The contract, which France had been lobbying hard to win, involves the vessels being assembled in India's financial city of Mumbai as part of a technology transfer arrangement.

"According to the agreement, India will build the Scorpene submarines at the state-owned Mazagaon docks in Mumbai under transfer of technology from France," an Indian defence ministry statement said.

"The first submarine will be ready for induction ... within seven years of signing of the contract. The remaining five will be delivered at intervals of one year each thereafter."

The formal signing came less than a month after French President Jacques Chirac announced in Paris that India had agreed to buy the six Scorpenes for its navy as well as 43 Airbus passenger aircraft, worth 1.8 billion euros, for state-run Indian Airlines.

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