Technical glitches have put back the $3.9 billion Scorpene-class building program for six vessels, Defense Minister A.K. Antony told the Indian Parliament, local media reported.
He said that "teething problems, absorption of technology" and slow improvements to the Mazagon Docks in Mumbai, formerly Bombay, have led to delays.
India was licensed by France in 2005 to construct the French-designed submarines, and work started at the end of 2006. The original schedule was for the first vessel to be delivered in December 2012 and one a year after that to 2017.
The two-year delay in delivering the first vessel is significant for the nation's submarine strategy. India operates 16 diesel-electric submarines. These are 10 Russian Kilo-class, four German HDWs and "two virtually obsolete" Foxtrots. With retirement of vessels soon due, only nine submarines will be operating by 2012.
This week India also launched its first nuclear-powered, home-built submarine, the INS Arihant.
Pakistan was quick to condemn the launch as a security threat to the region. India has said in the past that the nuclear submarine is needed to counter what it sees as a growing Chinese naval presence in India's offshore waters.
The 6,000-ton Arihant with its 85-megawatt reactor will have a crew of 100 and be capable of launching missiles at targets around 440 miles away. But the 367-foot vessel will not be operational until 2015 due to lengthy sea trials.
India's Scorpene problems come as Malaysia announced this month that its first French-built Scorpene had left France on its maiden voyage to its home base.
India is, however, on schedule to take delivery of the Russian navy's Nerpa at the end of the year. The nuclear-powered attack vessel is a 20,000-ton Akula-II class submarine in which 20 Russian sailors were killed when poisonous gas was accidentally released while on sea trials in the Sea of Japan in November.
The renamed INS Chakra will be on a 10-year lease and be used as a training ship.
Also this week the Indian public spending watchdog the Comptroller and Auditor General slammed the government's defense procurement, saying financial irregularities and wheeling and dealing pervade too many deals.
It focused in on the Scorpene and the acquisition of a Russian aircraft carrier Admiral Gorshkov.
In what the agency called the "biggest defense mess-up" ever stopping just short of a "scam," India is to spend almost $2 billion more than the expected total cost of $974 million to refit the carrier.
The "secondhand" refitted carrier will have a 20-year lifespan and be 60 percent more expensive than a new one, it noted.
In the Scorpene deal, it said undue financial advantage was given to the French vendors. "Large concessions in respect of warranty, performance bank guarantee, escalation, arbitration, liquidated damages, agency commission were bestowed on the vendor," said the audit agency.
The submarine project has been "dogged by some controversy," according to a Times of India report.
There had been allegations of kickbacks made in the October 2005 contracts signed with two French companies -- prime contractor Armaris, a DCN-Thales joint venture, for the transfer of technology and construction design, and with missile systems firm MBDA for sea-skimming Exocet missiles.
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