By Olesya Dmitracova
New Delhi - Russian President Vladimir Putin sealed a deal on Thursday to construct nuclear power plants in India, as Moscow moved closer to its long-term Asian partner through lucrative energy and arms agreements.
Putin met Indian Prime Minister Manmohan Singh on Thursday and will be the guest of honour at the official celebrations of India's main national holiday Republic Day on Friday - a reflection of the historically close ties between the two countries.
"Energy security is the most important of the emerging dimensions of our strategic partnership. Russia's position as a global leader on energy issues is widely recognised," Singh said at the signing ceremony.
Two Russian reactors are already under construction in India, where rapid economic growth is driving a demand for additional supplies of energy.
Some of the reactors will be at the Kudankulan nuclear power station in the southern state of Tamil Nadu and others at additional sites, an Indian government official said.
The two countries are also exploring Indian investment in the Sakhalin-3 oil and gas exploration blocks in the Pacific. Indian Oil Minister Murli Deora said on Wednesday New Delhi would ask Russia for a stake in the project during Putin's visit.
Russia, however, faces competition from the United States for the lucrative Indian nuclear power and arms markets.
In December, US President George Bush signed legislation effectively ending a US ban on civilian nuclear trade with the country. In 2005, Washington and New Delhi struck a framework agreement to boost ties in the military sector.
But for now India is the second-biggest buyer of Russian weapons after China. Up to 80 percent of weapons and hardware now in use by New Delhi has been supplied by Moscow, say experts.
Earlier in the week, Russian Defence Minister Sergei Ivanov said Russia would pitch its MiG-35 combat jet in an Indian tender for 126 fighter aircraft.
He added Russia was ready to start negotiations about India's participation in developing a fifth generation fighter due to make its first flight no later than 2009.
India and Russia on Wednesday signed a cooperation agreement for future development and manufacture of multipurpose transport aircraft.
India's Defence Minister A. K. Antony said plans to buy at least 300 Russian T-90 tanks, as well as fighters and military helicopters, were also discussed.
After the Cold War alliance between Moscow and New Delhi collapsed together with the Soviet Union, Russia has maintained a "strategic partnership" with India, supporting its Asian ally's quest for a bigger international role.
"New Delhi is bending over backwards to ensure good ties with Russia," Brahma Chellany, an analyst with the New Delhi-based Centre for Policy Research," told Reuters.
India has observer status in the Shanghai Cooperation Organisation, a regional group uniting Russia, China and four ex-Soviet Central Asian republics.
The Kremlin has also promised to back India's ambitions to become a permanent UN Security Council member if a decision is made to expand the current five-member group which includes the United States, Russia, France, Britain and China.
However, close political ties have so far failed to ignite a trade boom. Annual turnover stands at around $2-billion, which the two sides aim to boost to $10-billion by 2010.
"This is a problem," Chellany said. "Russia and India need to rebuild the trade relationship to maintain a strategic relationship."