A smaller intensity explosion was followed by two massive blasts, causing a major fire in the Russian-made submarine, Admiral D K Joshi, Chief of Naval Staff told reporters after visiting the dockyard in Colaba.
Joshi, who accompanied Defence Minister A K Antony, did not rule out the possibility of sabotage but said, "Indications so far do not support such a theory."
The diesel-electric submarine was commissioned into the Indian Navy in 1997 at a cost of around Rs 400 crore and had gone through a Rs 450-crore extensive upgrade in Russia under a contract signed in 2010. The warship rejoined the navy on April 29, this year. The boat displaces 2,300 tonnes, carries 52 crew members, has a top speed of 19 knots (35 km per hour) and diving depth of 300 metres.
It was fully armed at the time of the mishap, navy sources said.
With the 18 navy personnel still missing nearly 17 hours after the mishap, Joshi said, "While we can hope for the best, we have to be prepared for the worst. "Miracles do happen. There might be air-pockets (to aid their survival). We know that so much time has gone by," he said.
Joshi said three other personnel who were on board the vessel but not inside, jumped to safety but were too shocked to make a statement.
A board of inquiry has been constituted to probe the reason behind the blasts and it is expected to submit its report within four weeks, he said.
Divers from the navy, Joshi said, have been able to cut through the vessel, as all hatches had fused due to the fire, and were looking for the missing personnel, but without any success so far.
The deafening blast followed by a fire occurred shortly after midnight on the INS Sindhurakshak submarine at the naval dockyard, officials said.
TV grabs showed a huge ball of flame.
Some INS Sindhurakshak sailors have been rushed to naval hospital INHS Ashvini in Colaba.
The explosion on the submarine comes within days of India getting its first indigenous aircraft carrier Vikrant Aug 12 and the nuclear reactor that propels Arihant, the country's first ballistic missile submarine, going critical Aug 9.
A second submarine, also berthed at the dockyard, escaped any major harm after the fire engulfed INS Sindhurakshak, Mumbai fire brigade sources said.
At least 16 fire tenders of Mumbai Fire Brigade and Mumbai Port Trust were rushed to assist the naval fire brigade to douse the conflagration, the smoke emanating from which could be seen in many parts of south Mumbai.
A fire brigade official said that around 3 am, the blaze had been brought under control and prevented from spreading to other vessels docked in the vicinity.
Deputy Chief Fire Officer P S Rahandale said he saw one submarine was engulfed in fire while another submarine, which was about 10 to 15 feet away, was "partially" on fire.
Rahandale said his team of firemen and Navy's Fire Brigade personnel immediately "attacked" the flames that were near the second sub. From the dozens of fire tenders, a wall of high-pressure stream of water was built between Sindhurakshak and the second sub with the help of eight to nine water cannons. The second submarine was then moved to a safe place.
Naval chief Joshi said the flames that leapt from the sinking vessel touched the outer casing of the second sub, also a Sindhughosh-class submarine like Sindhurakshak. There was no damage to the second sub, he said, adding the vessel was quickly taken to safety.