Russia and India agreed on Tuesday a long-awaited contract to jointly develop fifth generation fighter aircraft and signed a deal to expand capacity at a nuclear power plant.
The defence and nuclear deals were signed during a two-day visit to India by Russian President Dmitry Medvedev, who was expected to lobby hard for the former Cold War ally to stay loyal to Russian-made jets and reactors, rather than those offered by the West.
A statement said the two countries would work on a design project for the fighters and had agreed to build the third and fourth generating units for a nuclear power plant in India's southern state of Tamil Nadu.
Russia has been India's close economic and political partner since Soviet days, and monopolised India's defence market for decades, but New Delhi wants to reduce its reliance on one country to reflect its growing clout on the world stage. Leaders from Britain, the United States, France and China -- along with Russia, the permanent members of the United Nations Security Council -- have all visited India in the last six months, securing contracts worth a total of around $50 billion.
Medvedev, accompanied by a large delegation of business leaders, was holding talks with Prime Minister Manmohan Singh and ruling Congress party chief Sonia Gandhi on Tuesday in New Delhi, then visit the Taj Mahal in Agra and Mumbai on Wednesday.
"It is well known that we want to diversify our basket of suppliers for our strategic areas. We will always have close ties with Russia but they are no longer the only game in town," said a senior Indian government official, who declined to be named.
Russia sees India as a counterweight to China and a potential ally in Afghanistan. India's growing ties with the United States, underscored by a landmark civil nuclear deal, has made Russia ill at ease. New Delhi is likely to seek unequivocal backing from Russia for its ambition to secure a permanent seat on an enlarged UN Security Council, following statements of support from Paris and Washington in recent months.
Medvedev had been expected to secure a contract on jointly developing 250-300 fifth generation fighter aircraft over 10 years. The contract amount was unknown, but unofficially said to be around $35 billion.
Tuesday's statement said the two sides had also signed a deal for Russia to supply missiles to the Indian army. No details were given on the size of the deal.
Russia is also keen to continue supplying nuclear technology and expertise to energy-hungry India as it plans to add 63,000 MW of nuclear power by 2032 to support its economic growth.
"Energy is one area where Russia will be the most important partner for India both in terms of conventional and non conventional energy.... Russians are one of our main suppliers of nuclear power plants," said Lalit Mansingh, former Indian foreign secretary.
Behind the rhetoric of expanding ties with its fellow BRIC economy -- the term used to group emerging powers Brazil, Russia, India and China -- bilateral trade is eclipsed by Russia's booming economic ties with the European Union and China.
The Kremlin said trade with India will total $10 billion this year, while official statistics show Russia's trade with the European Union stood at $246 billion in the first 10 months of 2010, and trade with China was $47.5 billion in the same period.
India and Russia hope to boost bilateral trade to $20 billion within five years.