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India on Thursday sealed a $3 billion deal with Russia for leasing a nuclear-powered attack submarine for the Indian Navy for a period of 10 years, military sources said.

The two countries signed an inter-governmental agreement capping months of negotiations on price and various other aspects of the deal. Under the pact, Russia will have to deliver the Akula class submarine, to be known as Chakra III, to the Indian Navy by 2025.

It will be the third Russian nuclear submarine to be leased to the Indian Navy. A spokesperson in the Defence Ministry refused to comment when asked about the deal.

India has been significantly bolstering its naval prowess in the backdrop of China’s attempts to expand its influence in the Indian Ocean region.

The Indian Navy had taken two submarines from Russia on lease previously. The first nuclear-powered submarine—christened INS Chakra—was taken in 1988 under a three-year lease from the Soviet Union; the first INS Chakra was a ‘Charlie’ class cruise missile-armed submarine.

A second INS Chakra was taken on lease in 2012 for a period of 10 years; this vessel was an Akula class submarine.

The lease of Chakra-II will expire in 2022 and India is looking at extending the lease, sources said.

The deal for the Chakra-III came days after Indo-Russian joint production facility to manufacture AK-203 assault rifles for the Indian Army was inaugurated by Prime Minister Narendra Modi in Amethi in Uttar Pradesh.

In October, India signed a multi-billion dollar deal with Russia to procure a batch of S-400 air defence missile systems.

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