All 18 sailors aboard submarine INS Sindhurakshak, which exploded and sank on Wednesday, are feared dead, said the Indian Navy, adding that the cause of the explosion was being investigated. A board of enquiry would probe all possible explanations, including sabotage, it said.
Chief of naval staff DK Joshi said no sign of life had been detected on board even after divers managed to enter through the main hatch in a bid to refloat the vessel.
"It is certainly a dent on Indian navy's submarine capabilities for the time being," he added.
About a dozen fire engines rushed to the dockyard and extinguished the fire in about two hours, officials said.
Afterward, the sub was nearly submerged at its berth in the naval dockyard.
Navy spokesman Narendra Vispute said the cause of the explosion was being investigated.
Joshi said there had been an initial fire which appeared to have sparked a big explosion as weaponry ignited.
"The basic question is what caused the fire and explosion. We do not have an answer to that question as of now," he said.
A board of enquiry would probe all possible explanations including sabotage, but "the indicators at this point of time do not support that theory", he said.
The fully-armed INS Sindhurakshak, returned by original manufacturer Russia earlier in 2013 after a major refit, exploded in flames in Mumbai shortly after midnight onWednesday and sank in a military shipyard.
The 16-year-old Russian-made submarine also suffered an explosion in 2010 that killed one sailor and injured two others. The navy said that accident was caused by a faulty battery valve that leaked hydrogen, causing an explosion in the vessel's battery compartment.
Navy officials said there had been no contact with any of the sailors since the explosions, which lit up the sky above the Mumbai navy base where the submarine was docked.
The disaster is thought to be the Vavy's worst since the sinking of a frigate by a Pakistani submarine in 1971. Defence minister AK Antony described the explosion as the "greatest tragedy in recent time".
"I feel sad about those navy personnel who have lost their lives in service of the country," he told reporters in New Delhi.
The blast came days after New Delhi trumpeted the launch of its first domestically-produced aircraft carrier and the start of sea trials for its first Indian-made nuclear submarine.
The world's biggest democracy has been expanding its armed forces rapidly to upgrade its mostly Soviet-era weaponry and respond to what is perceived as a growing threat from regional rival China.
Amateur video footage showed a fireball in the forward section of the Sindhurakshak, where torpedoes and missiles are stored as well as the battery units.
"There were two to three explosions and the night sky lit up briefly," eyewitness Dharmendra Jaiswal said.
Joshi said navy divers had opened one hatch on the submarine but had not yet been able to enter the vessel. Because the submarine was docked, a unit of navy watchmen was on board when the blast occurred and not the normal crew, he said.
At least some weaponry exploded in the near-simultaneous blasts, Joshi added.
Local TVchannels showed a video of the explosion on the diesel-powered submarine, apparently filmed by a bystander. An enormous ball of red and yellow fire rose hundreds of feet into the air.
PS Rahangdale, an off-duty firefighter who rushed to the scene, told a local television channel that the Sindhurakshak "was totally on fire" and was berthed next to another submarine.
"Because of timely intervention of my team and resources and navy's resources we could save that second submarine," he said.
Other sailors on vessels berthed nearby were admitted to a navy hospital in Mumbai with burns.
In February 2010 the Sindhurakshak suffered a fire while docked in Visakhapatnam city in southern India, killing a 24-year-old sailor and leaving two others with burns.
A spokesman for the Russian Zvyozdochka company which overhauled the Sindhurakshak's weapons, navigation and power generator systems said India raised no objections about the vessel when it was returned after testing in April.
The submarine, whose name means "Protector of the Seas" in Hindi, is still covered by a Russian warranty and eight Zvyozdochka employees are in Mumbai, the spokesman said.
"Zvyozdochka is prepared to render its full assistance in the investigation and search for the causes of the accident," the spokesman told the ITAR-TASS news agency.
The submarine was built in 1997 in Saint Petersburg and had completed 1,000 dive hours since returning after its refurbishment.
Rahul Bedi, a defence expert with IHS Jane's Defence Weekly, told AFP the 16-year-old submarine lacked some safety features common to newer vessels even after its $80 million overhaul.
"They don't have escape routes in the event of accidents, unlike some of the modern submarines," he said.
The Indian navy has 14 submarines, but only between seven and nine are operational at any one time because of regular repair and refitting operations.
The disaster had echoes of a tragedy in Russia in 2000 when the Kursk nuclear submarine sank in the Barents Sea with the loss of all 118 crew on board.
‘Defender of seas’ falls
Russia is still the biggest military supplier to India, but relations have been strained recently by major delays and cost overruns with a refurbished aircraft carrier, the INS Vikramaditya.
The accident is set to overshadow scheduled talks between Indian Prime Minister Manmohan Singh and Russian President Vladimir Putin at a G20 summit in Saint Petersburg in September.
The government has authorized the navy to have up to 24 conventional submarines, but it has just 14, including eight Russian Kilo-class and four German Type HDW209 boats. Bedi said five of those will be retired by 2014-15.
Last year, India acquired a Russian Nerpa nuclear submarine on a 10-year lease at a cost of nearly $1 billion. India also has designed and built its own nuclear submarine. The navy activated the atomic reactor on that vessel on Saturday and could deploy it in the next two years.
India has steadily built up its naval capabilities in recent years, spurred by its rivalry with neighboring China. But the country's military has encountered scandal as it attempts to bulk up.
In February, India put on hold a $750 million deal to buy helicopters from Italian aerospace and defense giant Finmeccanica and its British subsidiary, AgustaWestland, following charges of kickbacks and bribes. Three of the 12 helicopters were delivered in December and the rest have been put on hold.
Giuseppe Orsihe, the former head of Finmeccanica, is facing trial in Italy for his alleged role in the payment of bribes to secure the helicopter contract.
(With AP and AFP inputs)