PM Modi, Emmanuel Macron held a phone conversation on Tuesday

Paris: French President Emmanuel Macron discussed on Tuesday co-operating over the Indo-Pacific region with Prime Minister Narendra Modi, as France deals with the fallout from Australia's cancellation of a $40 billion French submarine order.

The two leaders held a phone conversation on Tuesday, said a statement from Macron's office, during which they also discussed issues such as the crisis in Afghanistan.

Last week, France recalled its ambassadors from the United States and Australia after Australia cancelled its previous nuclear submarine deal with France.

Australia said last week that it would scrap an earlier 2016 deal with France's Naval Group to build a fleet of conventional submarines, and would instead build at least eight nuclear-powered submarines with US and British technology after striking a trilateral security partnership. France called it a stab in the back.

China, in turn, denounced a new Indo-Pacific security alliance - AUKUS - between the United States, Britain, and Australia, warning of an intensified arms race in the region.