Tata Power is in talks with the defence ministry for production of Pinaka, the multi-barrel rocket launcher.
"Investments, as may be necessary, for production will be made by the company according to requirements and progress made with the ministry on this programme," Tata Power sources said.
Tata Power plans to leverage the company's strengths in systems integration and embedded software development for participating in large defence programmes in the coming years.
The strategic electronics division of the company has been involved in the Pinaka project.
The Army has decided to induct the weapon system after successful extended user trials.
The prototype of the weapon system was also displayed in the Republic Day parade, this year.
According to company sources, regulatory changes in the defence sector announced in the last two years have the potential to increase the private sector's role in the field.
"The recent changes have prompted the company to further its focus on the defence sector," sources said.
The defence programme will be undertaken by the strategic electronics division of the company, which has been in operation since the last 30 years.
The operation is supported by a full-fledged design and development centre in Mumbai and a manufacturing facility in Bangalore.
The division has made significant investments in the indigenisation of advanced technology with specific accent on systems complying with defence operating standards for all the three wings of the armed forces.
The division registered a significant increase in revenue from Rs 26.46 crore (Rs 264.6 million) in 2001-02 to Rs 42.97 crore (Rs 429.7 million) in 2002-03, mainly because of focus on large value programmes in the defence sector.