Nehwal, currently ranked number two in the world, defeated unseeded Indonesian Hana Ramadhini, who looked impressive but lost to the Olympic bronze medallist 21-15, 21-12 in a 40-minute contest.
The 25-year-old Indian started off aggressively in the first game with seven straight points before Ramadhini came back to draw level, before eventually struggling to find answers to Nehwal's fast pace.
Nehwal, who reached the final of the prestigious All-England Championship this month, is expected to snatch the number one spot if she wins the $250,000 Super Series tournament in front of a home crowd.
World number four Carolina Marin of Spain also booked a place in the semi-finals with a 21-15, 17-21, 21-15 victory over Japan's Nozomi Okuhara.
Thailand's Ratchanok Intanon, meanwhile, defeated China's Yao Xue 21-14, 21-8.
In the men's tournament, third seed Lin Dan of China crashed out of the India Open when he fell to world number ten Tommy Sugiarto 17-21, 21-15, 17-21 in a one hour and 18 minute contest.
His exit from the contest was the second major upset in the event after India's H.S. Prannoy defeated tournament favourite and men's world number two Jan O Jorgensen on Thursday.
Prannoy, who impressed with his qualifying game, himself was ousted from the event on Friday after losing to world number six Viktor Axelsen 21-16, 9-21, 18-21.
India's K. Srikanth defeated Japan's unseeded Takuma Ueda 21-15, 23-25, 21-18 to reach Saturday's semi-finals.