Tesco is set to invest £85m to enter into the joint venture deal with Indian retailer Trent Hypermarket, part of Tata Group.
Tesco, which aims to build a chain of supermarkets in the country, will buy a 50% stake as part of the Joint Venture with Trent, which operates the Star Bazaar retail business in India.
It is the next step in Tesco’s development in the country after approval by Indian regulators in December to open a chain of supermarkets. It will make it the first foreign retailer to launch a supermarket chain in the country.
Many international store groups have been put off launching in India due to the complex foreign investment rules.
Tesco aims to open three to four stores each year focused on the states of Maharashtra and Karnataka.
Tesco has advised Trent on aspects of business such as store design since 2008.
Last month Trent hired former House of Fraser executive Richard Wayment as its chief retail operations officer.