India and Russia on Tuesday signed a $500-million deal (Rs 3,571 crore) for the construction of two Indian Navy warships in Goa, PTI reported. State-run defence firm Goa Shipyard Limited signed the agreement with Russia’s Rosoboronexport under a government-to-government framework for defence cooperation.

Russia will provide design, technology and some materials to Goa Shipyard Limited for the construction of the warships.

Goa Shipyard Limited Chairman and Managing Director Shekhar Mital told PTI that the construction would begin in 2020. One ship will be ready for induction in 2026 and the other the following year, he added.

While the deal’s upfront value is $500 million, the warships will eventually cost India a lot more than that, an unidentified government official told the Hindustan Times. “The $500 million is for the foreign content in the vessels, including material, design and specialist assistance,” he said. “The frigates will cost more factoring in the indigenous content. That cost is being worked out.”

The two countries had reportedly signed an agreement worth $950 million (Rs 6,787 crore) last month to import two similar warships from Russia. The ships are being built at the Yantar Shipyard in Kaliningrad and are expected to be delivered to the Indian Navy by 2023, according to the Hindustan Times.