It will be the fourth academy by the automobile giant after United States, Germany and China.
The initiative is another step to promote motorsports in India besides the F1 race from Oct 28-30 at the 5.14 km circuit in Greater Noida.
Peter Honegg, managing director and CEO of Mercedes-Benz India, said the academy will be launched in January and they along with JPSI will come up with a concrete plan on the facility after the inaugural F1 race in October.
"We want to start the academy in January and by November we will be ready with the details on the project," Honegg told reporters here Wednesday.
"Our brand is seen as a luxury brand in India and we want to change that perception quickly. Mercedes has been closely associated with motorsports globally."
Honegg revealed that the academy will have two programmes to start with. The 'emotional and basic programme' will focus on how to drive a sports car and the drivers will get a certificate after successfully completing the course.
He added that the advanced level of the programme will be meant for those who want to pursue a career in motorsports. They will hone their skills under former international drivers and will be sent to training in Germany.
JPSI managing director Sameer Gaur said the academy will be one of things they are planning post the high-profile event.
"We are happy to partner Mercedes in this initiative and we will also look to keep the track busy by hosting two or three major international races every year. But right now the focus remains on the Indian GP," said Gaur.
Mercedes and JPSI have also entered an agreement in which Mercedes will be the sole provider of the safety cars for all events at the BIC including the Indian Grand Prix.
Mercedes is the engine supplier of three teams in the current F1 season including their own Mercedes GP Petronas outfit. The other two are McLaren Mercedes and Force India.