By IANS
New Delhi : Russia’s demand for more money for the military hardware that India has contracted for is expected to feature prominently during National Security Adviser M.K. Narayanan’s two-day visit to Moscow from Monday.
Security related issues are also likely to be discussed during Narayanan’s meetings with Russian Defence Minister Anatoly Serdyukov and his counterpart, acting secretary of the National Security Council Valentin Sobolev.
Russia’s demand for a price hike in two big-ticket deals for the aircraft carrier Admiral Gorshkov and for the Sukhoi Su-30MKI combat jets “is proving to be a hard nut to crack”, as one defence ministry official put it.
“Eventually, it might have to be sorted out at the highest levels of government,” the official added, speaking on condition of anonymity.
Narayanan’s visit is the third high-level engagement on the price issue between the two countries in recent months and comes ahead of Indian Defence Minister A.K. Antony’s visit to Moscow in October for the annual meeting of the inter-governmental commission on military cooperation.
This issue, in fact, has emerged as a major irritant as officials of the two countries prepare for a summit meeting between Indian Prime Minister Manmohan Singh and Russian President Vladimir Putin.
Citing a weakening dollar and a strengthening rouble, Russia is reported to have asked for an additional $113 million for refurbishing the Gorshkov, which India has purchased for $1.5 billion. The contract doesn’t contain a price escalation clause.
Due to the lack of funds, work on the carrier has stopped at Russia’s Sevmash shipyard and this has pushed back the delivery of the vessel from 2008 to 2012.
However, there are also reports that another reason for the delay is that a major portion of the workforce at the yard has been diverted to a new nuclear submarine that is being built there.
Earlier this month, Sevmash director general Vladimir Pastukhov had put in his papers with Russian officials saying this was “due to slippages in (Gorshkov’s) repair and modernisation schedule”.
At the time of signing of the deal in 2004, Pastukhov had expressed doubts whether the overhaul costs could be met at the price negotiated by India, reports in the Russian media said.
In the case of the Su-30 combat jets, Russia is believed to have asked for a 5 percent increase in the cost of an additional 40 planes that India wants to purchase, as well as for the 138 that are to be manufactured here under license.
India is agreeable to only a 2.5 percent hike.
The price hikes were discussed when an Indian delegation led by the then defence secretary, Shekhar Dutt, visited Moscow in May. A Russian team was in New Delhi earlier this month to continue the negotiations.