Russia [Images] has proposed a price escalation of a staggering $1.2 billion for re-equipping aircraft carrier Admiral Gorshkov and technical evaluation and negotiations in this regard are underway, the government said on Wednesday.

Replying to questions in Rajya Sabha, Defence Minister A K Antony said the Russian side has indicated revision in time and cost for repairing the aircraft carrier due to 'growth of work'.

"The price escalation proposed by the Russian side is $1,202 million. The process of examination of the scope and necessity for additional work projected by the Russian side has been initiated," he said.

Under a contract worth $1.5 billion signed between Russia and India in 2003, Moscow [Images] was to deliver the carrier along with its compliment of MiG-29K fighters in August 2007.

But just months short of the scheduled delivery, Moscow stunned New Delhi by asking for an increase in cost to almost double, saying the warship needed a lot of additional work and would have to undergo almost a year-long sea trial in Russian waters.

Replying to supplementaries, Minister of State for Defence M M Pallam Raju said a technical evaluation committee is examining the Russian proposal and the government will take a decision after getting its report.

Gorshkov, according to new schedule submitted by Moscow, will now be ready for delivery earliest by 2011.