The group's Mahindra Racing, the first Indian team to participate in the FIM MotoGP, decided to take the step following its success as a bike maker with an increase in the number of rivals using its bikes. The Moto3 races are part of the high-profile MotoGP series.
Apart from its own team, Mahindra is supplying the 250cc bikes to San Carlo Team Italia, Team CIP and Ambrogio Racing.
Next season, a new team Aspar owned by former world champion Jorge Martinez, will become the latest to use the company's racing bikes.
Explaining the rationale behind the move, he said: "It is a natural progression for us, like other bike makers do. We will make and supply our bikes to other teams and provide them technical support. We don't need our riders to showcase the strength of our bikes anymore."
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Shukla further said: "Although there is never a harm in having our own team, we thought it was better to focus on providing support to our customers than competing with them."
Mahindra Racing first participated in the FIM MotoGP World Motorcycle Racing Championship series in 2011 and the Italian National Motorcycle Racing Championship (CIV) in 2012.
In the 2013 Malaysian Grand Prix, Oliveira had claimed the team's first-ever podium finish. The team also recorded top-five finishes in 10 of the 17 rounds last season.