New Delhi, June 25 -- India is set to approve a roughly $370 million investment from Horse Powertrain Ltd., a hybrid-engine venture backed by China's Zhejiang Geely Holding Group Co., that would mark one of the biggest manufacturing investments from a Chinese-linked company in years.

The deal would enable Horse Powertrain, whose other major shareholder is Renault SA, to invest in the French carmaker's manufacturing operations in India, according to people familiar with the matter. Horse intends to build advanced hybrid powertrains and engines in the country, said the people, who asked not to be identified discussing private deliberations.

The clearance would be one of the first since India relaxed FDI rules in March for investments from...