The Delhi-headquartered agency will be aligned with the Asia operations of the Publicis Worldwide network.
Capital's founding directors Sunil Sachdeva and Prasad Subramaniam will report to Matthew Godfrey, chief executive of Publicis Asia.
The aim of the move is to reinforce Publicis Groupe's position in India, where it already has more than 1,100 employees.
All of Publicis Groupe's biggest brands and networks are established in India, including advertising networks Saatchi & Saatchi, Publicis and Leo Burnett, media networks ZenithOptimedia and Starcom, and the recently created India Media Exchange.
Capital was founded in 1992 and has created campaigns for local and global clients including Maruti Suzuki, LG, CitiFinancial, Apollo Tyres, DLF, Hero Group, LML and Spice Telecom.
Olivier Fleurot, executive chairman of Publicis Worldwide, said: "India is a very important market for Publicis Worldwide. Not only does Capital Advertising allow us to increase our presence in this rapid-growth market, but it also strengthens our offer in the capital, which is the Indian advertising industry's fastest growing zone, with a population of 14m."
Subramaniam and Sachdeva said: "Being part of an international network has become critical in order for us to best respond to clients' needs in an increasingly globalised market. This move is our way of taking our business to the next level."