Priti Rajagopalan, 23, received a 5,000-pound grant towards her work at a ceremony held at the Commonwealth Secretariat headquarters in London, the Commonwealth said on Saturday.
"This award inspires me to move forward and to take a lot more people with me, with the same spirit, into the development sphere," Rajagopalan said
She plans to use the grant to start an urban organic farming project to produce food for the local area and to invest in a solar powered farm in India.
The Commonwealth Youth Awards for excellence in development work recognise the contribution of young people in achieving development goals. Rajagopalan received the award for the pan-Commonwealth and Asia region.
At the age of 18, Rajagopalan started a waste management programme in India with some friends, training students across 200 schools and more than 40 universities in separating waste and composting.
The compost was sold cheaply to farmers. The Indian government now funds the project in more than 40 cities.
Rajagopalan has also trained women and children in rural India to make and maintain their own solar powered goods and water purifiers, and to sterilise equipment for midwives.
An engineer by training, Rajagopalan matches her grass roots sustainability projects with policy work for governments and international organisations, and helping researchers and colleges exchange ideas.
At the ceremony, Rajagopalan was joined by the regional winners for Africa and Europe, the Caribbean including Canada and the Pacific, who each won a 3,000 pounds grant: Ghanaian Gilbert Addah; Christaneisha Soleyn from Barbados and New Zealander Ariel Chuang.
Commonwealth Deputy Secretary-General Mmasekgoa Masire-Mwamba said: "These young people are to be applauded for their accomplishments to better the lives of their peers, communities and future generations.
"They are an inspiration to us all and demonstrate the importance of listening to and learning from young people on development issues. The Commonwealth takes great pride in working with its member states to develop the extraordinary potential of young people and partner with them in shaping our collective futures."