AK Antony gave no further details but said he felt "sad" about those who lost their lives. Earlier the navy said 18 sailors had been trapped on board.
The blast on the INS Sindhurakshak took place after midnight and fire-fighters spent four hours putting out the blaze.
Officials said the diesel-powered vessel was badly damaged.
It is not clear if Mr Antony was referring to deaths among the sailors still trapped on the submarine. One navy official told the BBC that "surviving an explosion of this huge scale" was rare.
Many sailors managed to jump to safety after the blast. Divers are still at the scene trying to search for survivors and some of the injured were taken to hospital. The submarine remains partly submerged at its berth.
Dramatic images on Indian television showed a large fireball illuminating the sky. Smoke from the blaze could be seen in many parts of the city.
A naval inquiry has been set up to look into the causes of the incident, but officials told the BBC they suspect it to be the result of an on-board error and not an act involving any outside agency.
The authorities have also said that there is no fear of any further explosions.
The Russian-built submarine was upgraded recently at a cost of $80m (£52m). At the time of the explosion it was said to be fully loaded with ammunition.
Russian firm Zvyozdochka, which refitted the submarine, said the vessel had been fully operational when it was returned to India in January. reports from Russia say specialists are ready to help with the aftermath.
'Great loss'
"It's a great loss to us... it's the greatest tragedy of recent times," Defence Minister AK Antony told reporters in Delhi before leaving for Mumbai to visit the site of the incident.
Earlier, Indian navy spokesman PVS Satish said 18 people were believed to be trapped on board and "we are in the process of trying to rescue them".
The front portion of the submarine has been damaged badly, Commander Satish said.
The INS Sindhurakshak, which is powered by diesel and electricity, is one of the 10 Kilo-class submarines bought from Russia between 1986 and 2000. It is equipped with Russian Club-S cruise missile systems.
The submarine was sent to Russia for the refit in 2010 after a sailor on board was killed by a fire that broke out in the battery compartment while the submarine was docked at the Vishakhapatnam naval base in February that year.
Wednesday's explosion comes just days after India's navy launched its first home-built aircraft carrier, hailed by defence officials as a "crowning glory".
Last year, India bought a Russian Nerpa nuclear submarine for its navy on a 10-year lease from Russia at the cost of nearly $1bn (£645m), making it part of a select group of nations to operate nuclear-powered submarines.
India and Russia are long-time allies and Russia supplies about 70% of India's military hardware.
BBC
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