India is seen as one of the world's most untapped retail markets

Argos will license its brand and product catalogue for use in retail outlets in India, with the first due to open in Mumbai later this year.

Argos, which is part of the Home Retail Group, said the deal would give it a "foothold" in a fast-expanding market.

Several other British retailers including Mothercare have used the franchise model to enter India.

Growing market

Existing regulations prevent most foreign retailers from opening their own stores in India and franchising is seen as a cost-effective way for firms to build a presence there.

Argos is teaming up with Indian firms Shopper's Stop and Hypercity Retail India to launch the Hypercity Argos retail concept.

As well as providing its own catalogue, Argos will offer IT support and advice on developing sales through the internet.

Home Retail Group said it was excited by the opportunities in India but emphasised that its main focus remained on developing the Argos and Homebase businesses in Europe.

"The heads of terms with Shoppers Stop and Hypercity, both pioneers in the Indian retail market, gives Argos an initial foothold in what is a rapidly expanding market," said Terry Duddy, Home Retail Group's chief executive.

Shopper's Stop operates 22 department stores in 11 Indian cities while Hypercity Retail opened its first food and general merchandise store last year.

Many of the UK's top retailers are casting an eye over India, as its rapid economic growth and rising income levels boost consumer spending levels.