The 350 metric tons of chemical waste was dumped by the Union Carbide plant between 1969 and 1984 into pits that activists say are leaking toxins into ground water.
Officials in the state of Madhya Pradesh, where Bhopal is located, are "seriously working on a plan" to send the waste for incineration by Germany's government-run Society for International Cooperation, according to the state's official in charge of gas relief efforts, Praveer Krishna.
Indian ministers are to make a final decision June 8.
Activists involved in the discussions said the initial proposal called for India to pay 9 million euros ($11.3 million) for the disposal, which India will seek to recover from Dow Chemical, which bought Union Carbide in 2001.
"India does not have the facilities to incinerate the waste safely," activist Rachna Dhingra said. Trying to deal with it in India, she said, "would poison a lot of people."
Victims rights groups in Bhopal, meanwhile, are still demanding more compensation for the 1984 disaster beyond the $8.1 billion paid for more than 500,000 people exposed to the gas leak. They have also called for Dow to be dropped as a sponsor of the 2012 London Olympics. Organizers of the Games say they will keep Dow's sponsorship.
The disaster in Bhopal killed an estimated 15,000 people. Dow maintains it was not responsible for the catastrophe and that legal claims on the case in India have long been settled.