The contract, which France had been lobbying hard to win, calls for the diesel-powered vessels to be 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."

India also signed a separate contract with the French arm of the European MBDA weapons firm to arm the Scorpenes with missiles once the vessels are at sea.

Indian government sources told AFP they would be Exocet missiles which can be tipped with nuclear warheads.

The 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.

The 65-metre (213-foot) long submarines are designed for coastal defence, with modern detection equipment, six torpedo tubes and missile launchers.

They are able to stay at sea for up to 45 days with a crew of 31, and can dive to a depth of 300 metres.

The main contract was signed at the Indian defence ministry by representatives of Mazagaon docks and firms involved in the deal, including Aramis, which is 50 percent owned by French state shipbuilder Direction des Constructions Navales (DCN) and defence and engineering giant Thales.

A total of five agreements were signed including one to ensure "avoidance of all forms of corruption by ensuring free, fair, transparent and unprejudiced dealings prior to, during and subsequent to the currency of the contract."

Indian naval chief Arun Prakash said the unprecedented transparency clause was essential.

"For the first time an integrity agreement has been included which will now become standard procedure so that there are no doubts or apprehensions in the minds of either the buyer or the seller," the admiral said.

France's ambassador to India, Dominique Girard, who inked the technology transfer accord, called the deal a "new leap in our relationship" but did not comment on the integrity pact.

A former executive of Thales last month accused the company of organising a centralised slush fund to bribe and corrupt officials to win contracts, in an interview published by the French daily Le Monde.

The company issued a denial of the story, stressing that Michel Josserand, the former head of Thales' engineering and consulting unit, had been sacked for his involvement in "irregularities".

It also filed a complaint against Le Monde and Josserand for defamation.

Girard told the Hindu newspaper that the slush fund allegations were "unfair".

France has tighter anti-bribery laws than the framework suggested by the Organisation for Economic Cooperation and Development, Girard told the newspaper in an interview published Thursday.

"Therefore for the newspaper to suggest that the company had a centralised slush fund account was stretching the imagination," the Hindu quoted him as saying.

All rights reserved. � 2005 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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