Moscow raises price of defence deals with India
* Price hike likely to delay delivery of an aircraft carrier
* Indian air force to participate in multinational war games in the US
NEW DELHI: Indias newfound bonhomie with the United States has not gone well with its old friend Russia. Moscow is conveying its displeasure by hiking the price of already delayed defence deals with India. It has not only increased the annual escalation cost of weapon system from 2.55 percent to 5 percent, it is also demanding an additional $1.2 billion to deliver the aircraft carrier Admiral Gorshkov.
Observers here say the annual escalation costs would hit Indian defence industry badly. They say it would mean a substantial amount for Moscow, on the other hand, given that an estimated $15 billion worth of defence contracts are in the pipeline. Defence Minister AK Antony, during his visit to Moscow last month, had raised the issue of Gorshkov with his Russian counterpart Anatoly Serdyukov.
Both sides have formed two committees, one comprising officials of the two defence ministries and the other comprising officers of the two navies, to resolve issues. The Russians are believed to have raised the price-hike issue at the first meeting of the defence ministries committee.
Delay in delivery: The aircraft carrier would originally have cost $974 million and was due to be delivered in late 2007 or early 2008. This was then delayed to 2010-11. With the latest development, the delivery is likely to be delayed even further.
An Indian team had visited Moscow [earlier this month] for preliminary negotiations. These discussions will now be continued on an urgent basis when a Russian team arrives here, an Indian official said.
After protracted negotiations, India signed a deal with Russia on January 20, 2004 to buy the Gorshkov, along with 12 single-seat MiG-29 fighters and four twin-seat MiG-29 trainers. Of the contracted amount, approximately $974 million was to be spent on upgrading and re-fitting the aircraft carrier and $526 million on the MiG-29 jets and six Kamov Ka-31 attack and reconnaissance anti-submarine helicopters. India has already paid $458 million for this aircraft.
The delay in refurbishing the carrier has been attributed to two developments at the Russian shipyard where this is being undertaken.
The first was the realisation that the work involved in refurbishment had been grossly underestimated and much more would be required before the ship was made seaworthy.
The second was that the shipyard had transferred the bulk of the workforce engaged on the carrier to a new nuclear-powered submarine it had begun constructing.
The Gorshkov, earlier called the Baku, was the last of four Soviet carriers built at the height of the Cold War and became operational in 1986. However, the ships career was cut short when a devastating fire crippled the vessel in 1994. Although repaired, Gorshkov never saw operational service in the Russian Navy and was finally mothballed in 1996.
Multinational war games: AK Antony said on Monday the Indian Air Force would for the first time take part in multinational aerial war games in the United States.
The approval came despite stiff opposition from communist parties to Indias participation in the annual event, codenamed Red Flag. iftikhar gilani/agencies
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