Russian Navy

Navy team to discuss Gorshkov price hike with Russia

08.11.2007 Days ahead of Prime Minister Manmohan Singh’s visit to Russia, a top-level Indian Navy delegation is heading for Moscow to discuss the delay and price escalation in the Admiral Gorshkov aircraft carrier deal — perhaps, the most thorny issue between the two countries.

The first official hearing by India on the price escalation is scheduled to take place this week. A detailed financial and technical plan, outlining the specific areas where Russian shipbuilders feel costs need to be increased, will be presented to the Indian side for the first time. Moscow has made it clear that the cost of the warship will need to go up by at least $350 million. However, Indian officials fear that the final escalation may end up being much more. This comes even as questions are being raised on the original decision by the NDA government to procure the warship from Russia in 2004.

But, India cannot back off from the deal considering that payments amounting to over $450 million have already been made for refurbishing the aircraft carrier. The original price quoted for refurbishing the carrier was just under $980 million.

Sources confirmed that the Prime Minister has already been briefed on the issue and the matter is likely to come up for discussions during his Moscow visit starting Sunday.

The matter also came up during Defence Minister A K Antony’s visit to Moscow last month for the India-Russia Inter-Governmental Commission on Military Technical Cooperation (IRIGC). The minister had admitted that there was a delay in the project and an expert group was being constituted to speed up the process.

While the Indian Navy had reconciled itself to the fact that the delivery of the ship would be delayed from the original deadline of August 2008 by a few years, it had been adamant that the original price contract needs to be honoured.

This meeting is the first indication of a softening of stance on the price issue. However, the Indian delegation has not been authorised to negotiate with Russian officials or sign any kind of an agreement. It has just been deputed for the specific purpose of listening to the Russian argument for escalation. The Indian team, including Vice-Admiral B S Randhawa, Vice-Admiral Dilip Deshpande and a Joint Secretary from the Defence Ministry, will leave for Moscow on Wednesday.


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