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Unlike the 1965 war, the Navy NHQ staffers and commanders of the Pakistan Navy knew very well that the Navy was ill-prepared for the naval conflict with India. The Pakistan Navy was in no condition of fighting an offensive war in deep sea against the Indian Navy, and neither was it in a condition to mount serious defence against Indian Navy's seaborne encroachment.
In the western theatre of the war, the Indian Navy's Western Naval Command under Vice admiral S.N. Kohli, successfully launched a surprise attack on Karachi port on the night of 4/5 December 1971 under the codename Trident.The naval attack involving the Soviet-built Osa missile boats sank the Pakistan Navy's destroyer PNS Khaibar and minesweeper PNS Muhafiz while PNS Shah Jahan was also badly damaged.Pakistani naval sources reported that about 720 Pakistani sailors were killed or wounded, and Pakistan lost reserve fuel and many commercial ships, thus crippling the Pakistan Navy's further involvement in the conflict. In retaliation, the Pakistan Navy submarines, Hangor, Mangro, and Shushuk, began their operations to seek out the major Indian warships. On 9 December 1971, Hangor sank INS Khukri, inflicting 194 Indian casualties, and this attack was the first submarine kill since World War II.
The sinking of INS Khukri was followed by another Indian attack on Karachi port on the night of 8/9 December 1971 under the codename Python. A squadron of Indian Navy's Osa missile boats approached the Karachi port and launched a series of Soviet-acquired Styx missiles, that resulted in further destruction of reserve fuel tanks and the sinking of three Pakistani merchant ships, as well as foreign ships docked in Karachi. The Pakistan Air Force did not attack the Indian Navy ships, and confusion remained the next day when the civilian pilots of Pakistan International, acting as reconnaissance war pilots, misidentified PNS Zulfiqar and the air force attacked its own warship, inflicting major damages and killing several officers on board.
In the eastern theatre of the war, the Indian Eastern Naval Command, under Vice Admiral Nilakanta Krishnan, completely isolated East Pakistan by a naval blockade in the Bay of Bengal, trapping the Eastern Pakistan Navy and eight foreign merchant ships in their ports. From 4 December onwards, the aircraft carrier INS Vikrant was deployed, and its Sea Hawk fighter-bombers attacked many coastal towns in East Pakistan, including Chittagong and Cox's Bazar. Pakistan countered the threat by sending the submarine PNS Ghazi, which sank off Visakhapatnam's coast, due to an internal explosion, though whether this was triggered by Indian depth charges, diving to avoid them or some other reason has never been established.
Due to high number of defections, the Navy relied on deploying the Pakistan Marines, led by Rear Admiral Leslie Mungavin, where they had to conduct riverine operations against the Indian Army, but they too suffered major losses, mainly due to their lack of understanding of expeditionary warfare and the wet terrain of East Pakistan.
The damage inflicted on the Pakistan Navy stood at 7 gunboats, 1 minesweeper, 1 submarine, 2 destroyers, 3 patrol crafts belonging to the coast guard, 18 cargo, supply and communication vessels; and large-scale damage inflicted on the naval base and docks in the coastal town of Karachi. Three merchant navy ships – Anwar Baksh, Pasni and Madhumathi – and ten smaller vessels were captured. Around 1900 personnel were lost, while 1413 servicemen were captured by Indian forces in Dacca. According to one Pakistani scholar, Tariq Ali, Pakistan lost half its navy in the war.