Asia's oldest exchange, formerly known as Bombay Stock Exchange, plans to replace its derivatives market platform with Eurex sometime this year and then subsequently replace its cash market platform, the statement said.
BSE is hoping to attract more foreign investors who use the Eurex trading platform, while Deutsche Boerse pledged last month to use future savings from cost-cutting to pay for an expansion push into Asia.
Deutsche Boerse owns a 5 percent stake in BSE, the maximum allowed by a single investor.
"This technology alliance strengthens our long-term partnership with BSE, and is another milestone in our Asian strategic roadmap," said Andreas Preuss, CEO of Eurex and Deputy CEO of Deutsche Boerse, according to the statement.
The adoption of Eurex by BSE comes amid concerns about the stability of domestic trading systems after a flurry of erroneous orders from an Indian broker in October and unusual block sales in a handful of stocks last month rattled investors.
Both those incidents took place at rival National Stock Exchange Ltd (NSE), although the bourse has said its trading systems were unaffected.
NSE remains the market leader in India, with the total value of share trading reaching $526.1 billion last year, compared with $110.3 billion on the BSE, according to World Federation of Exchanges data.