The decision was taken at a Cabinet meeting presided over by Chief Minister Sheila Dikshit.
"We have decided to upgrade the NSIT to a university," Dikshit said.
Established in 1983, the NSIT has emerged as a premier technological institute for education and research in various areas of engineering.
"The government has taken the decision as per recommendation of the National Knowledge Commission," an official said.
The institute is spread over 145 acre of area in Sector-3, Dwarka.
The Cabinet also decided to pay electricity bill of Rs 6.57 crore to BSES Rajdhani Power Ltd owed to the company by Punjab migrants residing in Peeragarhi camp in North West Delhi.
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