The 20-year-old clocked 4:05.39 seconds to erase the mark set by Sunita Rani at 4:06.03 at the 2002 Asian Games in Busan.
The contract of the 59-year-old German, a former world record holder, was valid until the end of the Tokyo Olympics.
Ann Rose Tomy of Idukki clocked 13.98 seconds to fetch silver in the Federation Cup Jr Championship in Punjab to meet the worlds' qualifying mark
AFI President Adille Sumariwalla expressed confidence that Nair will be able to guide Indian athletes to greater heights.
Hermann has quit from his post, saying he "could no longer meet the self-imposed expectations coming along with the role."
Legendary long jumper Anju Bobby George was made senior vice-president.
Incumbent Adille Sumariwalla will be unanimously elected as Athletics Federation of India president for a third term during the AGM on Saturday.
Rai coached top athletes such as Olympian quartermiler Vandana Rao, heptathlete Pramila Aiyappa, Ashwini Nachappa, Murali Kuttan, M K Asha, E B Shyla, Rosa Kutty and G G Pramila.
The AFI's committee also decided to carry out its own mandatory medical check-up for any athlete, coach or support staff joining the camp after a break.
Chopra was asked to withdraw at the eleventh hour from the National Open Athletics Championships in Ranchi as the AFI felt he has still not recovered sufficiently following an elbow surgery in May.