The 15.6 metre-long interceptor craft had sunk 90 nautical miles north east off Chennai due to the fire yesterday.
Navy sources said six personnel were on board the boat when the mishap occurred.
However, the six were immediately rescued by Naval personnel on board the other boats nearby, thus averting any casualty, they said.
The fire had caused an extensive damage to the Fibre-glass Reinforced Plastic (FRP) hull of the craft resulting in its sinking, Navy had said yesterday.