Accordingly, there was no reason for the AIFF not to offer a contract to Stephen."
Constantine began his second spell in India in January 2015 and got a 14-month extension in November 2016.
However, the team made a dramatic recovery after that bad phase and went on to win as many as 11 matches while staying undefeated in 13 games.
The national team was languishing in mid-170s when Constantine took over.
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