The United States and other western countries had urged India to abandon development of the Agni III missile, saying they are worried about an escalating nuclear arms race between India and its archrival, Pakistan.
"The test firing of Agni III is overdue and we feel the need for that long-range missile as part of our policy of deterrence," Defense Minister George Fernandes was quoted as saying by the Press Trust of India news agency.
"The date has not been firmed up. (The) effort is to see that it is test fired this year," he was quoted as saying.
India says it needs the missiles to defend itself against its neighboring rivals, Pakistan in the west and China in the north — both of which have waged war with India in the past.
Fernandes also said that India had put on hold the development of the "Trishul," a surface-to-air missile that would target aircraft and counter sea-skimming missiles.
The current versions of the Agni — I and II — are being produced and are ready for deployment by India's armed forces, Fernandes said. Both are capable of carrying nuclear warheads.
The Agni I has a range of 435 miles, and the Agni II has a range of up to 1,400 miles, capable of hitting targets anywhere in Pakistan and deep into China. "Agni" means "fire" in Hindi.
Development of the Agni III reportedly began as early as 1999, according to the Federation of American Scientists, an arms control watchdog group. The group said the missile likely has a range of 2,100 miles.
India's missile arsenal also includes the short-range ballistic missile Prithvi with a range of 95 miles; the surface-to-air Akash and the anti-tank Nag missile.
India has also recently tested the supersonic Brahmos missile, also capable of hitting Pakistani cities and developed in a joint program with Russia.
"Apart from Agni and Prithvi, (the) supersonic cruise missile Brahmos is something exclusive. Nobody else has this missile today," Fernandes said. "We are ready now (for deployment). All tests are complete."
The Brahmos has a range of 185 miles and has a payload of 440 pounds but cannot carry a nuclear warhead. It flies at more than 1,400 mph, twice the speed of sound, and has three versions — ground-to-air, air-to-ground and a navy version.
India conducted its first nuclear test in 1974. Its nuclear tests in 1998 caused international outrage and provoked economic sanctions by the United States and other Western nations.
Pakistan followed suit with nuclear tests of its own.
Western nations gradually lifted sanctions against both India and Pakistan as the two countries became allies in the international campaign against the al Qaeda terror network and the Taliban militia in Afghanistan.