The deal, which will commence in 2012 with about 150 MW during the first phase, will be spread over the next six years, the companies said in a statement.
AIM-listed Caparo plans to raise funds to develop wind assets worth 600 MW in India "soon," its Chief Executive Ravi Kailas said, but declined to give a specific timeline.
"This agreement with Gamesa will be a significant step in meeting the long-term development goals of our company," he said.
Caparo aims to develop wind farms of up to 5,000 MW capacity in India by 2017, according to the firm's website.
In January, Caparo had signed an order worth about $1.28 billion for 1,000 MW of wind power projects with India's Suzlon Energy.
Earlier this month, India's renewable energy secretary had said the country aims to add 17,000 MW of renewable energy over the next five years, starting 2012.
The country has about 13,000 MW of installed wind energy capacity and it now ranks 5th in the world after the United States, Germany, China and Spain in grid connected wind power installations, according to the Indian government.
Deliveries under the agreement with Gamesa, which is part of Caparo's long-term strategy of securing turbines at a preferential pricing, will be completed by 2016, the firms said.
Gamesa will service the agreement from its new capacities in India with a manufacturing capability of up to 1,500 MW per annum and scalable to 2,000 MW per annum, Ramesh Kymal, chairman and managing director at Gamesa India, told reporters.
"We will be making turbines here. Some parts will be brought from abroad," Kymal added.
Gamesa's Indian operations, launched in February 2010, have touched a turnover of 10 billion rupees in their first year, it had said in March.