The business will initially be based in Mumbai.
Tesco is also entering into an exclusive franchise agreement with Trent, the retail arm of Indian conglomerate the Tata Group.
Tesco will provide expertise and technical support to help Trent develop its hypermarket business, Star Bazaar.
Trent currently has four hypermarkets, with plans to grow to 50 stores over the next five years.
Tesco’s wholesale business will supply merchandise to Star Bazaar.
Sir Terry Leahy, chief executive of Tesco, said: “This is another exciting development for Tesco. It complements our entries into China and the United States, giving us access to another of the most important economies in the world.
Noel N Tata, managing director of Trent, said: “We are extremely excited about our association with Tesco. Our ability to access Tesco’s retail knowledge and expertise will play an important role in our endeavour to offer a unique shopping experience to customers across the country.
“Their wholesale cash-and-carry business will provide us with the opportunity to tap into a world class supply chain thereby delivering the best of products and services to our customers.”
