Russia and India agreed to construct a new transport plane, highlighting the strengthening economic and military ties between the two countries.
The agreement, signed during a Kremlin ceremony, is the latest in a string of military deals between the two countries. Last month, the two sides agreed to work together on building a new fighter jet.
"The signing today of a cooperation agreement on the creation of a multipurpose transport aircraft, and earlier (on the creation) of a multipurpose fifth-generation fighter jet opens new prospects for scientific and industrial cooperation in very sensitive areas," President Vladimir Putin said after talks with Indian Prime Minister Manmohan Singh.
India has bought more than US$30 billion (Ђ20 billion) worth of Soviet and Russian arms since 1960, and has ranked alongside China in recent years as a top customer for Russia's weapons industry.
Russia and India also have conducted joint military maneuvers and Russia is courting India to win a contract to supply it with 126 new fighter planes.
Russia's MiG aircraft maker is facing tough competition from U.S., French and Swedish companies, but it hopes to win the bid with its latest MiG-35 plane.
Russia is also building a nuclear power plant at Kudankulam in the Indian state of Tamil Nadu, and in January the two countries agreed that Russia would build four additional nuclear reactors for the plant.
"We look forward to expanding our cooperation with Russia in the peaceful use of nuclear energy," Singh said Monday.
The new transport aircraft is expected to have a capacity of 20 tons (22 short tons) of cargo. Components will be assembled in both countries.
The fighter jet deal that was signed in October was worth US$1.5 billion (Ђ1 billion) and allows India to build 40 Su-30MKI fighter jets under license, upgrading its maneuverability, radar and stealth technology, Russian state-controlled media said.
Putin said Monday that growing ties in the area of new technologies would increase both countries' competitiveness on the world market.
"The talks, as always, took place in a constructive and genuine business atmosphere," Putin said after the nearly two-hour meeting with Singh.
Putin also called for expanding energy ties between two countries. India has been trying to increase investment in the Russian oil industry, especially in new exploration areas off Russia's Pacific Coast.
India's state-run oil company, ONGC Videsh Ltd., has already invested US$1.7 billion (Ђ1.31 billion) in an oil field on Sakhalin Island.
Officials also signed an agreement to change how India repays its Soviet-era debts to Moscow. Russia had been angling for a deal that would allow it to reinvest Indian debt payments in more parts of the Indian economy.
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