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India-Russia resolve price dispute over aircraft carrier

India and Russia have finalised a price "satisfactory" to both sides for the refitting and delivery of the Admiral Gorshkov aircraft carrier, thus ending a prolonged standoff over the key defence deal, say official sources

world Updated: Dec 06, 2009 18:39 IST

India and Russia have finalised a price "satisfactory" to both sides for the refitting and delivery of the Admiral Gorshkov aircraft carrier, thus ending a prolonged standoff over the key defence deal, official sources said on Sunday.

"We are close to finalising the agreement (on the aircraft carrier)," said an official in New Delhi.

The comments come as Prime Minister Manmohan Singh arrived in Moscow on a three-day official visit during which the two sides are expected to sign a framework civil nuclear cooperation agreement and three defence pacts.

"The festering wound (over the price issue of aircraft carrier) has been healed up. It will no longer be a sore in the India-Russia relations. The two countries have finalised a mutually satisfactory price tag," an official privy to the development, said.

He said it was unlikely that the deal will be signed during Manmohan Singh's three-day trip to Moscow but "will be inked soon in the next few months".

Indian and Russian defence officials have been negotiating the price for the purchase of the refurbished $2.2-billion aircraft carrier for over a decade.

Moscow is now asking on $2.9 billion for the aircraft carrier, nearly thrice the price that was originally agreed between the two sides in 2004. But New Delhi wanted the price to be scaled back to $2.1 billion.

The official did not disclose what that "satisfactory price" was but said it is "between what the two countries where negotiating over".

Delays in refitting the Admiral Gorshkov aircraft carrier and huge cost overruns have been a particular concern with India. It had also put at unease the otherwise time-tested relationship between the former cold war allies.

A senior official of the Prime Minister's Office, accompanying Manmohan Singh, said India considers Russia as the "most important partner in several areas like defence, space, civil nuclear, and oil".

"Defence cooperation with Russia is the most important and it exists on its own merits," the official said.