Thaindian News

New Delhi, July 29 (IANS) India and Russia are yet to conclude negotiations on the “substantial increase” in price that Moscow has demanded for the aircraft carrier Admiral Gorshkov, and the criticism expressed over the ship’s viability will be kept in mind before signing the final contract, parliament was informed Wednesday.
“Russia has demanded a substantial increase. The negotiations on this so far have been inconclusive. Before we take a final decision, we will verify everything (said against the deal), including the report of the CAG (Comptroller and Auditor General),” Defence Minister A.K. Antony said during question hour in the Rajya Sabha.

He was responding to a supplementary on audit watchdog CAG’s observation that the “second-hand” carrier will be 60 percent costlier than a new one and there is the risk of further delay in its delivery.

The original deal, signed in 2004, was for India to pay $1.5 billion for the vessel, mothballed since a devastating fire in 1995. Of this, $948 million was to be spent on refitting the 45,000 tonne vessel and the balance on the MiG-29 combat jets and Kamov anti-submarine warfare helicopters that would be deployed on the ship.

Since 2007, however, Russia has steadily been asking for more money, saying the extent of repairs to the vessel had been grossly underestimated. Various reports say Russia is now asking for between $2.2 million and $2.9 million.

Protracted negotiations, even at the level of Antony and his Russian counterpart, have so far failed to resolve the impasse.

Detailing the events in the run up to the signing of the 2004 contract, Antony said the Indian Navy had since 1994 been searching for an aircraft carrier from all available sources.

“After an elaborate search, it was realised that no country was in a position to sell us an aircraft carrier. Russia then offered us the ship as a gift (after paying for its retrofit and the aircraft it will carry).

“The government of the day took a decision and the contract was signed in 2004,” Antony explained.

The CAG thinks differently.

“The cost of acquisition has more than doubled to USD 1.82 billion (for the refit) in four years. At best, Indian Navy would be acquiring, belatedly, a second-hand ship with a limited life span by paying significantly more than what it would have paid for a new ship,” it said in its report released July 24.

“It can be seen that Indian Navy was acquiring a second-hand refitted aircraft carrier that had half the life span left and was 60 percent more expensive that a new one,” the report maintained.

The report also pointed out the carrier would have limited operational capabilities and certain key capabilities which would enable it “to meet potential threats or challenges” had either not been provided for or been postponed to a later date.

“The anti-aircraft missile complex selected to be fitted in the ship failed during the trials and the refurbishment contract was concluded without the missile system…This implies that the ship would not have a CIWS (Close-In Weapon System) till her first refit in India in 2017,” the report pointed out.

The CIWS is a vital shipboard weapon for detecting and destroying incoming anti-ship missiles and enemy aircraft at short range.

The carrier was scheduled to have been delivered in 2008. This has now been pushed back to 2012, with the vessel becoming due for its first refit in India in 2017.