The Slumdog Millionaire star is in negotiations to play an "integral supporting role" in the Paramount picture, according to Deadline.
However, the studio denied earlier reports that the 50-year-old is being lined up to play a villain in the Brad Bird-directed film.
Kapoor has won numerous awards for his Bollywood film career, and last year made his TV debut in the final season of 24.
M:I4 sees Tom Cruise reprise his role as IMF operative Ethan Hunt, alongside returnees Ving Raimes and Simon Pegg, and new cast members Jeremy Renner, Josh Holloway and Paula Patton.
Cruise, Paula Wagner and J.J. Abrams are producing the movie, which will shoot in Vancouver, Prague and Dubai this autumn with a view to a December 2011 release.