"With the authentic evidence we found believed to be from the submarine, we have now moved from the sub miss phase to sub sunk", Admiral Margono said.
Hundreds of military personnel took part in a frantic hunt for the KRI Nanggala 402.
KRI Nanggala 402 had lost contact after its last reported dive Wednesday off the resort island, and the navy chief has said it was expected to run out of oxygen early Saturday morning..
Indonesian military officials are holding out hope that a rescue is still possible, but they expressed concern shortly after the submarine went missing that it may have gone too deep to recover.
An Indonesian military spokesman said officials would push the search hard in the hours before the navy has calculated that oxygen aboard the sub will run out - estimated at about 3 a.m. local time Saturday (4 p.m. ET Friday).
"In a co-coordinated effort with the Indian Navy for the search and rescue of an Indonesian submarine, one C17 and two IL 76 aircraft of the IAF are airlifting submarine rescue equipment from Mumbai and Visakhapatnam to Indonesia", an IAF spokesperson said.
The vessel lost contact as it was conducting a weapons exercise, reportedly a torpedo drill, but the navy said an electric failure may have left the sub helpless to execute emergency procedures to resurface after a dive.
An Indonesian defense expert said the crew could still be found alive.
"We have raised the status from submiss to subsunk", navy chief Yudo Margono told reporters, adding that the retrieved items could not have come from another vessel.
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Pentagon spokesperson John Kirby announced Thursday evening on Twitter that at Indonesia's request, the USA was "sending airborne assets to assist in the search for the missing submarine".
An Indonesian naval vessel detected an object with "strong magnetic resonance" at a depth of 50 to 100 meters (164 to 328 feet), Maj.
"But if the submarine is in a 700-meter sea trough, it will be hard for them to survive because underwater pressure will cause cracks and ruptures of the steel hull", Connie Rahakundini Bakrie said.
"The tracking team said the lights were all still on when [KRI Nanggala] entered the water", the chief of staff said, hinting that the submarine may not have suffered a blackout.
The submarine, which disappeared as it prepared to conduct a torpedo drill, is created to withstand a depth of up to 500 metres (1,640 ft). The Bali Sea can reach depths of more than 1,500 metres.
The Indian Navy sent the DSRV following an alert it received through the International Submarine Escape and Rescue Liaison Office (ISMERLO) about the missing Indonesian submarine.
Fifty-three people, including the commander and crew, were on board.
The Indonesian Navy said it was "in good condition".
Late on Friday, the Pentagon said US Defence Secretary Lloyd Austin had spoken with his Indonesian counterpart Prabowo Subianto and offered additional support, which could include undersea search assets.