Britain is pledging £14m for a four-year technology partnership with India that it hopes will generate thousands of new jobs across the UK.

The technology alliance, which will initially focus on developing driverless cars, virtual reality and artificial intelligence, follows on from the success of the UK-Israel Tech Hub, which generated £62 million worth of deals over the past five years.

The ambitious agreement will see British universities and businesses partner with states in India, working with the British High Commission in New Delhi, the Indian government and private sector to increase tech investment, exports and research and development. Businesses will be able to exchange staff, develop mentoring schemes and collaborate on emerging technologies.

The UK will initially invest £1m for a pilot in Pune, Maharashtra, to develop low emission and autonomous vehicles, battery storage and vehicle lightweighting. Additional connections to Bangalore with a focus on augmented and virtual reality, advanced materials and AI are expected to follow. It will potentially invest a further £13m by 2022.

Digital Secretary Matt Hancock said: "Our world-leading digital economy is booming, worth more than £116 billion a year and employing more than two million people.