Sadly no, IN seems to had some doubts about the MESMA AIP, since it's new and wasn't ready when the procurement was done. DCNS still offers it and there is the possibility to add it at least in the last 2 or 3 subs of this order, but so far IN didn't took the option.
My guess is, they will try to reduce the price for the optional AIP + follow orders of Scorpene and possibly some other additions with the P75I competition, because that competition requires AIP in the RFP and more Scorpene from an already available production line, that now seems to gain speed is the most logical and likely solution (unless the competitors don't offer something big).
How does Scorpene add value to IN, what is special about it?
It's a modern diesel-electric submarine, with a new design, weapons and systems, so will be a clear leap compared to the currently available U209 and Kilo subs. If we get naval Scalp missiles, even the land attack capability of Kilos with Klub S missiles will be at least equalied.
However, without AIP propulsion, it lacks one of the most modern capabilities of current generation subs and which already is a standard in most navies all around the world. Not having this capability is a major downer for sure, especially since our adversaries, which means we can't use this tech for our own advantage, but also will have difficulties to develop counter tactics against them, since it will take years till IN will have it.
I guess there were news that if DRDO develops own AIP, may be the last two of these could get.
Yeah, but we know how to take their promises don't we? They failed to develop a useful fighter engine and correct me if I'm wrong, did we have developed at least an indigenous diesel-electric propulsion yet? If not, shouldn't DRDO take this as the first step, since we otherwise are dependent on foreign countries for this core tech, before they go on to develop an indigenous AIP?
I guess this is just the usuall, WE CAN DO THAT TOO attitude of DRDO, to show off and claim to be world class, but there's sadly a big difference in what they promise and what they deliver!
Nope, None of these subs will get retired.
IN has upgraded all kilos recently, they will surely operate till 2020 or even beyond.
+ talks of HDW upgrades are also going on, again they will also operate till 2020 or beyond.
Actually the 4 x German subs were aimed to be replaced by the last 4 x Scorpene subs, but the delays might make it important to have some minor life extention upgrades to the U209s. At the same time some of the Kilos will be unavailable, since they are going through upgrades as well, which means there will be a shortage, but you are right that the Kilos won't be phased out that soon, especially without deciding about P75I it's likely replacement.