Australia is interested in buying military submarines from Japan despite having vowed to build them at home.
Australia may buy 12 4,000 ton Soryu class stealth diesel engine submarines and would replace six outdated Collin-class boats by 2030.
The multi-billion dollar purchase could see Australia acquiring a fleet of stealth diesel engine submarines based on the Japanese Maritime Self-Defense Force's Soryu class vessels.
The negotiations are supposedly in rather early stages but the deal could be sealed as soon as January 2015, unnamed sources told Reuters.
Australia might look at options of working jointly to develop the technology or import the engines and building the rest.
Other option is to build the fleet in South Australia under license from Japan to Canberra buying finished subs designed and built by Mitsubishi Heavy Industries Ltd and Kawasaki Heavy Industries Ltd, the report said.
A defense ministry spokeswoman said that no decision on design and build of the next Australian submarines has been taken so far and such strategic decisions will be considered only through Defense White Paper process.
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