Govt to take final decision on Gorshkov price hike in Oct

The matter would also be discussed during the visit of Russian Defence Minister Anatoly Serdyukov to India on Monday but MoD officials made it clear that a final decision would only be taken by the CCS on the basis of a detailed report by the Indian Navy and issues raised by Russia.

While neither side is commenting on the expected price escalation for refurbishing the warship, Indian officials admit that the aircraft carrier needs more funds to replace vital parts, including two engines and a significant amount of cabling.

In addition, extensive trials planned out for the warship in Russian waters after the refit will also add to the final cost of the deal. Ministry officials say the trials can end up adding over $600 million in fuel and operating costs for the deal.

While it is clear that India will need to cough up more money for the warship, its delivery schedule still remains in doubt. The warship was expected to be delivered by 2008 but the date has now been pushed to 2012.

Russia had said its Sevmash shipyard, where the ship is being refurbished, underestimated the scale of work and costs involved. To add to this, the shipyard is undergoing a severe financial crunch with managers struggling to recruit workers for the ship.

In May, after it became clear that the price will need to be readjusted, India had asked the Russian Government to make an advance payment of $250 million to the shipyard and ensure that work does not stop. The amount would be adjusted with Russia after the final price negotiations. The Sevmash shipyard has already put 300 additional workers on the warship to increase the pace of work and has assured that sea trials will begin in 2011 to pave the way for its induction into the Indian Navy the next year.

Meanwhile, India is going ahead with the procurement of additional MiG 29 K ship-borne fighters from Russia that will be placed onboard the Gorshkov. While 16 MiG 29 K/KUB were ordered as part of the deal signed in 2004, the Defence Ministry has given the go-ahead for the procurement of 29 additional fighters over the next few years to raise additional Naval fighter squadrons.