(Reuters) - Cairn India Ltd (CAIRN.NS), oil and gas unit of London-listed Vedanta Resources (VED.L), is set to spend about $1 billion to buy back shares, Bloomberg reported on Sunday citing two people familiar with the matter.

The share purchase will include buying back Cairn Energy Plc's (CNE.L) 10.3 percent stake in the company, Bloomberg said citing one of the sources.

Mining conglomerate Vedanta, controlled by billionaire Anil Agarwal, acquired a majority stake in Cairn India for almost $9 billion in 2011. Since then, Cairn India played a pivotal role in boosting revenue and production even as Vedanta's mining business in India faced regulatory hurdles and mining restrictions.

The plan may help Sesa Sterlite Ltd (SESAGOA.NS) and Agarwal's other subsidiaries increase ownership in Cairn India to more than 65 percent from 59 percent, the source told Bloomberg.

Cairn India's board is expected to meet on November 26 to consider a buyback.

Vedanta and Cairn Energy could not immediately be reached for a comment outside regular business hours.

Earlier this month, Vedanta said Cairn India was on track to hit its 2014 production target, previously put at 225,000 barrels of oil equivalent per day.

(Reporting by Karen Rebelo in Bangalore; Editing by Diane Craft)