Thursday’s meeting will discuss whether to allow 51% foreign direct investment in multi-brand retail, allowing groups like Wal-Mart and Tesco to open stores.
Such operators can only sell wholesale in India and not directly to customers.
Correspondents say the issue is complex and controversial and a clear-cut decision is by no means guaranteed.
A decision on the issue has been pending for two years.
Supporters of the move say it will increase competition and quality while reducing prices, which have been hit by close to double-digit inflation.
Trade Minister Anand Sharma said there was “a broad-based consensus” in the cabinet in favour of the proposal.
However, some analysts have pointed to the potential political fallout and say there may be another move to postpone any decision.
The multi-nationals have long been eyeing the lucrative Indian market. Only single brand retailers can have 51% foreign direct investment (FDI), although 100% FDI is allowed in wholesale.
Any easing could come with strict controls, for example on local sourcing and levels of investmen