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India-Russia resolve price dispute over aircraft carrier

world Updated: Dec 06, 2009 20:02 IST

India and Russia have finalized 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 Sunday.

"We are close to finalize the agreement (on the aircraft carrier)," an official told IANS 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.

However, officials travelling with the prime minister in Moscow said the two sides have decided no "heal up the festering wound" and would no longer be a "sore" in bilateral relationship between the two countries.

"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 finalized a mutually satisfactory price tag," the 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.