Germany's ThyssenKrupp Marine Systems (TKMS) is also in the race to build the submarines for the Indian Navy. Spain and Germany are now the only two remaining contenders for the Indian Navy's submarine tender. Spain's Navantia and engineering and construction major Larsen & Toubro have signed an agreement for the 4.8 billion euros ($5.26 billion) tender. Under the agreement, Navantia will design the submarines based on its S80 class of submarines and provide the air-independent propulsion system. The project will involve the building of six conventional submarines equipped with Air-Independent Propulsion (AIP).

It is expected to be valued at over Euro 4.8 billion and will be followed by a 30-year lifecycle sustenance contract of similar value. The agreement also ensures a total transfer of technology on all aspects of the submarine including the AIP to Larsen & Toubro. The Spanish and German bids are part of the Indian Navy's Strategic Partnership (SP) model of acquisition. Navantia's involvement in the Scorpene submarines (Kalvari class) built in India has provided them with the experience and handholding of the Indian yard. India is looking to replace its aging fleet of 16 conventional submarines, 11 of which are more than two decades old, along with two indigenous nuclear-powered submarines. With the signing of the agreement between Navantia and L&T, Spain is now a strong contender for the submarine tender. The Spanish government-owned shipyard will provide advanced technology and design, while L&T will build the submarines. This is a great opportunity to further cement the relationship between India and Spain, and also to push forward India's 'Make in India' initiative.