Indian Navy Finalizes Rs 36,000 Crore Deal for 3 More Scorpene Submarines with MDL, Cost Triples Compared to Earlier Batch

The Indian Navy is set to significantly expand its underwater fleet with the acquisition of three additional Scorpene-class submarines. A deal worth over Rs 36,000 crore has been finalized with Mazagon Dockyards Limited (MDL), with the contract expected to be signed by March 31st. This move comes as India seeks to bolster its naval capabilities amidst growing regional challenges.

This latest acquisition, however, has raised eyebrows due to the substantial increase in cost compared to the previous batch of Scorpene submarines. Each of the new submarines is estimated to cost around Rs 12,000 crore, nearly three times the price of the earlier submarines built under Project-75. Those vessels, also constructed by MDL in collaboration with France's Naval Group, were acquired for approximately Rs 3,500 crore each, with the total cost for all six amounting to Rs 21,000 crore.

Sources within the defence establishment have indicated that the higher cost can be attributed to several factors. The new submarines will boast 60% indigenous content, nearly double that of the previous batch, promoting India's 'Make in India' initiative in defence manufacturing. They will also incorporate design modifications, aligning them with the Scorpene class submarines being supplied to the Brazilian Navy, resulting in slightly larger vessels.

Despite these advancements, concerns remain about the significant price escalation. The deal, as it stands, does not include the cost of installing the Air Independent Propulsion (AIP) system developed by the Defence Research and Development Organisation (DRDO). This system, designed to enhance the submarines' submerged endurance, will further add to the overall expenditure.

The decision to procure additional Scorpene submarines was prompted by delays in Project-75(I), which aims to acquire six advanced submarines with AIP. These new submarines will serve as a crucial stopgap as the Indian Navy awaits the induction of its first indigenously designed nuclear attack submarine (SSN) by 2036-37.

This procurement underscores India's commitment to modernizing its naval forces and maintaining a credible deterrent in the Indian Ocean region. However, it also highlights the challenges associated with balancing ambitious defence requirements with budgetary constraints. The government's push for indigenization is evident, but questions about cost-effectiveness in the procurement process persist.

 

[sanket]

Then why not buy Xtra 3 Subs i.e. 6+3 from TKMS which is the latest design & better than Scorpene as the timeline will be similar?

 

[Mithu Roy]

Why waste so much money on Scorpene? Better to go in for nuclear SSN and meanwhile upgrade Scorpene with AIP. Or buy more of German subs to bring down cost.

 

[Anant]

The cost of the Scorpene-class boats back in 2005 was Rs. 21,000 crores for six boats, or about 648 million Euros per boat (rough exchange rate in 2005 was 54 INR to the Euro). Now, one Euro in 2005 is worth about 1.54 Euros today, so a straight-line inflation means each submarine should cost about 998 million Euros today. That figure translates to a total of approximately Rs. 29,995 crores for three submarines.

Therefore, the actual non-inflationary price escalation is just a smidge over 20%. However, the Rs. 36,000 crore figure does not include the AIP system, so the actual increase in cost is closer to 25% per boat, not 200%, as many have reported.

See, Rs. 12,000 crores per submarine is still ridiculously expensive. We are kind of getting ripped off here. However, some escalation was to be expected given the upgrades in the submarine, and atleast what seems to be an increase in indigenisation.

That said, even with the costs of the AIP system taken into account, the net price escalation is around 20-25%, not 200%.

 

[Anant]

Why waste so much money on Scorpene? Better to go in for nuclear SSN and meanwhile upgrade Scorpene with AIP. Or buy more of German subs to bring down cost.

SSNs are even more expensive. Also, the German boats aren't going to be significantly cheaper than that. As for the rest, please refer to the calculations I have done in my comment which shows that the actual price escalation is about 25%, not 200%.

These are still ridiculously expensive submarines, yes, but the price isn't as bad as many are making it out to be.

 

[Somnath Sinhababu]

Russia has offered India some Kilo Class submarine with a very low price few years back... These submarines were underconsruction in their shipyards... India should talk with Russia about this deal...

