The chain will open the outlet near the Golden Temple, Amritsar in northern India.
The decision was taken to tailor their menus to the large Hindu and Muslim communities in the country.
McDonald's spokesman Rajesh Kumar Maini said: "There is a big opportunity for vegetarian restaurants as many Indians are vegetarian."
He added: "At the moment, India is still a very small market – we just have 271 restaurants in India and across the world we have nearly 33,000."
The company hopes the move will open up a new market for them in the region.
"The reasons were very compelling - cow slaughter is not allowed because of religious reasons and we couldn't do pork either," Maini continued.
McDonald's menus in the country are already focused on vegetarian tastes with McAloo Tikki, a spicy fried potato-based patty burger, being the chain's top seller.
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