Tuesday, November 3, 2009

Gorshkov price talks may extend beyond Indian PM's visit to Russia

No end seems to be in sight in the protracted price negotiation for Admiral Gorshkov aircraft carrier, which is likely to extend beyond prime minister Manmohan Singh's visit to Moscow next month, increasing uncertainty over its timely delivery in 2012.

"The negotiations with the Russians for the Gorshkov warship is continuing. I do not think the talks are likely to end before the prime minister's visit to Moscow next month," a defence ministry official said here today.

"During Singh's visit to Moscow in December, only two defence agreements would be extend military and technical cooperation by another 10 years to 2020, and for assured after-sales maintenance and spare parts supply of Russian defence equipment used by the Indian Armed Forces," the official said.

When asked if the new price for the 45,000-tonne Gorshkov, for which the Russians are demanding an additional $2.9 billion, could be clinched, he replied in the negative, noting that the talks may not conclude before Singh's visit.

"The talks for a new price could go into next year," he added. The Kiev-class warship was originally scheduled for delivery in 2008.

The Indian side has held a series of talks at various levels on the escalating costs and delivery delays with the Russians, including during defence minister Antony's visit to Moscow last month, and is keen on bringing down the additional cost to about $2.2 billion. India plans to have the Gorshkov -- bought in 2004 for $974 million along with 16 MiG-29K fighter jets for $526 million and rechristened INS Vikramaditya -- by 2012 before the Navy's lone aircraft carrier INS Viraat is decommissioned from service.

It is also building an Indigenous Aircraft Carrier (IAC) at its Cochin Shipyard in Kerala and the first in the series of three IACs is likely to be delivered by 2015.

But the Russians pushing for a price hike since 2007 citing escalating cost of refitting the warship at their Sevmash shipyard and additional cabling work may derail the Navy's plans.

In its latest report, the CAG has pulled up the defence ministry for the "300 per cent" increase in the cost of the "second hand" aircraft carrier to $3.9 billion whereas a brand new aircraft carrier was available at about $4 billion to $5 billion.

However, the Navy's argument in favour of Gorshkov has been the unwillingness of other countries building aircraft carriers to sell the platform to India.


india should pay the extra money to other country will offer such a platform at such low prices

It was an open ended deal and the final cost depends on what type of goodies Indians want on this ship. Prices for commodity and systems have seen a sharp rise all over thgeworld during the last few yeras. It will not surprizing if Indians end up pay an axcess of $6B for this ship. It may still be a worth the price. Aircraft carriers are more of a status symbol than of any tangible benefit. If Indians want to have a blue water navy, that price tag may not be bad. Every one knows that having a pet elephant is not very cheap but real question is if some one really want to have an elephant in his backyard.

why indian navy needs an aircraft carrier,its not a global power even many rich nations dont have it

even $6-billion is less for gorshkov. instead of blaming russians india should set it's own house on order.

On 3rd-Nov-2009 india spend 7-billion dollars in just one day to buy 200-tonnes of gold from the international monetory fund.

if india can spend 7-billion dollars in just one day surely it can spend 3.5 billion dollars over a period of 3-years

India sold 67 tons gold to IMF during 1990's as an SOS measure to handle its dwindling balance of payments. Now they bought 200 tons back. Is it a good move? May be. But think of the price of gold then in 1992 and now. Buying gold at such a high price is only good for Indians.

Comparing gold with the ship is not logical. The ship depreciates quickly, has high running cost, and brings no significant benefits. A poor nation like India should have invested that billions of dollars for the betterment of poverty-stricken masses.

^^Indian economy has come a long way since 1990. Its a saga I don't need to repeat. The $10+ billion annual capital budget(for new weapons) has to be spent somewhere. A few billions for an AC is indeed peanuts for IN. They have bigger things lined up beyond Gorshkov.

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