New Delhi. India has cleared an installment of US$ 122 million to Russia to ensure that the modification work on aircraft carrier Gorshkov, aka Vikramaditya, continues till a settlement on the final price is achieved.

The payment was sanctioned earlier this month by the government following demands by Rosoboronexport, the sole Russian agency designated for importing or exporting defence equipment.

India had paid around $ 600 million initially after an agreement between the two countries in 2004, according to which the old aircraft carrier was gifted as free but India was to pay $ 974 million to modify and upgrade it in accordance with Indian Navy's specifications.

In 2007 however, the Russians said they had made a mistake in their calculations to repair and modify Gorshkov, and demanded another $ 1.2 billion. Recently, they have added still another $ 700 million saying that modifications, and then sea trials, would be more expensive than as considered by them earlier.

The total demand by the Russians now touches $ 2,9 billion, instead of $ 974 million, or, approximately one billion as originally contracted.

The delivery of the aircraft carrier has also been pushed from 2008 to 2012-13, although repair work on it is continuing without break at the Sevmash shipyard in northern Russia on its Arctic coast.

The Russian government had extended $ 250 million to the shipyard in 2008, and now the installment of $ 122 million being paid by India is also to ensure that there is no break in the repair work, sources told India Strategic.

Indian naval officials have been stationed at Sevmash for the past several years to monitor the day-to-day activity and to ensure that the repair and modifications are in line with the Naval Staff Qualitative Requirements (NSQRs), the dispute over the additional monetary demands notwithstanding.

India has naturally been reluctant to meet the post-contract Russian demands, and even the Comptroller General of India (CGI) has described the deal as a mess. But the Navy needs Gorshkov as early as possible as its only existing aircraft carrier, Viraat, is on life extension and undergoing a refit to serve for another few years.

It takes nearly 8 to 10 years to acquire an aircraft carrier. Procedures within the Indian bureaucratic system require two to three years, and then a company which is ordered to build it, should take another 5 to 8 years.

Although the Indian Navy is already building one of its two aircraft carriers in design consultancy with Italy's Fincantieri, it has no choice but to go in for Gorshkov in line with its sanctioned three-carrier planning. Ideally though, a country the size of India with 7500 km of coastline should have at least 5 aircraft carriers.

A Russian defence delegation was in New Delhi in July but it refused to negotiate lower than its demand for $ 2.9 billion.

Discussions though will continue.

The government's Cabinet Committee on Security (CCS) is reported to have asked the Ministry of Defence to continue the negotiations but has not acceded to the two revised Russian demands.

It may be noted that the Gorshkov deal also involves a related $ 740 million contract for 16 Mig 29K aircraft. That deal is going smoothly and the first four of these aircraft are likely to arrive at INS Hansa, the Indian Navy training facility in Goa, by year-end.

Ten pilots, initially trained by the US Navy for carrier landing at its Naval Air Station, Pensacola training facility, are now in Russia training on the Mig 29Ks.

Four of these Mig 29Ks are twin-seaters for training and the remaining 12 for routine operational flying. The Navy will continue to operate the aircraft from its ground stations as all of them should be in India before the arrival of Gorshkov.