India hopes to sign the deal for the Admiral Gorshkov aircraft carrier during Prime Minister Atal Bihari Vajpayee's visit to Russia in November.
The two sides may agree to a price of about $675 million for refurbishing the aircraft carrier. India had earlier been ready to pay around $600 million while the Russians were talking of around $800 million.
Defence Minister George Fernandes on Tuesday said both sides are now working overtime to finalise the deal in time for Vajpayee's Russia visit.
Also see: Ramananda Sengupta on India's strategic allies
A breakthrough in the Gorshkov deal, long under negotiation even as the massive aircraft carrier lies idle at a Russian harbour, will pave the way for India acquiring potent tools for developing its nuclear abilities.
Also see: Does India need to invest Rs 9,000 crore on a Russian aircraft carrier?
Russia has tied India's request for the lease of two nuclear submarines and TU-22 long-range nuclear bombers to the Gorshkov deal. "Once the Gorshkov deal is cleared, everything else will fall in line," a senior naval officer said.
Fernandes said on Tuesday that the Gorshkov's 'price negotiation took a lot of time,' but was 'on the verge of completion.'
India will also acquire at least 30 MiG-29Ks, the naval version of the MiG-29 fighters, with the aircraft carrier.
Sources said the pressing need for Russian nuclear submarines to train naval officers and men and the requirements of India's ongoing Advanced Technology Vessel project forced the government to expedite the Gorshkov deal.
The Russian nuclear submarines will provide India with the much needed technology demonstrator as the country goes about building its own nuclear armaments. A generation of naval officers and men will be able to train on them.
"Whatever concessions we make for the Gorshkov deal can be made good in future negotiations," a defence ministry official said.
The prime minister will begin his visit to Russia on November 11. Russian Defence Minister Sergei Ivanov is expected in India shortly to discuss modalities for the visit.
Vajpayee visited Russia this summer to celebrate the 300th anniversary of St Petersburg.
President Vladmir Putin visited India last December for the annual summit between the two countries. This year, it is the Indian prime minister's turn to travel to Moscow.
Rediff Archives:
Vajpayee's Tri-nation Visit | Putin's India Visit 2002
More from rediff