Sydney: Australia on Tuesday signed a 50 billion dollars deal with France for 12 sophisticated submarines to be built by French defence major DCNS that was at the centre of a controversy this year surrounding the leak of documents relating to India's Scorpene submarines.


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Australian Prime Minister Malcolm Turnbull and French Defence Minister Jean-Yves Le Drian signed the inter- governmental agreement (IGA) in Adelaide, where they officially opened the Australian headquarters of DCNS that will design and build the Shortfin Barracuda.


"The IGA is the last foundation stone needed to ensure Australia is able to develop a cutting-edge sovereign submarine capability," Turnbull told reporters.


The pact is a "critically important step in the development of our security, in the assurance of our government in delivering Australians the security and the prosperity that they need," he said.


Turnbull said the deal underpins the largest capital project in Australia's history.


"Security is uncertain around the world and that is why we are re-equipping our navy and our defence forces right across the three services and the cyber sphere, ensuring we have the capabilities to keep Australians safe in times that are more challenging than we have known for many years," Turnbull said.


"Our future, our assurance, our security as a first world, high-wage...Economy depends upon the technology, the innovation, the skills that come from investment such as this," he said.


As part of the 50 billion project, French shipbuilder DCNS will design the new submarines and they will be built in Adelaide.


Le Drian, describing the signing as an "historic event", said the agreement was "an important building block in deepening our bilateral relationship, notably... Between our two navies".


The new contract between Australia and France lays out the legal framework under which Australia and France will partner on the future submarine programme over the coming decades.


Australia awarded DCNS the main contract in April.


The deal comes months after over 22,000 pages of secret data on the capabilities of six highly-advanced submarines being built for the Indian Navy in Mumbai in collaboration with DCNS were leaked.


Le Drian yesterday said the leak of documents relating to India's Scorpene submarines was aimed at harming France.


He renewed suggestions that revelations of the major data breach in its submarine programme were the work of malicious foreign or commercial rivals.


The circumstances of the leak are now the subject of a French investigation.