July 2, 2009 / 12:33 PM / 11 years ago

Medvedev raps Russia shipmaker over late India deal

* Medvedev lambasts shipbuilder for late delivery to India

* Sevmash cites higher costs, technology problems

By Denis Dyomkin

SEVERODVINSK, Russia, July 2 (Reuters) - President Dmitry Medvedev on Thursday lashed out at Russian shipbuilder Sevmash for delays on a landmark contract with India, traditionally a close trading partner.

Arms exports, which exceeded $8 billion last year, are a key source of revenue for Russia. India and China account for the bulk of Russia’s defence industry sales.

In a $1.6 billion deal signed in 2004, Russia was to modernise the Admiral Gorshkov at Sevmash, in the northern port of Severodvinsk, and deliver the aircraft carrier by 2008.

After delays from the Russian side, the delivery was pushed back to 2012 and its price nearly doubled to $2.8 billion. The contract has become a painful issue in India-Russia relations.

“Now we all have to make excuses to one another,” Medvedev told Sevmash general director Nikolai Kalistratov during their meeting in Severodvinsk on the White Sea.

“You have to make excuses to me, I have to make excuses to the Indian partners,” a visibly irritated Medvedev added.

The modernisation of Admiral Gorshkov, was expected to lead on to other lucrative contracts, including tanks, aircraft and warships.

The ship, already renamed INS Vikramaditya, was first launched in 1982 and was decommissioned in 1996. Smaller than U.S. carriers and powered by steam engines rather than nuclear reactors, it originally carried helicopters and vertical take-off and landing aircraft.

Russian engineers have had to lengthen the runway and build up a proper springboard to allow conventional warplanes to reach take-off speed.

“We have failed to assess correctly the scale and the complexity of works,” Sevmash’s Kalistratov told Medvedev. “We in Russia are doing this for the first time.”

He said the ship would be handed over to India in late 2012. “We can’t make it earlier than that,” he said.

“Let’s consider this the first and most difficult experience,” Medvedev said.

“You need to complete (the ship) and hand it over to partners. Otherwise we will only see bad consequences.” (Writing by Oleg Shchedrov; Editing by Louise Ireland)

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