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Engineering and construction major Larsen & Toubro on Monday said it struck an agreement with Spanish shipbuilder Navantia to bid for a submarine tender by the Indian Navy likely valued at more than 4.8 billion euros ($5.26 billion).

Navantia and L&T first signed a memorandum of understanding in April to bid for the Indian Navy's Project 75 (India) that requires domestic firms to tie up with foreign companies to produce six conventional submarines equipped with air-independent propulsion (AIP).

The companies said L&T would build the submarines, while Navantia would design them based on the Spanish state-owned shipbuilder's S80 class of submarines and provide the air-independent propulsion system that lets submarines remain underwater longer.

L&T has so far built more than 65 defence vessels- both in partnership and on its own- including a handful for the Indian Navy and Coast Guard, according to its website.

The partnership comes a month after Germany's Thyssenkrupp and India's Mazagon Dock Shipbuilders – the only other qualified domestic firm for the tender – signed an agreement to take part in the bidding.

In March, India approved a budget of 560 billion rupees ($6.8 billion) for its navy, which has 16 conventional submarines, 11 of which are more than two decades old, along with two indigenous nuclear-powered submarines.

($1 = 0.9117 euros)