The Defence Ministry of India has rejected the proposal from Larsen & Toubro (L&T) in the ₹70,000 crore submarine deal, deeming it non-compliant with the requirements set by the Indian Navy. This decision was made public on January 23, 2025, and follows L&T's partnership with Spanish firm Navantia in their bid to supply six advanced submarines under Project 75 India, which aims to enhance the Navy's underwater capabilities.

Non-Compliance

The proposal was found non-compliant primarily because L&T's showcased Air Independent Propulsion (AIP) system was not sea-proven, which was a critical requirement outlined in the tender documents. The Indian Navy had specifically requested a system that had been tested in actual sea conditions, rather than just demonstrated onshore in Spain.

Remaining Competitors

With L&T's bid disqualified, Mazagon Dockyards Limited (MDL), in collaboration with ThyssenKrupp Marine Systems from Germany, is now the sole contender for the project. MDL has already been involved in previous submarine projects and is expected to advance to the next stage of procurement following technical clearance.

Mazagon Dock Shipbuilders Limited (MDL) delivered INS Vaghsheer, the sixth and final Scorpene-class submarine under Project 75, to the Indian Navy on January 9, 202513. The submarine was launched on April 20, 2022, and has undergone rigorous testing to ensure it is fully combat-ready.

Vendors involved in Project 75 have been actively communicating with the government regarding the project's progress and procedural adherence by the Defence Ministry. This engagement is crucial for ensuring that the project meets its objectives and timelines.

There have been suggestions to officials to consider an equitable distribution of the project workload among various shipyards. This approach could potentially enhance competition, efficiency, and collaboration within the domestic defence manufacturing sector.

The L&T and its partner had showcased the functioning of its critical Air Independent Propulsion system in Spain to the Indian Navy team there on shore but the Indian Navy demanded a sea-proven system in its requirements in the tender document.

Following the announcement, shares of L&T fell by approximately 1%, while shares of Mazagon Dockyards surged over 5%, reflecting investor confidence in MDL's prospects for securing the contract.

This development underscores India's ongoing efforts to modernize its naval capabilities amid regional security concerns, particularly in light of China's naval expansion. The government is keen on enhancing indigenous defence manufacturing capabilities through such projects.

Agencies