The Indian Government this week approved Tesco's plans for a $110 million investment into the country, which will establish a partnership with the Tata Retail Group.
The decision, which was made on Monday, means that Tesco is the first global food retailer to get approval to invest in India since the government decided to open up the supermarket sector last year.
The deal itself will see Tesco tae a 50% stake in the Tata Group-owned Trent Hypermarket.
Tesco already supplies produce for Tata's Star Bazaar shops.
With Government backing, Tesco will now beat Walmart in the race to invest in this powerful emerging market, worth $500 billion.
Tesco’s India investment follows declining third-quarter sales in all nine of its continuing overseas markets for the second consecutive quarter.
The world’s third biggest retailer, which makes about two-thirds of its revenue in Britain, is currently in the midst of a $1.6 billion turnaround plan.
Walmart, which recently ended a six-year-old partnership with Bharti Retail, stalling the world's biggest retailer's efforts to expand in India.
However, Walmart recently named a new CEO for its India unit in a demonstration of its enduring interest to develop a retail strategy for the country.
India's Foreign Investment Promotion Board (FIPB) also approved a proposal by the British telecoms group, Vodafone, to take full ownership of its Indian business.