The move comes against a backdrop of growing Chinese warship presence in the Indian Ocean. Earlier this year former Indian Navy chief Sunil Lanba said that "there are six to eight Chinese Navy ships" in the northern part of the Indian ocean at any given time.
Speaking at the squadron commissioning ceremony in Chennai, Admiral Karambir Singh said the move would beef up the country's maritime security.
Singh also emphasised the importance of India maintaining an edge over its adversaries in defence preparedness.
The Indian Navy Chief said: "The developing geopolitical situation in the region needs to be monitored constantly. It is therefore, necessary to maintain surveillance over the Bay of Bengal, Palk Bay and adjoining regions."
INS Rajali at Arakkonam and INS Parundu at Ramnad are the other two air bases in Tamil Nadu.
The insignia of the squadron depicts a Greater Spotted Eagle swooping over vast blue and white waves. It is a large bird of prey and has good sensory capabilities, symbolising the intelligence-gathering role of the squadron.
The Squadron will operate Dornier aircraft and provide support to the navy's long-range maritime reconnaissance aircraft, the Boeing P-8I, which entered service in 2015.
The Indian Navy was the first international customer for the P-8 Poseidon aircraft after a $2.1 billion order for eight aircraft in 2009.
Since 2018, the Indian Navy has been operating its warships and other maritime assets under a new strategic plan known as "Mission-Based Deployment" as it seeks to maintain its dominant regional position amid a growing Chinese naval presence. The Indian navy divides the plan in two parts known as Operation GULFDEP and Operation MALDEP.
Under GULFDEP, naval warships are stationed in the Gulf of Oman and Persian Gulf while under MALDEP, warships, submarines and other assets keep tabs on movements in the Andaman Sea and the approaches to the Malacca Strait.
Earlier this month, the Chinese transport ministry raised the security level for its vessels heading through the Malacca Strait, a key Asian trade route and major oil choke point.
Dornier-Short range Spy Plane
The Dornier is a multi-role Short Range Maritime Reconnaissance (SRMR) aircraft manufactured by Indian aviation giant Hindustan Aerospace Limited, under license from Swiss RUAG Aerospace.
The aircraft is used for maritime surveillance, Search and Rescue Operations and to provide targeting data to weapons platforms. The Indian Navy has ordered 12 new Dornier aircraft from HAL with improved sensors and equipment including a glass cockpit, advanced surveillance radar, Electronic Intelligence (ELINT), optical sensors and networking features.