The Interfax news agency says Mr. Ivanov told reporters on October 22 that he had discussed military cooperation with India, but reports on the lease are false. On October 21, Interfax quoted sources in Russia’s defence industry as saying India would lease an Akula-class nuclear-powered submarine. The report said the deal was signed earlier this year and could earn Russia tens of millions of dollars per year.

A high-ranking official from the Russian military-industrial complex quoted by the agency said “Moscow and New Delhi have signed a contract according to which India’s navy will lease a Project 971 nuclear-powered submarine for 10 years.” The official said that the contract was signed at the beginning of 2004. The submarine to be leased is being constructed at the Amur shipbuilding facility, in the Far East city of Komsomolsk-on-Amur. “It is 85-percent ready right now,” the source said.

The submarine should be finished by 2007. An Indian crew was reportedly then to arrive in Russia to train on the submarine. This submarine belongs to Russia’s most advanced Akula-II class and is comparable to the U.S. Sea Wolf and modernised Los Angeles-class submarines. It costs $1.7 billion, MosNews reported.

In 1990s, India and Russia had agreed on a package to boost Indian Navy’s blue water capability, which included the simultaneous acquisition of Admiral Gorshkov aircraft carrier, lease of two Akula class nuclear submarines and four Tu-22M3 (Nato name Backfire) strategic bombers.

Last January, Russian Defense Minister Sergei Ivanov announced that Russia had reached a preliminary agreement to sell India an aircraft carrier along with 28 MiG-29K fighter jets in a deal worth approximately $1.5 billion, paving the way for progress on other components of the package.

In 1988 Russia leased to India a nuclear submarine less sophisticated than Akula-II.