A senior Tesco official, who spoke on condition of anonymity, had told Reuters it took months of arm-twisting and assurances by the government to persuade the company to take the plunge.
In October the world's biggest retailer Wal-Mart called off a joint venture with India's Bharti Enterprises, citing unfriendly regulations.
(Read more:India third quarter GDP growth stronger than expected)
Tesco has had a franchise agreement to provide support to Trent's Star Bazaar chain since 2008, but is now expected to open three or four stores a year under a slow expansion plan designed to comply with sourcing regulations.
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.