Sunday, July 10 2005 14:54 Hrs (IST) - World Time -

Cherbourg (France): In a significant gesture, France today (July 10, 2005) offered to absorb the increase in costs due to inflation in the much delayed multi-billion deal to make Scorpene submarine in India.

French Defence major Armaris also assured expertise if the Indian Navy wanted to carry out "significant changes" in the design of the submarine to install an Air Independent Propulsion (AIP) system, called the Misma, and to add a new weapon system in the submarine, billed as the world's most silent killer machine.

Terming as "misleading" that inflation could double the price of the Scorpene submarine, Armaris Chairman Peter Legros said, "We are offering revisable and adjustable rates to level off cost escalation caused by delay in finalisation of the deal."

He also indicated that the company was open to making adjustments in the pricing of the deal, estimated to run into seven billion euros.

Revealing that the inflation level in Europe was down to its lowest level, Legros told visiting Indian mediapersons here that the price escalation problem could be sorted out amicably.

India and France completed negotiations for a deal to assemble six 2000-tonne displacement Scorpene submarines at Mumbai's Mazagoan docks under full technology transfer in early 2004.

The deal has been cleared by the Indian Navy and Ministry of Defence and is awaiting nod from the Cabinet Committee on Security.

The delay in the finalisation of the deal, under which a submarine would be assembled each year at Mazagoan dock after the signing of the contract, figured prominently during the meeting of French President Jacques Chirac and Prime Minister Manmohan Singh on the sidelines of the recently held G-8 summit in Scotland, sources said.

The Indian mediapersons were taken round the sprawling Scorpene building facility at France's premier underwater dry dock where two submarines for the Malaysian Navy are under construction.

Engineers building the Scorpene said French experience in installing the world's most advanced acoustics system in the submarine had led to similar systems being developed for a new range of French nuclear submarines.

France is currently decommissioning its old nuclear submarines and building four new ones.

"The new French submarines would have a lot of similarity with Scorpene design," they said.

On claims by rival German HDW company that Scorpene did not have an advanced Air Independent Propulsion system, Armaris Chairman said Scorpenes on offer to India were designed as per the Indian Navy's specifications.

"Armaris is ready to offer its new advanced Mesma AIP system to India which would enable Scorpene to have extended submergence by three to four times," he said.

Mesma has been fully tested and it is scheduled to enter service in late 2005.