The Indian Cricket League (ICL), starting on Friday, will see the winner of the six-team competition pocket one million dollars alone, raising the bar for the rival league backed by the country's cricket board (BCCI).
"This is for the first time in the history of Indian cricket that the total money for a tournament is rupees 15 crore (3.8 million dollars)," said Ashish Kaul, executive vice-president of Essel Group, promoters of the event.
"The prize money allotted for the winners exceeds international standards and will create a new trend in the Indian cricket parlance," he said in a statement.
The runners-up will receive prize money of 470,000 dollars.
The unofficial league is bankrolled by Subash Chandra, whose two-billion-dollar Essel Group includes the country's biggest television network Zee Telefilms.
The hefty pay packet on offer has lured the likes of West Indies batting great Brian Lara, Pakistan's Inzamam-ul-Haq and New Zealand's Chris Cairns.
The tournament kicks off in Panchkula, an industrial town on the outskirts of the northern Indian city of Chandigarh, with the finale slated for December 16.
The BCCI-backed Indian Premier League is scheduled to be held in April next year.