The latest explosion sent a huge fireball into the air and sent nearby sailors jumping into the sea in panic. It is shaping up to be another embarrassment for India's military, which has been hit with a corruption scandal as it races to modernize its forces.
Defense Minister A.K. Antony said some sailors were killed but gave no other details.
"It's a loss to all of us. It's a tragedy," Antony told reporters in New Delhi before leaving for Mumbai to assess the situation.
Local TV news station Headlines Today showed 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.
One man standing outside the dockyard who declined to give his name said he heard a sound like a rocket or jet engine, then a blast. Another witness said the sky turned red after the explosion. Nearly a dozen fire engines rushed to the dockyard to douse the fire.
The fire was extinguished in about two hours, but a navy official said it was unclear how many sailors were killed or injured. The official spoke on condition of anonymity because he was not authorized to talk to reporters.
The official said that when the blast occurred, some sailors of other nearby units jumped into the sea in panic. He said some were injured and hospitalized.
Afterward, the sub was nearly submerged at its berth in the naval dockyard.
Another navy official said there has been no contact with the trapped sailors, and that navy divers have reached the submarine to find out whether there are survivors. That official also spoke on condition of anonymity because he was not authorized to talk to reporters.
Navy spokesman Narendra Vispute said the cause of the explosion was being investigated.
The 16-year-old Russian-made submarine, INS Sindhurakshak, 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.
The sub recently returned from Russia after a two-and-a-half-year refit, overhaul and upgrade, said Rahul Bedi, an analyst for the independent Jane's Information Group.
Wednesday's accident came at a time when India was facing a shortage of submarines because of obsolescence, Bedi said.
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 for its navy on a 10-year lease from Russia 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 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 Italian Finmeccanica, is facing trial in Italy for his alleged role in the payment of bribes to secure the helicopter contract.
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