As previously reported by BarentsObserver, Sevmash has already admitted that the aircraft carrier is a loss project for the yard.

In the meeting with Medvedev, Sevmash General Director Nikolai Kalistratov confirmed that “very much work remains with the aircraft carrier” .

At the same time, Mr. Kalistratov criticized the Indians for having raised their requirements from Sevmash. –They wanted a Lada, and now they demand a Mercedes, he told the president. Aircraft carrier blunders: 2009-07-03

The original price has been tripled ($6a7 million to $2 Billion) and there is a sense that it might be increased again. The main reason for the increase in the price is the unrelenting expectations of the Bhrartis who now expect a tip of the line ship–even though they purchased a mothballed dilapated tub.

The Russian are  sick and tired of the Indian demeanor who continue to bargain endlessly. In recent years, India has grown closer to the USA, and many defense deals may be in the offing. Cracks are showing the Indo-Russian alliance and a chagrined Russia is now charging market prices for the ship.

Meanwhile, India has agreed to pay an additional billion dollars to complete the delayed refurbishment of the Russian aircraft carrier Gorshkov. The Russians not only demanded more money, but also admitted that a labor shortage would delay delivery until 2012. An Indian shipyard team will try to get the carrier out of the Russian yards earlier, and will also keep an eye on quality control.

The Russians have also admitted that the project also suffers from shoddy workmanship. The Indians have lots of experience with this sort of thing in Russian weapons, and will try to catch mistakes before the ship gets to India, hopefully in two or three years, rather than four. The Indians will also help with reconstructing the blueprints for the ship, which were apparently lost, and that contributed to the delay as well.

The new deal will cost $2.5 billion. This includes the purchase of the Gorshkov, and Russian shipyards performing repairs, modifications and upgrades. Another $800 milliom is to be spent on aircraft, weapons and equipment. Building a Gorshkov type carrier today would cost about $4 billion, and take several years more. India is building another carrier, from scratch, but that 37,000 ton vessel won’t be ready until 2015.

The Admiral Gorshkov entered service in 1987, but was inactivated in 1996 (too expensive to operate on a post Cold War budget). The Indian deal was made in 2004, and the carrier was to be ready by 2008. But a year ago reports began coming out of Russia that the shipyard doing the work, Sevmash, had seriously miscalculated the cost of the project. The revised costs were more like $1.1 billion for the $700 million refurb. The situation proceeded to get worse, with Sevmash reporting ever increasing costs to refurbish the carrier.

The Indians were not happy, and at first insisted that the Russian government (which owns many of the entities involved) make good on the original deal. India sent its own team of technical experts to Russia, and their report apparently confirmed what the Russians reported, about shipyard officials low-balling the cost of the work needed. This is a common tactic for firms building weapons for their own country. It gets more complicated when you try to pull that sort of thing on a foreign customer. The Russian government will cover some of the overrun cost. The Sevmash managers who negotiated the low bid are being prosecuted.

Once refurbished, the Gorshkov, renamed INS Vikramaditya, should be good for about 30 years of service. That’s because, after the refit, 70 percent of the ships equipment will be new, and the rest refurbished. India Left Naked by James Dunnigan April 22, 2008

The recent admission by the Indian Navy sheds some light on the incompetence and the corruption of the Indian defense procurement department. It appears that the Indian Navy signed on the dotted line to purchase mult-million Dollar Air-Craft Career after doing a summary visual inspection. It also appears that the Indian Navy bought the ship on an “As Is Basis”.

The decision to ink the multi-million dollar deal to purchase decommissioned Russian aircraft carrier Admiral Gorshkov was taken after a mere “visual examination” of the ship in “as is condition”, the Indian Navy has admitted.

The Navy said in a reply dated September 22, 2009, on a Right to Information (RTI) request that it went ahead with the deal based on the “thought” that repairs would make the ship sea-worthy.

But it was only after the “equipment was opened up” later for a “detailed examination of hull structures, systems, cabling, etc” that the Navy found that entire replacements and not repairs were necessary for the carrier.

“As per the contract signed in January 2004, the original package was drawn up based on visual examination in as-is condition wherein it was found that the majority of the equipment, systems could be repaired while the electronic equipment could be renewed,” Vice-Admiral S P S Cheema with the Integrated Headquarters, Ministry of Defence (Navy), wrote in his RTI reply.

Though it cannot afford to, but Delhi wants to play in the big leagues. India will pay $2 billion for an antique aircraft carrier designed for 1980s. It is a shame that Indian navy got a piece of junk made look nice for $2 billion. India agreed to a $1.5 billion package deal signed in January 2004 for Russian aircraft carrier Admiral Gorshkov. It was Pranab Mukherjee, the Indian foreign minister and then defense minister who initiated the deal with the Russians. Now India has shell out as much as $2 billion more to Russia to get aircraft carrier Admiral Gorshkov by end-2012. The final cost is expect to be around $3 Billion. Actually the deal may nver go through. Many analysts believe that the Russians don’t want to sell the Admiral Gorshkov to Delhi.