Tesco had been one of the retailers, together with Wal-Mart and French retailer Carrefour, in line for the venture, but pulled out of talks with Bharti Enterprises on Friday (24 November).
It did not say why negotiations had ended but remained “excited by the opportunities available in India” and would continue to review how it might enter the market.
The Wal-Mart and Bharti Enterprises joint venture is aiming to start opening stores in the country from 2007, with plans for several hundred stores in four to five years.
Local reports suggest the firms will initially invest $100m (£51.6m) in the partnership.
“The joint venture with equal stakes will operate in areas where the government allows foreign investment in retail like cash and carry and logistics,” Sunil Mittal, chairman of Bharti Enterprises told Reuters.
“The retail shops will be owned by Bharti Enterprises under the Wal-Mart franchise. The idea is to give Indians the lowest price everyday.”