In experiments with rats, the 'pill' lowered blood glucose levels almost as much as injected insulin.
In fact, the effects of the 'pill' lasted longer than that of injected insulin, according to the study published in the American Chemical Society journal Biomacromolecules.
For years, researchers have sought a way to transform delivery of insulin therapy from a jab to a pill, but it has been a challenge.
The body's digestive enzymes that are so good at breaking down food also break down insulin before it can get to work.
In addition, insulin does not get easily absorbed through the gut into the bloodstream.
To overcome these hurdles, researchers from the National Institute of Pharmaceutical Education and Research (NIPER) in Punjab, combined two approaches to shield insulin from the digestive enzymes and then get it into the blood.
The team, which included researchers Ashish Kumar Agrawal, Harshad Harde, Kaushik Thanki and Sanyog Jain, packaged insulin in tiny sacs made of lipids, or fats, called liposomes, which are already used in some treatments.
Then, they wrapped the liposomes in layers of protective molecules called polyelectrolytes.
To help these "layersomes" get absorbed into the bloodstream, they attached folic acid, a kind of vitamin B that has been shown to help transport liposomes across the intestinal wall into the blood.
In rats, the delivery system lowered blood glucose levels almost as much as injected insulin, though the effects of the layersomes lasted longer than that of injected insulin.
An estimated 347 million people globally are living with diabetes, a condition where the body fails to utilise the ingested glucose properly.
This could be due to lack of the hormone insulin or because the insulin that is available is not working effectively.
Diabetics must test their blood sugar several times a day, and need insulin jabs for the rest of their lives in order to maintain adequate levels of the hormone.