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Admiral Gorshkov deal : India agrees to pay more |
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The Government of India has agreed to renegotiate the $1.2 billion Admiral Gorshkov aircraft carrier deal with Russia despite strong reservations expressed by the Indian Navy. Putting an end to the controversy over Moscow demanding $1.5 billion more for the aircraft carrier, sources say, the Government has agreed to a substantial hike in the range of 50 to 60 per cent.
The decision on the new price tag will be taken by the Cabinet Committee on Security (CCS) after the final negotiations between the two countries in March. Though Defence Security Vijay Singh refrained from disclosing the amount, it is learnt that the escalation could vary from $500 million to $700 million. Singh told media persons in New Delhi that “there will be a substantial increase in the price of the ship.” He had last week visited Sevmarsh Dockyard in Russia to inspect the pace of progress and discuss the issue with his counterparts.
The cost of the ship as per the original contract of 2004 was $1.2 billion, including $970 million for its refitments and the remaining for acquiring a squadron of MiG-29 K fighter jets.
Incidentally, there was no clause for renegotiation which made the deal being classified as “fixed price contract. The ship, now undergoing major refurbishment in Russia as per the Indian specifications, was scheduled to join the Indian Navy in 2008. But now it will be inducted in early 2012 after undergoing extensive sea trials in Russia and India. Singh said a Russian delegation would come to New Delhi within the next few days, after which an Indian delegation will go to Moscow to rework the deal. The entire process of arriving at an agreed hike was likely to end in March. The renegotiated agreement would then be put up before the CCS and the Cabinet for the final go-ahead, he said. The Defence Secretary had to rush to Moscow for a dialogue in the wake of the Russians asking for an additional $1.2 billion in late November last year. Flustered by this demand, the Navy Chief, Admiral Sureesh Mehta, in December last had opposed any renegotiation and said the original contract had a fixed price clause. This demand by Russia and the outburst by the Navy Chief saw Prime Minister Manmohan Singh raising the issue with President Vladimir Putin and the two sides agreed to hold extensive discussions before arriving at any decision.
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