diff --git a/cabal-install/src/Distribution/Client/Errors.hs b/cabal-install/src/Distribution/Client/Errors.hs
index 3b80b50dd94..b5201aaf939 100644
--- a/cabal-install/src/Distribution/Client/Errors.hs
+++ b/cabal-install/src/Distribution/Client/Errors.hs
@@ -70,7 +70,7 @@ data CabalInstallException
   | ReportTargetProblems String
   | ListBinTargetException String
   | ResolveWithoutDependency String
-  | CannotReadCabalFile FilePath
+  | CannotReadCabalFile FilePath FilePath
   | ErrorUpdatingIndex FilePath IOException
   | InternalError FilePath
   | ReadIndexCache FilePath
@@ -390,7 +390,11 @@ exceptionMessageCabalInstall e = case e of
   ReportTargetProblems problemsMsg -> problemsMsg
   ListBinTargetException errorStr -> errorStr
   ResolveWithoutDependency errorStr -> errorStr
-  CannotReadCabalFile file -> "Cannot read .cabal file inside " ++ file
+  CannotReadCabalFile expect file ->
+    "Failed to read "
+      ++ expect
+      ++ " from archive "
+      ++ file
   ErrorUpdatingIndex name ioe -> "Error while updating index for " ++ name ++ " repository " ++ show ioe
   InternalError msg ->
     "internal error when reading package index: "
diff --git a/cabal-install/src/Distribution/Client/IndexUtils.hs b/cabal-install/src/Distribution/Client/IndexUtils.hs
index 705c62d62d1..bb95610cab6 100644
--- a/cabal-install/src/Distribution/Client/IndexUtils.hs
+++ b/cabal-install/src/Distribution/Client/IndexUtils.hs
@@ -66,6 +66,10 @@ import Distribution.Client.Types
 import Distribution.Parsec (simpleParsecBS)
 import Distribution.Verbosity
 
+import Distribution.Client.ProjectConfig
+  ( CabalFileParseError
+  , readSourcePackageCabalFile
+  )
 import Distribution.Client.Setup
   ( RepoContext (..)
   )
@@ -97,6 +101,7 @@ import Distribution.Simple.Utils
   , fromUTF8LBS
   , info
   , warn
+  , warnError
   )
 import Distribution.Types.Dependency
 import Distribution.Types.PackageName (PackageName)
@@ -880,14 +885,22 @@ withIndexEntries verbosity (RepoIndex _repoCtxt (RepoLocalNoIndex (LocalRepo nam
         where
           cabalPath = prettyShow pkgid ++ ".cabal"
       Just pkgId -> do
+        let tarFile = localDir </> file
         -- check for the right named .cabal file in the compressed tarball
-        tarGz <- BS.readFile (localDir </> file)
+        tarGz <- BS.readFile tarFile
         let tar = GZip.decompress tarGz
             entries = Tar.read tar
+            expectFilename = prettyShow pkgId FilePath.</> prettyShow (packageName pkgId) ++ ".cabal"
 
-        case Tar.foldEntries (readCabalEntry pkgId) Nothing (const Nothing) entries of
+        tarballPackageDescription <-
+          Tar.foldEntries
+            (readCabalEntry expectFilename)
+            (pure Nothing)
+            (handleTarFormatError tarFile)
+            entries
+        case tarballPackageDescription of
           Just ce -> return (Just ce)
-          Nothing -> dieWithException verbosity $ CannotReadCabalFile file
+          Nothing -> dieWithException verbosity $ CannotReadCabalFile expectFilename tarFile
 
   let (prefs, gpds) =
         partitionEithers $
@@ -918,16 +931,41 @@ withIndexEntries verbosity (RepoIndex _repoCtxt (RepoLocalNoIndex (LocalRepo nam
 
     stripSuffix sfx str = fmap reverse (stripPrefix (reverse sfx) (reverse str))
 
-    -- look for <pkgid>/<pkgname>.cabal inside the tarball
-    readCabalEntry :: PackageIdentifier -> Tar.Entry -> Maybe NoIndexCacheEntry -> Maybe NoIndexCacheEntry
-    readCabalEntry pkgId entry Nothing
-      | filename == Tar.entryPath entry
-      , Tar.NormalFile contents _ <- Tar.entryContent entry =
-          let bs = BS.toStrict contents
-           in ((`CacheGPD` bs) <$> parseGenericPackageDescriptionMaybe bs)
-      where
-        filename = prettyShow pkgId FilePath.</> prettyShow (packageName pkgId) ++ ".cabal"
-    readCabalEntry _ _ x = x
+    handleTarFormatError :: FilePath -> Tar.FormatError -> IO (Maybe NoIndexCacheEntry)
+    handleTarFormatError tarFile formatError = do
+      warnError verbosity $
+        "Failed to parse "
+          <> tarFile
+          <> ": "
+          <> displayException formatError
+      pure Nothing
+
+    -- look for `expectFilename` inside the tarball
+    readCabalEntry
+      :: FilePath
+      -> Tar.Entry
+      -> IO (Maybe NoIndexCacheEntry)
+      -> IO (Maybe NoIndexCacheEntry)
+    readCabalEntry expectFilename entry previous' = do
+      previous <- previous'
+      case previous of
+        Just _entry -> pure previous
+        Nothing -> do
+          if expectFilename /= Tar.entryPath entry
+            then pure Nothing
+            else case Tar.entryContent entry of
+              Tar.NormalFile contents _fileSize -> do
+                let bytes = BS.toStrict contents
+                maybePackageDescription
+                  :: Either CabalFileParseError GenericPackageDescription <-
+                  try $ readSourcePackageCabalFile verbosity expectFilename bytes
+                case maybePackageDescription of
+                  Left exception -> do
+                    warnError verbosity $ displayException exception
+                    pure Nothing
+                  Right genericPackageDescription ->
+                    pure $ Just $ CacheGPD genericPackageDescription bytes
+              _ -> pure Nothing
 withIndexEntries verbosity index callback _ = do
   -- non-secure repositories
   withFile (indexFile index) ReadMode $ \h -> do
diff --git a/cabal-install/src/Distribution/Client/ProjectConfig.hs b/cabal-install/src/Distribution/Client/ProjectConfig.hs
index 5f31dc0fab5..d5d77d14afe 100644
--- a/cabal-install/src/Distribution/Client/ProjectConfig.hs
+++ b/cabal-install/src/Distribution/Client/ProjectConfig.hs
@@ -38,6 +38,8 @@ module Distribution.Client.ProjectConfig
   , writeProjectConfigFile
   , commandLineFlagsToProjectConfig
   , onlyTopLevelProvenance
+  , readSourcePackageCabalFile
+  , CabalFileParseError (..)
 
     -- * Packages within projects
   , ProjectPackageLocation (..)
@@ -1615,7 +1617,7 @@ readSourcePackageCabalFile verbosity pkgfilename content =
   case runParseResult (parseGenericPackageDescription content) of
     (warnings, Right pkg) -> do
       unless (null warnings) $
-        info verbosity (formatWarnings warnings)
+        warn verbosity (formatWarnings warnings)
       return pkg
     (warnings, Left (mspecVersion, errors)) ->
       throwIO $ CabalFileParseError pkgfilename content errors mspecVersion warnings