India will pay Russia $2.3 billion for work to refit the Admiral Gorshkov aircraft carrier, the IANS agency reported on Thursday.

A Kremlin source said earlier in December that Russia and India had reached an agreement to complete a refit of the ship.

Moscow and New Delhi had been wrangling over the final cost of the project since Russia said it had underestimated the cost of modernization, and asked for an additional $1.2 billion, a sum India called "exorbitant."

Under the original $1.5-billion 2004 contract between Russia's state-controlled arms exporter Rosoboronexport and the Indian Navy, which includes delivery of MiG-29K Fulcrum carrier-based fighters, work on the aircraft carrier was to be completed in 2008.

After long-running delays and disputes, India offered in February 2008 to raise the refit costs for the aircraft carrier, docked at the Sevmash shipyard in northern Russia for the past 12 years, by up to $600 million.

Russia said it was not satisfied with the proposed amount, and the issue of the additional funding had remained unresolved until now.

The Admiral Gorshkov is a modified Kiev-class aircraft carrier, originally named Baku.

The ship was laid down in 1978 at the Nikolayev South shipyard in Ukraine, launched in 1982, and commissioned with the Soviet Navy in 1987.

It was renamed after the collapse of the Soviet Union in 1991.

In 1994, following a boiler room explosion, the Admiral Gorshkov sat in dock for a year for repairs. After a brief return to service in 1995, it was finally withdrawn from service in 1996 and put up for sale.

The ship has displacement capacity of 45,000 tons. It has maximum speed of 32 knots and an endurance of 13,500 nautical miles (25,000 km) at a cruising speed of 18 knots.

MOSCOW, November 17 (RIA Novosti)