The cabinet has deferred the decision citing inadequate funds, as another Rs 1500 crore is required to be paid for the 30 planes to close the deal.
There have also been allegations of kickbacks in clearance of the advance payment by the Congress regime. The Gowda government is therefore treading cautiously, officials said.
The advance payment was the first hard currency payment ever made in a major Indo-Russian defence deal.
The April 1996 deal has a clause that the advance payment will be refunded if India decided not to go ahead with the purchase. But strangely, there is no provision of interest payment.
The advance was paid on the understanding that the Russians would not hike the price of the aircraft, engines and spares support (estimated at $20 million for each plane) in the event of a delay in the final decision. The Sukhoi design bureau of Irutsk, Russia, has a heavy backlog of orders from China and the Russian Air Force for the Su-27, a variant of the India-ordered Su-30.
India had wanted a plane custom-made for domestic conditions. It had also sought the right to service and overhaul the planes in the country, besides joint production in a phased manner. The Defence Research & Development Organisation (DRDO), which was a part of the Indian purchase team, had insisted on complete technology transfer for all major components, spares and systems. The Russians agreed to most of the terms, but on the condition that an advance be paid to cement the deal.
The then Congress government of Narasimha Rao, under pressure for not clearing any major defence order in the previous five years, gave in and cleared the advance.
However, within a few days of the advance payment in April 1996, elections were notified in the country, putting an end to further negotiations on the deal.
The Rao government had also come under fire from the opposition for clearing a big defence purchase just before the polls.
Officials said the Russians have been in constant touch with the Indian authorities to get a final clearance.
They have committed substantial resources to fulfil the Indian order of a squadron of planes along with spares, systems, engines and advanced weaponry.
The issue was taken up during the visit to New Delhi last month by Boris N Kuzuk, top defence policy advisor to the Russian President.
He had met Prime Minister H D Deve Gowda and defence minister Mulayam Singh Yadav separately to discuss, among other things, the completion of the Sukhoi deal.
Defence planners have warned that without the long-range Sukhoi fighters, the country will be underpowered
