A torpedo recovery vessel sank off the coastal city of Visakhapatnam killing at least one person, the navy said on Friday, in the latest accident to raise concerns about the Asian power's ageing fleet.
Four other crew members are missing from the 28 personnel on board when the ship sank late on Thursday, a navy spokesman said.
"The remaining 23 personnel were rescued by the search and rescue ships," the spokesman said.
The vessel was on an exercise to recover practice torpedoes fired by fleet ships, when flooding occurred in one of the compartments, the navy said in a statement.
The navy has experienced a spate of accidents at a time when it is trying to modernize and expand its reach to keep up with the rising maritime ambitions of neighbour China.
The torpedo recovery vessel, a TRVA-72, was built by the Shipyard Limited in 1983, according to media reports.
Most of the country's fleet of more than a dozen submarines is in urgent need of modernization.
The new government of Prime Minister Narendra Modi has vowed to upgrade India's military equipment, much of which dates back to the Soviet era, as well as boosting domestic defence manufacturing.