The simmering controversy over the cost escalation insisted upon by Russia for retrofitting the 44,750-tonne Kiev class aircraft carrier Admiral Gorshkov has spurred the Indian Navy to look beyond Russia to meet its futuristic requirements. Russia’s demand for an additional US$ 2-billion over and above the US$1.5-billion package deal signed in 2004 for retrofitting this aircraft carrier originally known as Baku has upset the Indian defence establishment. Of the US$ 1.5 billion originally contracted amount, US$974 million was for augmenting the decommissioned Russian aircraft carrier and the rest earmarked for 16 M-29K fighter aircraft to operate from the carrier which would be inducted into the Indian Navy as INS Vikramaditya.

Russia on its part has offered to make available additional M-29K fighters for use onboard India’s homegrown aircraft carrier now under construction at the Cochin Shipyard at Kochi in Kerala. A section of Indian defence analysts are of the view  that Russia, which is the largest supplier of defence hardware to India, is well on the way to palming off  M-29K fighters which are no longer the state of the art aircraft for operations from an aircraft carrier.

As part of the 2004 deal, India had already paid US$ 500 million to Russia to help Sevmash shipyard, the focal point for the retrofitting and modernization of Gorshkov. As commentators point out, Gorshkov repair project had saved the shipyard from running into bankruptcy. In 2007, citing reasons such as under estimation of the work involved in retrofitting and volatility in the global currency market, Russia came out with an additional cost projection of US$ 1.2 billion. Much to the surprise of New Delhi, this was jacked up to US$ 2 billion in February this year.

Negotiations are now on between India and Russia to arrive at a consensus on the increased price tag. If everything goes as planned, the fresh deal providing for the increased cost of Gorshkov retrofitting, is likely to be sealed by August this year. In fact, the ongoing row over Gorshkov retrofitting is the latest instance of “disharmony” in the Indo-Russian defence deal. For many years now, the Indian defence establishment has been forced to put up with the Russian penchant for jacking up costs midway through the execution of the project and then delaying the delivery. Moreover, poor performance of the many Russian supplied weapons and defence hardware and difficulties in getting spares have not gone down well with the end users in India.

In this context, in December 2007, Indian Navy Chief Sureesh Mehta had stated that it was high time that New Delhi stopped putting all its eggs in one basket, thereby implying that India should stop depending totally on Russia and instead expand its defence ties with more reliable partners.

The sole aircraft carrier with the Indian navy, INS Viraat is being retrofitted to extend its lifespan till 2015. As per the original contract, Russia was required to deliver retrofitted Gorshkov in 2009. However, the controversy over pricing has pushed the delivery schedule to 2012.  Prior to delivery the retrofitted carrier will be subjected to extensive sea trials.

Interestingly, for its 37,500 metric ton air defence ship, Cochin Shipyard has sought the assistance of Fincantieri of Italy. Under a twin contract worth Euro 22-million, this Italian ship building outfit will be responsible for the integration and commission of the propulsion system and providing assistance during the sea trials of this homegrown aircraft carrier, expected to enter service before the middle of the next decade.

Equally worrisome to India is the mishap that rattled the Russian built nuclear submarine Akula-II in November 2008. This submarine which has been earmarked for leasing by the Indian Navy while on a trial in the Sea of Japan, met with an accident resulting in the death of 20 sailors and injury to 17 others.  A faulty fire fighting system has been blamed for this accident .The 12,000 tonne Akula-II would have been delivered to the Indian navy on a ten years lease in June 2009.  Though the lease agreement for Akula-II class submarine has not been made public, it is speculated that the submarine will be delivered as part of the package along with Admiral Gorshkov. The Akula-II mishap, say defence experts, should serve as a wake up call for the Indian navy. Indian Navy is worried over the considerable boost given by the Chinese Navy to its nuclear submarine fleet. India’s home grown nuclear submarine development project has now covered much ground.

Against such a scenario, the Indian Navy is now keen to re-forge its ties with Germany which is a contender for a submarine fleet expansion plan unveiled by India. German outfit HDW which was blacklisted by India following allegation of bribery after it supplied four class 209 type submarines. Following this episode, Indian Navy went in for French Scorpene diesel electric submarines. With the case against HDW getting closed in 2005, the firm is back in the race for the contract for the supply of submarines along with companies from Russia and France.  Indian Navy is also exploring the possibility of sourcing gyros, submarine torpedoes and software defined radio from Germany.