Leadership: Russians Again Hustle Indians For More Money


August 11, 2009: For reasons that remain unclear, the Russian shipyard that is building three Talwar class frigates for the Indian Navy, is demanding nine percent more money to complete the ships. The price of these ships has risen from about $365 million each to nearly $400 million. Compare this to over $533 million each for the planned stealth versions also being built. The Russians are blaming currency fluctuations for the boost, but the Indians know better.

The builder, the Yantar shipyard in Kaliningrad, is the largest in Russia. Since it was established in 1945, Yantar has built some 650 ships, 23 percent of them military. Like most other Russian defense industries, Yantar fell on hard times after the Cold War ended in 1991. But Yantar scrambled and hung on. In the first quarter of the year, Yantar made a profit of $35 million, versus a loss of $40 million for the first quarter of 2008.

Yantar's fundamental problems are twofold. First, the yard did not keep up with modern technology during the Cold War (like most Russian industries) and has long been scrapping together funds needed to rebuild and become competitive in an international market. The second problem is poor management. Yantar can't get ships done on time and with the kind of quality customers require. Offering low prices only goes so far to make up for the other problems. Now, Russian industry as a whole is getting up to international standards, and there is not as much skilled labor available for low wages. Yantar is losing its price advantage.

Another Russian yard is currently negotiating a $1.6 billion increase in the cost of refurbishing a used Russian aircraft carrier India is buying. Thus the Indians are in no mood to have previously negotiated prices, on another class of ships, unilaterally jacked up.

The 4,000 ton P-17 project Talwar's are 386 feet long, carry 24 anti-aircraft and eight anti-ship missiles, four torpedo tubes, as well as a 100mm gun, short range anti-missile guns, a helicopter, and anti-submarine weapons (depth charges and missiles). The ship has a very complete set of electronics gear, except for the troublesome Indian sonar. There is a crew of 180. All of the Talwars are being equipped with eight BrahMos anti-ship missile each. The Talwar is a modified version of the Russian Krivak IV design.

The P-17A "stealth" frigates are the same size as the Talwars, but the superstructure would be changed so as to reduce the radar signature (making the ship less likely to show up on enemy radars). Improved weapons and electronics are installed as well.


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