Updated on Thursday, July 02, 2009, 21:54 IST

Moscow, July 02: Describing the delay in upgradation of 'Admiral Gorshkov' aircraft carrier for Indian Navy as the "sole" irritant in bilateral ties, Russian President Dmitry Medvedev on Thursday ordered the shipbuilders to speedily complete the work or else it will have "serious consequences."

"In fact the 'Gorshkov' project has become the sole problem in Russian-Indian relations," Medvedev said during a visit to the Sevmash shipyard in the White Sea town of Severodvinsk.

The Russian President also blasted the management, bureaucrats and Ministers involved in the Gorshkov project.

He agreed that it was Russia's first project which was "very difficult," but said that the Russian side has taken certain obligations in the course of negotiations on the Gorshkov deal with the Indian partners.

Prior to the Soviet collapse, aircraft carriers used to be built in Ukraine.

Responding to Sevmash General Director's argument about the whopping cost escalation due to additional work in the course of modernisation, an irritated Medvedev said in his televised remarks: "Why did you sign (Gorshkov deal)? As a result all of us have to give explanations, you to me and me before the Indian colleagues."

"Complete the work and deliver the ship, otherwise it would have serious consequences," Medvedev cautioned. Russia, which was to deliver the upgraded aircraft carrier in August 2007 to the Indian Navy for induction as INS Vikramaditya, however, sought extra funds for the completion of its refit.

Under the revised schedule INS Vikramaditya is expected to join the Indian Navy in 2012 and India has agreed to increase the financing of the project.

Under the USD 1.5 billion package deal signed in 2004, Russia was to upgrade the vessel for USD 974 million.

Later citing the cost escalation due to additional work required and depreciation of dollar value, Moscow demanded extra USD 2.2 billion to complete the refit of the carrier.

Bureau Report