Russia's [Images] heavy aircraft carrier Admiral Gorshkov could be delivered to the Russian Navy instead of going to India after modernisation, leading Russian business daily Kommersant reported as a high-level Indian defence team was scheduled to be in Moscow [Images] to resolve the deadlock over price escalation and delivery schedule.

A source in the Russian military-industrial complex told Russian information agency RBC that Russia and India are now reaching an agreement on changing the conditions of the 2004 contract for the carrier's overhaul, the paper said.

Under the contract, India received the hull without charge on condition that it would be modernised at Sevmash shipyard for the Indian Navy.

The value of the contract was $1.5 billion. Russia has reportedly demanded $1.2 billion extra for retrofitting the carrier.

According to unofficial information, negotiations are currently underway to increase the value of the contract by about $1 billion.

"That question is being worked out. If a compromise is not found with India, the aircraft carrier will probably be purchased by the Russian Navy," the source said.

The Admiral Gorshkov was built in 1978 as the Baku. Its name was changed in 1991. It is expected to be equipped with Russian-Indian Brahmos missiles and Russian or Israeli air defence.

The carrier, scheduled to be delivered to India in August, is not likely to be delivered before 2012 as Russia has reportedly conveyed that modernisation and sea trials will take at least four more years.