Classification of Indian Musical Instruments can actually be traced back to rather ancient times. The classification of instruments as laid down by Bharata is in fact the most accepted one in Indian Music today. There are a number of different criteria based on which instruments may be classified, such as material of construction, method of playing, functional use and so on. Keeping all these in mind, it seems the most logical classification of instruments was made by Bharata.

History of Classification of Indian Musical Instruments
In Bharata`s Natyashastra, he gives a four-fold classification of instruments. These are Tata-those which have strings, Avanaddha-drums, Ghana-cymbals, Sushira-flute. There are some who recognise only three categories- Tata, Vitata and Tata-Vitata, though the meaning of the last is not too clear. Even Narada, in the 1st century AD had given three divisions- Charma (leather), Tanirika (stringed) and Ghana (solid). According to Kohala (prior to sixth century AD) there are four classes: Sushira, Ghana, Charmabaddha (covered with membrane) and Tantri. Haripala (twelfth century, AD) in Sangeeta Sudhakara mentions four types of instruments: Sushira-flute, etc., Tata-Veena etc., Vitata-Mridanga etc., Ghana-cymbals etc.

The Tamil language word for instrument, the oldest in Dravidian terminology, as found in the Sangam literature of Tamil Nadu from the second to sixth centuries AD is Karuvi which literally means a tool and in a musical context an instrument. Five kinds of these were recognized: Tor-Karuvi, Tulaikkaruvi, Narampukkaruvi, Miatrukkaruvi, Kanchakkaruvi. The first class comprised drums (tole=hide); tulaikkaruvi is one with holes or a hollow, and hence a wind instrument (tulai=hole); narampu means animal gut and therefore stringed instruments fall into the third category; mitatrukkaruvi is the human voice; Kanchakkaruvi is one made of metal, cymbals, for instance. This system is parallel in details to the old Sanskrit grouping: Avanaddha, Sushira, Tata, Gatra (voice) and Ghana. Functionally, three groups were recognized: Geetanuga- suitable for accompanying singing, Nrityanuga- suitable for accompanying dancing, and Suska-solo instruments.

Classification of Indian Musical Instruments by Bharata
By far the most popularly followed classification of Indian instruments is the one laid down by Bharata. As has already been mentioned, he classified instruments into four categories. These are- string instruments called Tata, drums called Avanaddha, Cymbals called Ghana and wind instruments known as Sushira. Tata is derived from the root ton-to stretch of tense. That is, these instruments have some form of gut, wire, etc., stretched to produce sound. Avanaddha means, to be covered. So, all instruments that have one or two faces covered with hide, drums in general, are Avanaddha. Ghana indicates solid instruments. These do not require any further tuning once they are made; to this class belong cymbals, castanets, rattles and so on. Sushira literally means hollow. All instruments where wind is the producer of sound or the cause of excitement of any other mechanism- flute, Nagasvaram, Shehnai etc.-come under this section. While the classes as given by Bharata have remained the same through the centuries, some appellations have changed. For instance, Anaddha is substituted for Avanaddha. Similarly the word Vitata (without strings) is also used instead of Avanaddha.

This ancient division has not been bettered and in fact it will not be wrong to say that the classification of musical instruments in western musicology is along the same lines.