When Russian President Dmitry Medvedev visited the shipyard responsible for converting the aircraft carrier Admiral Gorshkov for the Indian navy at the beginning of last month, he suggested there would be “serious consequences” if Moscow failed to deliver.

Political hyperbole aside, the fall-out from India’s effort to secure a new aircraft carrier could turn out to be far-reaching. New Delhi is one of Russia’s largest clients when it comes to defense equipment, and the carrier deal is threatening to poison this well at a particularly inopportune moment for Moscow.

Western aerospace and defense manufacturers—with the U.S. in the lead—are pushing into the Indian market, not least of all for the prize of that country’s medium multirole fighter competition. Given such pressures, Russia needs to appear as a reliable and competent defense partner for India.

Medvedev, during a visit to the Sevmash shipyard at Severodvinsk, characterized the carrier program as a “very difficult experience.” This is a view shared by India’s comptroller and auditor general, the authority that audits and assists the state and central institutions on accounts and accountability.

The audit body has been critical of the carrier deal, providing opposition parties with ammunition with which to attack the government. One, the Bhartiya Janta Party, accused the government of buying “junk” at an exorbitant price.

India signed up for the program in 2004, with a delivery date of 2008. The new date for the ship—the INS Vikramaditya—is now set for 2012.

The cost was based on the price for converting the through-deck cruiser Gorshkov into a conventional carrier, and for a wing of 12 MiG-29Ks and four MiG-29KUBs, a naval variant of the Fulcrum. The aircraft were priced at $650 million, and the conversion at $974 million.

The MiG-29K development is running relatively smoothly—at least compared to the carrier’s. The first four aircraft are expected to be delivered this year, only 12 months later than anticipated.

As for the ship’s conversion, Russia has repeatedly raised the cost of the program. Since 2007, the price Moscow has quoted has risen to around $2.9 billion, though the customer has not yet agreed to the final figure.

Technical issues seem to be nearly resolved. An Indian navy official told Aviation Week there would be “one more round of discussions to take place in India in August.” The talks will involve the defense ministries from both countries, the Indian navy and Russian support and training organization Rosoboron.