Sources in the know said he could take the step at the earliest after being overlooked by the Government in the appointment of Navy chief after the sudden exit of Admiral DK Joshi in the wake of series of mishaps involving naval assets.
It is understood that he will soon write a letter to the Defence Ministry about his decision, the sources said.
Sinha was the senior-most Vice Admiral but he has been edged out, apparently because majority of the 14 mishaps, including two major submarine accidents, took place under his command during the last 10 months.
In August last year, submarine INS Sindhurakshak sank at the Naval Dockyard in Mumbai, killing 18 personnel on board.
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The sudden resignation by Joshi changed the line of succession in the Navy with Admiral Dhowan being appointed the chief today.
Had he retired in August next year as per his tenure, Southern Naval Commander Vice Admiral Satish Soni would have become the next chief.
Under the new circumstances, National Defence College Commandant Vice Admiral Sunil Lamba is expected to succeed Dhowan in May 2016.