A team of Indian officials are scheduled to meet Formula One supremo Bernie Ecclestone around the middle of January to bring the event to Hyderabad.
P.V.Rao, who will lead the team, said: "Discussions are going on and we have to discuss a lot of issues.
"But we are most hopeful. Our chances look pretty good.
"We are aiming for a race in 2007."
A preliminary meeting was held with Ecclestone earlier this month, Rao added.
Hyderabad, an information technology hub and the capital of Andhra Pradesh, has been the front-runner to host a Formula One race after Ecclestone showed interest in taking the sport to India, Asia's third largest economy.
The Andhra Pradesh government has pledged to provide land to build a track besides a new airport.
