Mr Pillai, 53, was arrested on Monday after hours of questioning. The police say they have "convincing initial evidence".
The police started investigating him after his help, a 23-year-old from Odisha, showed up at a private hospital for an abortion on Saturday. She is reportedly two months pregnant. Doctors called the police when she told them she was not married.
On being questioned by doctors and the police, she reportedly alleged that she had been sexually assaulted several times in the eight months that she had worked for the businessman. She has also recorded a statement with the magistrate.
Mr Pillai is the chairman of the Beta Group, which owns the brand "Nut King".
His brother Rajan Pillai, the former biscuit baron who once headed Britannia, died in Delhi's Tihar jail in 1995, allegedly after he was denied medical help for a liver condition. The Singapore-based industrialist had been arrested in Delhi after being convicted of fraud and cheating.