The parent company of UK Jaguar Land Rover said that annual production at the Sanand plant will initially give it a new capacity of 300,000 vehicles a year, which could be increased to 420,000.
In September last year, Ford said it would close its Indian car factories as part of a move that would cost it around $2 billion.
The US car maker said about 4,000 workers would be affected by the decision.
The company's previous ambition to make the country one of its biggest markets was in stark contrast to the major scaling back of its Indian operations.
In the last few years, companies like General Motors, Volkswagen-owned MAN Trucks and even the iconic motorbike maker Harley Davidson have stopped manufacturing in India.
While GM and Harley Davidson have said these decisions were part of their global shift from certain markets, analysts also point out lacklustre revenues and lack of economies of scale in India.
India is still seen as a car market with great potential but sales have plunged to a decade low due to the slowdown in economic growth, weak labour markets, higher fuel prices and pandemic-related disruptions.
Demand has gone up in India, according to some Indian car makers. One of Tata's rivals Mahindra and Mahindra said on Friday that demand for its vehicles was out of production as people rushed to buy its popular sport-utility vehicles.
Mahindra and Mahindra's executive director Rajesh Jejurikar said that we had kicked off capacity expansion programmes but had not anticipated this kind of demand.