 

[Anant]

Russia has offered India some Kilo Class submarine with a very low price few years back... These submarines were underconsruction in their shipyards... India should talk with Russia about this deal...

No, Russia has not been building Kilo-class boats (specifically, the export-oriented Project 636 design) for a while now. The more advanced Project 636.3 is not available for export.

Moreover, the Kilo-class is fundamentally a design from the 1970s and 1980s. Even the modernised Project 636.3 boats are roughly contemporaneous to diesel-electric boats built in the 2000s.

On top of all that, the Kilo-class does not have AIP, and short of sacrificing enough internal stuff to essentially make the submarine operationally unusable, you cannot fit AIP on those boats.

Russia builds Kilo-class boats for themselves today because they don't have a better SSK design (the Project 677 Lada-class is comparable at best and arguably worse), and because they cannot afford an all-nuclear fleet.

 

[Baiju Bhaskaran]

The price comparison is totally stupid. Your are comparing the 2003 and 2025 prices. Even the salary of MDL employees has increased almost ten times during this period. So the price can be somewhat justified. But it reflects the failure of total planning process, where our planners fail to understand the requirements or future geopolitics. Another reason is our procurement process of 80's and 90's which was deliberately laid down by anti India forces who wanted to keep our defence weak, and unfortunately it is still followed today.

 

[abhinav srivastava]

Brazil paid ~10 billion USD for 4 Riachuelo-class submarines, with total tech transfer ~20 years ago. Indonesia is paying ~6.3 billion USD for 2 Scorpene with tech transfer and AIP. Indonesia is negotiating this price since 2022. Quoting navalnews: "The Evolved variant is being offered in a whole local production scheme and it is estimated that approximately one-third of the total contract value, estimated at about $2.1 billion, will return to Indonesia through offsets and other collaboration initiatives."

While buying a foreign platform, we should negotiate the price for potential additions. If they are negotiating Rafale's, they should mention buying 26 now with an option to buy 13 additional at these prices up to 3 or 5 years from the deal.

 

[abhinav srivastava]

Then why not buy Xtra 3 Subs i.e. 6+3 from TKMS which is the latest design & better than Scorpene as the timeline will be similar?

The TKMS deal and subs will take at least 7-8 years to roll out. Recall, we signed kalavari class deal in 2005, first boat was inducted in 2017. Now, Scorpenes can be rolled out faster.

 

[Chinese eater]

This is how France works. Price escalation, never oblige with contract terms. They were fined by India for delay in obliging the Rafale contract.

France sold Mirage to India and Pakistan.

France had charged for Mirage upgrades without the engine; the cost was more than the current price of the F35.

Australia cancelled submarine deals with France knowing how they manipulate.

 

[Chinese eater]

6 Submarines with construction in India cost 21000 cr. And follow-on 3 cost 36000 cr. Wahh scam biggest scam.

 

[Nobody In here]

₹12,000 crore is astonishingly expensive for such a small submarine, that too without AIP. NEVER deal with the French scammers. They are simply here to suck money from India. Period !!

 

[vinod nair]

Very sad state. After assembling 6 submarines and India having expertise in developing 4 nuclear submarines (expect the propulsion part, other subsystems are nearly the same), still we have to shell out Rs 36,000 crore for three submarines with Indian AIP. We should close/sell to private players. Australia is not a fool to move away from the Barracuda submarine deal. We have other choices: go for simultaneous technology contract negotiations with Russian and German submarine manufacturers and scrap this deal. Go for outright purchase of Amur. We can't take this blackmail any further if this report is right.

 

[MSM7]

Russia has offered India some Kilo Class submarine with a very low price few years back... These submarines were underconsruction in their shipyards... India should talk with Russia about this deal...

Kilo class is outdated technology. Even Pakistan's upcoming Hangor-class submarine would be superior.

 

[MSM7]

₹12,000 crore is astonishingly expensive for such a small submarine, that too without AIP. NEVER deal with the French scammers. They are simply here to suck money from India. Period !!

These submarines will come with Indigenous AIP. They will also have indigenous combat management system. This will pave way to integration of Indian weapons to these submarines in future.