Earlier this month, India suspended plans to open its $450 billion supermarket sector to foreign firms, backtracking from one of the government's boldest reforms in years in the face of a huge political backlash.

Tesco currently has a franchise agreement with Tata's retail firm Trent under which the Indian firm's hypermarket chain Star Bazaar uses the British company's supply chains and infrastructure.

The British retailer is currently focusing on setting up warehouses and back-end infrastructure for the Star Bazaar stores and is not planning to set up cash-and-carry stores, the report said citing sources.

Tesco had earlier this year said it did not plan to enter the southern Indian state of Karnataka with wholesale operations after the state government refused to grant a licence to it due to pressure from local traders.

The company had planned to invest 5 billion rupees to set up wholesale stores in India, the report added.

Other retailers such as Germany's Metro, U.S. based Walmart and France's Carrefour have been progressing ahead with their wholesale operations in the country.