Diageo is in talks to buy 10-13 percent of India's United Spirits for $500-$600 million (240-288 million pounds), the Economic Times reported on Monday, citing unnamed sources.
United Spirits, whose enterprise value has been pegged at over $5 billion for the possible stake buy by Diageo, might be open to placing a small stake with the world's biggest alcoholic drinks group without losing management control, the daily said.
Officials at United Spirits, India's top spirits maker and the world's third-biggest alcoholic drinks company, could not immediately be reached for comment on the report.
A spokeswoman for Diageo's Indian unit was also not immediately available.
United Spirits, a part of the UB group, in May acquired Scottish spirits maker Whyte & Mackay for $1.2 billion.
European drinks makers are keen to increase their presence in India's fast-growing alcoholic drinks market, but want better trademark protection and lower tariffs on imported wines and spirits.
(Reporting by Sumeet Chatterjee; Editing by Ranjit Gangadharan)