The factory in central England, which will build Jaguar's new F-type sports car – the successor to the historic E-type, is expected to create up to 1,000 jobs and increase its capacity by 50 per cent.
The new investment plans for the brand come just three years after the factory was about to shut down due to a sharp drop in sales.
The company wants a convertible version of the F-Type to go on sale next year, followed by the launch of a coupe and is investing about £1.5 billion a year on research and development.
Jaguar has plans to launch 40 new models or variants of new models in the next five years and has already hired thousands of staff across the UK since 2009.
On the back of a turnaround in Jaguar’s fortunes, Tata Motors is also planning its first rupee bond sale.
The company, which had paid Ford Motor Co. $2.5 billion in 2008 for the iconic UK car brands, is likely to raise around $56.2 million from the offering.
Sales at JLR surged by a record 51 per cent in March as demand in China and Russia helped offset a slowdown in Europe.
Tata Motors had recently announced plans to add 1,000 jobs and move to three-shift, 24-hour production at its Halewood plant in England to meet the growing demand for models such as the Range Rover Evoque.
It also plans to invest $556 million for a 50 per cent stake in a planned joint venture with China's Chery Automobile Co.
The two companies had released a joint statement recently confirming that they had reached an agreement to establish a JV in China to manufacture and sell vehicles under both JLR and new brands.