An epic story of men, gods, lost tribes, battles and kingdoms, loaded with ancient and modern religious philosophy, has won its author the first million-dollar advance to be paid to an Indian writer by an Indian publisher.

So far without a name, the work is a trilogy that Amish Tripathi, a former banker turned bestselling novelist, will write when the marketing campaign for his most recent work, Oath of the Vayaputras, is over.

News of the deal broke in India at the weekend, days after the 600-page Oath of the Vayaputras was launched. "I have four or five ideas and I'm not sure which one I'll develop. But my first three works have now sold over 1.5m copies and brought in more than 400m rupees in sales (£5m), which I'm told is pretty good," said Tripathi, 38.

Gautam Padmanabhan, Tripathi's publisher, admitted the advance, which has prompted front page headlines in India, was large by Indian standards but said it was "based on [Tripathi's] past record and what we anticipate the works to be about". He said: "The advance we have paid is the largest by an Indian publisher for south Asian rights alone."

Tripathi is one of a new wave of writers selling huge quantities of books which mix reimagined ancient Hindu myths, history, narrative and spiritual wisdom. These are challenging traditional bestsellers – classics, self-help and business "how to" books – and newer stars of Indian publishing whose works retell stories often drawn from the everyday experiences of middle-class Indian youth in simple language.

Tripathi's first three works were a "re-imagined" account of the life of the god Shiva, one of the most popular, complex and powerful deities in the Hindu pantheon. They have become cult reads, with the most recent launched last week by Bollywood stars with a music-based marketing campaign featuring a specially recorded CD.

"It was about Shiva as a real historical man living 4,000 years ago whose adventures were so grand that people began to think of him as a god," Tripathi said. "It's difficult to categorise as a genre. There is fantasy, mythology, history, all written as a thriller but with philosophy too."

The first volume, which Tripathi published himself after a string of rejections in 2010, was an instant and unexpected hit. It is now selling well across south Asia, a UK edition has just been released, a US edition is imminent and film rights have been sold.

Market analysts say such works are tapping into a resurgence of interest in Hindu myths and the earliest history of India. More than 350,000 copies of the most recent work have been sold to bookshops, out of a 500,000 print run, twice that of the latest Harry Potter. "There is a preoccupation with who we are and where we come from. As we become more global we become more local as well. Our roots are becoming more and more important to people and Tripathi's books are engaging without being demanding," said B Narayanaswamy, president of Ipsos market research in Delhi.

In the trilogy, Shiva speaks an English familiar to most readers, full of everyday Indian street slang and Americanisms. Dozens of fan clubs have been set up with readers counting down days until the release of the Oath of the Vayaputras.

Narayanaswamy believes, however, that the $1m advance was unjustified. "The cruel fact is that Indians don't read books. I think paying that much was a mistake," he said.

Others say that Tripathi has shown an uncanny ability to strike a chord with Indian readers. Namita Gokhale, an author, publisher and organiser of the Jaipur literary festival, said that in a land obsessed by myth, Tripathi had reinterpreted the story of Shiva for a new generation.

More than half of India's 1.2 billion people are under 25. "Western myths are static but the gods are alive in India and for thousands of years have been continuously reinterpreted," said Gokhale.