The company will foray into both passenger and commercial vehicles through its arm PT Tata Motors Indonesia, the company said in a statement.
"Indonesia is a key market for Tata Motors, which has a wide range of products from small cars to buses in passenger vehicles and from 0.5T mini-trucks to 49T heavy trucks in commercial vehicles," it added.
Tata Motors is also evaluating options for setting up a manufacturing base in Indonesia to serve the country and the ASEAN region, it said, adding commercial launch and local assembly would happen in 2013.
Significant investments will also be planned for component localisation, the company said without elaborating.
Commenting on the development, Tata Motors Managing Director Karl Slym said: "As elsewhere in the world and as is the Tata practice, we will function in Indonesia as an
Indonesian company...We will establish deeply rooted local operations and will grow in tandem with the prosperity of the country and its people".
On the company's product launch programme for the Indonesian market, Tata Motors Executive Director (Commercial Vehicles) Ravi Pisharody said: "Based on customer feedback, we will progressively introduce relevant passenger and commercial
vehicles, backed by appropriate distribution and service infrastructure such that we are closest to our customers".
Tata Motors is also participating in the 20th Indonesia International Motor Show, starting in Jakarta on September 20. It will display 14 Tata passenger and commercial vehicles, being considered for introduction in Indonesia progressively.
The display includes a special green pavilion of Tata CNG vehicles, whose need is growing in Indonesia, it said.
By the time of the launch in 2013, PT Tata Motors Indonesia will have about 10 to 15 dealers nationwide, offering sales, service and spare parts.
"Over a period of three years, the company will set up a country-wide network of about 60 full-service dealers, about 100 other workshops and about 300 more spare parts retailers," the company added.