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India, Russia secure agreement on Adm. Gorshkov refit news
05 June 2009

New Delhi: India and Russia may have secured an agreement over the problematic Admiral Gorshkov (INS Vikramaditya) aircraft carrier and other defence deals. It is likely that a new agreement, which enhances the quantum of payment to be made for the refurbished 44,750 tonne carrier, may be put up for cabinet approval by the end of July.

It is also being given to understand that India may have made an additional payment of $102 million to Russia to enable the Sevmash shipyard tide over financial difficulties it is currently faced with. With this instalment, India has paid a total of $602 million for the aircraft carrier.

The carrier had been purchased under a $1.5 billion deal in 2004 that priced the refit programme at $974 million, with the balance intended for the purchase of 16 MiG-29K fighters and other items.

 The MiG-29K is a navalised version of the standard MiG-29, designed for operations from aircraft carriers.

The latest agreement has come about after last week's visit to Moscow by Indian defence secretary Vijay Singh to conduct a high level review of all defence acquisition-related programmes with Russia.

The Russians have been demanding for long that the agreed upon price of $1.5 billion be enhanced by another $2.9 billion. With precious years frittered away in a stalemate over the issue, India, may have finally conceded ground and agreed to pay an additional $2.2 billion for the refit of the Vikramaditya/Gorshkov.

The Russians have been claiming that the refit programme is as good as constructing a new aircraft carrier and that modern day costs of building such a carrier would easily touch $3 billion and beyond. They have also claimed that initial estimates made for the refit programme were hopelessly undervalued and could not be enforced.

Re-christened INS Vikramaditya, the carrier is undergoing its refit at the Sevmash shipyard in north Russia, which was close to bankruptcy until very recently. A bridge loan by the Russian government, recently announced by premier Vladimir Putin, has helped the shipyard survive closure.

Putin made it a point to mention that the Vikramaditya-refit programme must not be allowed to be affected.  

Media reports in Russia, as of the last few days, have been quoting defence officials as saying that the shipyard would actually lose a certain amount of money on the refit programme, but may learn to live with it. This could be a pointer to the fact that both sides may have arrived at a firm agreement.

The Russians are talking about a delivery date sometime in 2012, after extensive sea trials lasting a year. The Indian side may not be interested in such prolonged sea trials and may push for an earlier commissioning date.

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India, Russia secure agreement on Adm. Gorshkov refit