The US food giant, famous for its Big Mac burgers, is keen to tailor its fast-food to suit the country's predominant Hindu and Muslim communities, which has led to the decision to take beef and pork off the menu.
It will open its first vegetarian outlet in the middle of next year near the Golden Temple in Amritsar, northern India.
'It will be the first time we have opened a vegetarian restaurant in the world,' explained McDonald's spokesman Rajesh Kumar Maini.
'There is a big opportunity for vegetarian restaurants as many Indians are vegetarian.
'At the moment, India is still a very small market – we just have 271 restaurants in India and across the world we have nearly 33,000.
'But when you look at the potential of the country, it is one of the top priority countries and we are laying the groundwork for capturing the market.'
He added: 'The reasons were very compelling - cow slaughter is not allowed because of religious reasons and we couldn't do pork either.'
McDonald's in India already has a menu that is 50 per cent vegetarian, with the McAloo Tikki, a spicy fried potato-based patty burger, its top seller.
However the introduction of fast-food chains such as Domino's Pizza and Subway has raised concerns about obesity across the south Asian nation.