Russia and India must finally agree on the revised terms of a contract to deliver a modernized aircraft carrier to the Indian navy and ensure the implementation of the project, the Russian president said on Thursday.
The original $750 million contract to deliver the Admiral Gorshkov to India, which Russia's state-run arms exporter Rosoboronexport signed with the Indian Navy in 2004, stated that the work would be completed in 2008.
However, Russia later claimed it had underestimated the scale and the cost of the modernization and demanded an additional $1.2 billion, which New Delhi said was "exorbitant."
"This issue is not the simplest one in our relations," Dmitry Medvedev told reporters on the eve of his December 4-5 visit to India.
"However, I believe that we must show mutual respect, agree on the final terms of cooperation in this project, and ensure its successful implementation," he said.
According to various sources, after long-running delays and disputes, Russia and India agreed in February to raise retrofit costs for the aircraft carrier, docked at the Sevmash shipyard in northern Russia for the past 12 years, by at least $800 million.
However, Sevmash officials later claimed that the ongoing maintenance and upgrade made up 60-70% of the carrier's cost, or at least $2 bln.
The current contract covers a complete overhaul of the ship and equipping it with modern weaponry, including MiG-29K Fulcrum aircraft and Ka-27 Helix-A and Ka-31 Helix-B anti-submarine helicopters.
Sevmash has said if New Delhi provides sufficient funding to complete work then the construction of the ship will be completed in 2010 and tests will start in 2011, while in 2012 it will be handed over to the Indian Navy.
The carrier, renamed the Vikramaditya, is to replace India's INS Viraat carrier, which, although currently operational, is now 50 years old.
After modernization, the carrier is expected to be seaworthy for 30 years.