India is to bolster its navy with the purchase of six Franco-Spanish submarines in a deal worth $1.8bn (£985m, 1.4bn euros).
India plans to build six Scorpene submarines in Mumbai
The announcement came as India's Prime Minister Manmohan Singh met France's President Jacques Chirac in Paris.
India plans to build six diesel-powered Scorpene SSK-class submarines at a naval dockyard in Mumbai (Bombay).
The deal is the latest in a series of military purchases by Delhi aimed at modernising India's armed forces.
In a joint declaration, the sides also said they would "work towards the conclusion of an agreement on bilateral co-operation in the nuclear field".
No further details were given, but India is known to want to reduce its dependency on oil.
'Measure of trust'
India is currently the developing world's leading buyer of military equipment, according to a report for the US Congress.
Delhi spent $5.7bn on arms last year, taking it past China and Saudi Arabia, the Congressional Research Service said in August.
President Chirac welcomed the deal, describing it as "a measure of the friendship, trust and cooperation" between India and France.
On Friday, the Chilean navy took delivery of the first of two Scorpene submarines developed by naval defence firms DCN of France and Navantia of Spain.
The submarine deal follows the announcement last week of India Airlines' plan to buy 43 Airbus passenger jets in a deal worth $2.2bn.
Speaking at the time, British Prime Minister Tony Blair said the purchase was a "welcome sign" of developing relations between India and the European Union.