Reliance Defence, a unit of billionaire Anil Ambani's Reliance Infrastructure Ltd, plans to build submarines and aircraft carriers as well as to provide services including maintenance and refitting of ships at the facility.
It will be located 70 km south of Visakhapatnam in Andhra Pradesh.
Reliance Group chairman Mr Ambani cited estimates saying the Indian navy could spend nearly Rs 20,000 crore annually over the next 15 years on acquisitions and fleet modernisation of submarines and aircraft carriers.
This would generate a "huge pipeline of opportunity", according to a copy of his speech at an industry event released by the company.
The Narendra Modi government wants a greater role for the state and defence firms as it is forecast to spend $250 billion over the next decade to upgrade its military.
The government has, however, yet to move forward on its plans to build up the submarine fleet, meaning any order for companies including Reliance Defence may be years away.
($1 = Rs 66.8372)