Diabetes, is known to have a bilateral relationship with severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). Precise mechanism of diabetes onset in COVID-19 patients remains unclear. To analyse the incidence of new onset diabetes (NODM) among COVID-19 patients, as well as the effect of body mass index (BMI), family history, and steroid use on the incidence of the disease. Adult, not known diabetic patients, tested positive with Rapid Antigen Test or RT-PCR admitted to a tertiary care hospital and research institute were included in the present prospective observational study. The patients who developed NODM and NOPD (New Onset Pre-diabetes) during the three months follow-up and the risk factors associated were assessed. Patients with HbA1c >6.4% were diagnosed with NODM. An HbA1c of 5.7% to 6.4% was used to characterize NOPD. Out of 273 previously not known diabetic COVID-19 infected individuals, a total of 100 were studied for three months after consent. Mean age of the patients 48.31 ± 19.07 years with male predominance (67%). Among these, 58% were non-diabetics and 42% were pre-diabetics. 6 (10.3%) of the 58 non-diabetics developed NOPD, and 8 (13.8%) developed NODM. 6 (14.2%) of the 42 pre-diabetics became non-diabetic, and 16.6% (7) developed NODM. Family history of DM (P < 0.001), severity at admission (P < 0.006), diabetic ketoacidosis (P < 0.0275), and persistent symptoms were associated significantly with NODM. Those with NODM had significantly greater BMI, O2 duration, steroid duration, FBS, and PPBS (P < 0.001 for all). Nearly 67% of the patients who developed NOPD had shortness of breath as the common symptom at time of admission (P = 0.0165). The incidence of NODM was strongly influenced by positive family history of DM, higher BMI, steroid dosage, and its duration. Hence, patients with COVID-19 need to be under surveillance for blood glucose screening.