India set to finalise Rs 1 lakh crore submarine deals by next year

New Delhi: India is likely to seal two mega submarine deals worth over Rs 1 lakh crore by the middle of next year to crank up its undersea warfare capabilities against the backdrop of China’s increasing naval prowess, authoritative sources said on Sunday.

The first project that is being negotiated is for the procurement of three Scorpene submarines, which will be jointly constructed by state-run Mazagon Dock Limited (MDL) and French defence major Naval Group.

Though the defence ministry cleared the nearly Rs 36,000 crore deal over two years back, there have been delays in negotiations to firm up various technical and commercial aspects of the project, the sources said.

The second project that the defence ministry is eyeing to seal is for the acquisition of six diesel-electric stealth submarines at a cost of around Rs 65,000 crore. The procurement was initially cleared by the ministry in 2021.

“We are expecting both contracts will be firmed up by the middle of next year,” a source said.

Leading German shipbuilder ThyssenKrupp Marine Systems (TKMS) has partnered with Mazagon Dock Shipbuilders Ltd for the project, billed as one of the biggest ‘Make in India’ initiatives in recent years.

The sources said the cost negotiations for the deal will start soon, and the entire process may take six to nine months before a contract is concluded.

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While the proposed acquisition of six stealth submarines under Project 75 India (P75-I) is a completely new programme, the plan for the three Scorpene submarines will be a follow-on order of a previous acquisition.

Under the Indian Navy’s Project 75, six Scorpene submarines have already been constructed by Mazagon Dock Limited (MDL) in collaboration with the Naval Group.

The Navy wants both deals to be firmed up soon as it is looking at bolstering its underwater capabilities, said an official aware of the matter.

The sources cited above said finalising the cost negotiations process for the diesel-engine programme will take time. The commercial negotiations for Scorpene-class submarines have almost been completed, they added.

If everything goes as per plan, then the Scorpene project will be finalised early next year as it has already suffered significant delays, the sources said.

The delivery of boats under both projects will start around six years after the signing of the contracts, they said.

Asked if the MDL will have the capabilities to implement both the projects simultaneously, the sources said it was for the shipbuilder to augment its infrastructure.

“There have already been inordinate delays in the Scorpene submarine project and we hope it will be concluded soon,” said one of the sources.

While the defence ministry had given its in-principle approval for the additional Scorpenes as well as procurement of 26 naval variants of Rafale jets from France, the first project remained in limbo.

In April, India and France inked an intergovernmental agreement sealing a mega deal to procure 26 Rafale marine jets at a cost of Rs 64,000 crore (Euro 7 billion) for deployment on board the Indian Navy’s aircraft carrier INS Vikrant.

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