The Akula II class was to join the Indian Navy as the Chakra next year under an estimated $1-billion lease that was linked with the Gorshkov deal. However, the Chief of General Staff, Nikolai Makarov, has been quoted by a leading Russian daily saying that the submarine’s refit will be paid for by the Russian defence ministry.

“The sum of $650-780 million that Rosoboronexport and the Amur Shipbuilding Plant had negotiated over a long period of time with the Indian Ministry of Defence, will now be found within Russia. Either from the budget allocations for the purchase of new military equipment and weapons or beyond it,” the Rossiiskaya Gazeta has quoted General Makarov as saying.

While India and Russia have never officially acknowledged the deal, India was set to get the Nerpa submarine under a 10-year lease in 2009 to train its personnel on nuclear powered submarines in preparation for its own range of Advanced Technology Vessel subs.

However, the Russian statement, and media reports in recent days that Moscow will rather keep the Gorshkov for itself than giving it to India for a lower price, does not come as a surprise to analysts who believe that it is part of a series of tactics to seal the price renegotiation of the aircraft carrier.

The price renegotiation of the Gorshkov — Russia has asked for $1.2 billion more to complete works on the Kiev class warship — has reached the final stage and is set to be presented before the Cabinet shortly.

Under the original deal struck in 2004, India paid $1.5 billion for complete refurbishing of the carrier and a compliment of MiG 29 fighters. At the same time, it signed a secret 10-year lease agreement for two nuclear attack submarines to train its men.

While the Gorshkov has been hit by a five-year delay and massive price overrun, the nuclear submarines are a year behind time and the latest statement has thrown open the debate whether a price renegotiation will be required for the lease also.