India's government has allocated 500 billion rupees (about 11 billion dollars) to build and buy six new-generation submarines in what is considered the costliest military contract in the South Asian nation's history, dpa reported.
The Defence Acquisitions Council, chaired by federal Defence Minister AK Antony, took the decision on the landmark deal for the Indian Navy, the Times of India reported citing military sources.
Describing it the "mother of all (Indian) defence deals", the daily said the spend on the submarines exceeded the country's biggest defence deal to date - 9 billion dollars allocated for the purchase of 126 multi-role fighters for the Indian Air Force.
Four submarines will be constructed in India's western Mumbai and southern Vishakapatnam cities with the help of a foreign contractor, the report said.
"The other two submarines will be either be imported from the foreign vendor directly or constructed at a private shipyard in India," a defence official told the newspaper.
The submarine project has been called Project-75 India (P-75I). Apart from stealth, land-attack capability and the ability to incorporate futuristic technologies, all six submarines will be equipped with air-independent propulsion (AIP) systems to boost their operational capabilities, the report said.
Conventional submarines have to surface every few days to get oxygen to recharge their batteries.
Invitations to a tender for the foreign contractor were expected to be sent to Russia's Rosoboronexport, France's DCNS/Armaris, Germany's HDW and Spain's Navantia, the report said.
The decision was taken against a backdrop of concerns in the Defence Ministry that by 2015, the Indian Navy will be left with only half of its present fleet of 15 aging diesel-electric submarines. India currently has 10 Russian Kilo-class, four German HDW and one Soviet-era Foxtrot submarines.
India is in the process of ramping up its defence hardware and equipment to try to keep pace with the military build-ups in neighbouring China and Pakistan. India's military procurement budget is estimated to double to 30 billion dollars by 2012.