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Russia in bid to hike cost of Indian defence deals
Rahul Bedi JDW Correspondent
New Delhi
Russia is seeking to make changes to two Indian deals: the purchase of Su-30MKI fighters and the upgrade of the INS Vikramaditya aircraft carrier
A Russian delegation will visit India before mid-June to discuss the issue
India is deadlocked in delicate discussions with Russia over an effort by Moscow to renegotiate a price increase in the USD8.5 billion Su-30MKI multirole fighter aircraft deal. Russian representatives told a delegation of visiting senior Indian officials, led by Defence Secretary Shekhar Dutt, in mid-May of their proposal to double the annual cost from 2.55 per cent to 5 per cent for 138 of the 238 Su-30MKIs that remain to be delivered to the Indian Air Force (IAF).á This would result in an additional cost of around USD3 million-USD4 million for each Su-30MKI aircraft.
The alternative option put forward by Russia isáfor India to switch the fighter aircraft contract to the more stable Euro currency at the prevailing 2.55 per cent annual escalation rate.
Russian officials said this suggested swap was prompted by the declining exchange rate between the US dollar and the Russian rouble as well as domestic inflation, which is hovering at around 10 per cent.
The Indian delegation supported the change in currency but on condition that the annual increase be reduced to 2 per cent. It is believed Russian officials rejected this proposal and another meeting is planned before mid-June.
Indian military sources said it would be "tough [and] arduous" convincing the parliament and government spending watchdogs that it was necessary to renegotiate a "done deal".
Russia is also looking for more funds to modify the INS Vikramaditya aircraft carrier (formerly Admiral Gorshkov), the Indian delegation was told.
Official sources said that even though India is believed to have paid an additional USD113 million for the carrier's refit, initially estimated at around USD657 million, Russia is demanding more to be able to deliver the ship to the Indian Navy on schedule next year.
The need for additional funding to refit the ship is understood to have been caused by funding difficulties at the Sevmashpredpriyatiye shipyard in northern Russia, where the carrier is being retrofitted, and a significant miscalculation of the cost to re-cable the ship.
The length of the carrier's cabling, initially estimated by Russian engineers at around 700 km, has now been revised to 2,400 km.
In another Su-30MKI development, Defence Minister A K Antony told parliament earlier in May that the entire Su-30MKI fleet lacked electronic warfare (EW) systems as these were "not identified" in the initial 1996 procurement contract. The EW system is also not being incorporated in the 140 Su-30MkIs being built by HAL, Antony added.
"The general contract of December 2000 was signed with Russia for the manufacture of Su-30 aircraft by HAL as per the Standard of Preparation (SoP) for direct purchase aircraft contracted by the Ministry of Defence in 1996," Antony stated.
The EW system was not included in the general contract because the system had not been identified, he said, adding that the Su-30MKI aircraft being built by HAL were of the "same SoP as that of aircraft supplied directly by Russia". IAF officials declined to comment on the minister's statement.
Вообще-то это уже вторая статья на эту тему. На прошлой неделе была еще одна:
Russia seeks renegotiation of Indian Su-30MKI deal
Rahul Bedi Correspondent
New Delhi
Russia is seeking to make changes to two Indian deals — the purchase of Su-30MKI fighters and the upgrade of the INS Vikramaditya aircraft carrier
A Russian delegation will visit India before mid-June for discussions
India and Russia have become deadlocked in delicate discussions over an effort by Moscow to renegotiate a price increase in the USD8.5 billion Su-30MKI multirole fighter aircraft deal.
Russian representatives told a delegation of visiting senior Indian officials led by Defence Secretary Shekhar Dutt in mid-May of their proposal to double the annual cost by 2.55 per cent to 5 per cent for 138 of the 238 Su-30MKIs that remain to be delivered to the Indian Air Force (IAF).
This would result in an additional cost of about USD3 million to USD4 million for each aircraft.
The alternative option put forward by Russia was to switch the fighter aircraft contract to the more stable Euro currency at the prevailing 2.55 per cent annual escalation rate.
Russian officials said this suggested swap was prompted by the declining exchange rate between the US dollar and the Russian rouble, as well as domestic inflation, which is hovering at about 10 per cent.
The Indian delegation supported the change in currency on condition that the annual increase is reduced to 2 per cent. It is believed Russian officials rejected this proposal and another meeting is planned before mid-June in New Delhi.
Indian military sources said it would be "tough [and] arduous" convincing the parliament and government spending watchdogs that it was necessary to renegotiate a "done deal".
Russia is also looking for more funds to modify the INS Vikramaditya aircraft carrier (formerly Admiral Gorshkov), the Indian delegation was told.
Official sources said that even though India is believed to have paid an additional USD113 million for the carrier's refit, which was initially estimated at about USD657 million, Russia is demanding more to be able to deliver the ship to the Indian Navy on schedule in 2008.
The need for additional funding to refit the ship is understood to have been caused by funding difficulties at the Sevmashpredpriyatiye shipyard in northern Russia, where the carrier is being retrofitted, and a significant miscalculation of the cost to re-cable the ship.
The length of the carrier's cabling, initially estimated by Russian engineers at around 700 km, has now been revised upwards to 2,400 km.
In another Su-30MKI development, Indian Defence Minister AK Antony told parliament earlier in May that the entire fleet lacked electronic warfare (EW) systems, as these were "not identified" in the initial 1996 procurement contract. The EW system is also not being incorporated in the 140 Su-30MKIs being built by Hindustan Aeronautics Limited (HAL), Antony added.
"The general contract of December 2000 was signed with Russia for the manufacture of Su-30 aircraft by HAL as per the Standard of Preparation [SoP] for direct purchase aircraft contracted by the Ministry of Defence in 1996," Antony stated.
The EW system was not included in the general contract because the system had not been identified, he said, adding that the Su-30MKI aircraft being built by HAL were of the "same SoP as that of aircraft supplied directly by Russia".
IAF officials declined to comment on the minister's statement.
С уважением, ID