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.

The 65-metre (213-foot) long diesel-electric vessels are designed for coastal defence, with sophisticated 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 contract was signed at the Indian defence ministry by representatives of Mazagaon docks and companies 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."

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 formal 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.

France's ambassador to India, Dominique Girard, told the Hindi newspaper the allegations of a slush fund were "unfair".

France had 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," he said.

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