Navigation on the lunar surface is extremely challenging, especially for autonomous rovers exploring its surface. The Space Applications Centre (SAC), Indian Space Research Organisation (ISRO) has proposed an autonomous, self-synchronized positioning system for lunar navigation using a network of pseudolite transceivers. These pseudolite transceivers are planned to be deployed on the lunar landers and will be transmitting signals in S-band frequency, identified frequency band for lunar navigation. This paper provides system requirement specifications of lunar pseudolite system including pseudolite transceivers, rover and all the sub-systems such as antenna, LNA Filter, transmitter and receiver. This paper also discusses pseudolite transceiver deployment methods, such as self-surveyed pseudolites. The ability of pseudolites and mobile rovers to communicate with each other has also been evaluated through preliminary link budget estimation. Additionally, the navigation processing algorithms suitable for lunar navigation have been proposed. Rover positioning in relative reference frames has also been implemented and tested using Systems Tool Kit (STK) generated data. Coverage analysis has been done along with the position accuracy. In conclusion, the proposed lunar surface navigation system seeks to provide way ahead for the exploration and research activities on the lunar surface by offering a reliable, stand-alone solution for autonomous rover navigation.