The full-service carrier will take up to 20 A320s worth $1.83 billion at list prices. The planes will be sourced from leasing companies, rather than purchased direct from Airbus.
A project team set up by Singapore Airlines evaluated both aircraft and decided to place orders for the A320, two sources said. The decision extends the European planemaker's domination of India's single-aisle aircraft segment.
A Singapore Airlines spokesman referred queries to the joint venture's office in India, while an Airbus spokesman in Singapore said: "We do not comment on commercial discussions with existing or potential customers."
The new airline, which has not yet been formally named, is expected to begin operations in the second half of this year. It has begun recruiting pilots and is close to confirming its top executives, including a Singapore Airlines executive as its chief executive officer.
The airline applied for a "no-objection certificate" from India's civil aviation ministry and an air operators' certificate from the Indian Directorate General of Civil Aviation in late December.
It will initially operate domestic services from New Delhi and compete with full service carriers Air India and Jet Airways, which are the only players in the full-service market since the collapse of Kingfisher Airlines in 2012.
Around 70 percent of the Indian domestic market is dominated by low-cost carriers such as IndiGo, SpiceJet and GoAir. Tata is also starting up a low-cost carrier joint venture with Malaysia's AirAsia, increasing the competition in this segment.
IndiGo, which has the largest share of the Indian domestic market, has more than 70 A320s in its fleet and orders for around 190 of the existing aircraft and the upgraded A320neo variants, to be delivered over the rest of this decade.
GoAir, which will have 20 A320s in its fleet this year, has orders for another 72 A320neo aircraft.
Indian flag carrier Air India's narrowbody fleet comprises mostly the A320-family of aircraft, while its low-cost subsidiary Air India Express operates around 20 737s.
The Jet Airways narrowbody fleet comprises only 737s, while SpiceJet operates just over 40 737s and has placed an order for 40 more of the re-engined 737 Max variant.