New Delhi, July 24 - India's accounting watchdog, the Comptroller and Auditor General has found faults with the Indian Navy's deal with the French submarine manufacturer Scorpene and said the firm was given undue favours in spite of the 'unproven' platform design.

'Inspite of negligible experience in submarine construction, the (French) vendor was awarded the contract (for the construction of six submarines),' the CAG said in its annual report released Friday.

'Large concessions in respect of warranty, performance bank guarantee, escalation, arbitration, liquidated damages, agency commission were bestowed on the vendor,' it said.

The report noted that the Scorpene submarine was selected due to the Tube Launch Missile capability it offers. But '...the navy accepted the missile with reduced range by amending its own qualitative requirements. The navy also accepted deviations in the submarine parameters.

'The unproven design of the submarine was accepted based on the validation of the design through computer simulation, despite the fact the design of the submarine had not proved its efficacy in other navies,' said the report.

India inked a $3.5 billion deal with France in 2006 for six Scorpene submarines. The first of these submarines is to be delivered by 2011 while the remaining five will be built at the state-owned Mazgaon Docks Limited in Mumbai.