India, Russia may agree Admiral Gorshkov cost by Aug. - paper

NEW DELHI, June 5 (RIA Novosti) - India and Russia could reach a final agreement by the end of July on the cost of overhauling the Admiral Gorshkov aircraft carrier to be delivered to the Indian navy, the Hindu newspaper said on Friday.

The original $1.5 billion 2004 contract between Russia's state-run arms exporter Rosoboronexport and the Indian Navy, which includes the delivery of MiG-29K Fulcrum carrier-based fighters, envisioned that work on the aircraft carrier would be completed in 2008.

However, Russia later claimed it had underestimated the scale and the cost of the modernization, and demanded an additional $1.4 billion, which New Delhi said was "exorbitant."

A joint Indian-Russian working group met last week in Moscow to start preparing a revised agreement on the Admiral Gorshkov (future INS Vikramaditya) by the end of July.

The Hindu said that "although a final price tag is yet to be determined, Indian officials familiar with negotiations said on Thursday that the eventual figure would be closer to the $2.2 billion estimate."

The aircraft carrier is currently docked at the Sevmash shipyard in northern Russia, with over 2,000 workers carrying out repairs.

According to the paper, the Indian delegation led by Defense Secretary Vijay Singh has asked Russia to ensure delivery of the aircraft carrier by December 2012.

The Admiral Gorshkov carrier is to replace India's INS Viraat carrier, which, although currently operational, is now 50 years old.

After modernization, the carrier is expected to be seaworthy for 30 years.