Russia, India boost defence ties but no nuclear deal

Russia's President Vladimir Putin (R) gestures as he meets India's Prime Minister Manmohan Singh in Moscow, November 12, 2007.

MOSCOW (Reuters) - Russia and India agreed on Monday to boost defence ties by jointly developing a new military transport aircraft but they were unable to sign a major nuclear deal because of international restrictions against New Delhi.

Russian President Vladimir Putin and Indian Prime Minister Manmohan Singh agreed to settle years of wrangling over $1 billion of debts owed to Moscow since Soviet times and use them to develop the transport aircraft.

Singh said both sides were working on a deal that will allow Russia to build four more reactors at the Kudankulam nuclear power plant in Tamil Nadu. But no agreement was signed.

"We paid special attention to cooperation in the sphere of nuclear cooperation, to the sphere of military-technical cooperation," Putin told reporters.

"Defence cooperation is one of the pillars of our strategic partnership," Singh said. "We share similar world views on most of the regional and global issues."

Russia is competing with the United States for influence in India, a Cold War ally of Moscow which the Kremlin sees as a growing partner in Asia.

But India, which wants to buy billions of dollars of weapons as it rearms, has been unhappy with holdups on major Russian arms contracts, including a 3-year delay to a $1.5 billion aircraft carrier modernisation.

Putin brushed aside any talk of a chill in relations, saying he hoped Singh would feel the warmth of Russia's welcome despite the freezing Moscow winter. Singh said talks were superb.

India is one of two top buyers of Russian arms. Together with China, it accounts for most of Russia arms sales, which Moscow says will hit a record $7 billion this year.

RUPEES, REACTORS

Russia's Kommersant newspaper, quoting a Russian aircraft industry executive, said the debt would be used to finance construction of the MTA/Ilyushin-214 multi-purpose military transport aircraft.

Singh thanked Putin for Russia's support of India's nuclear programme. But no deal was signed on the four new reactors at the Kudankulam plant because of restrictions imposed by the 45-nation Nuclear Suppliers Group (NSG) on India.

Those restrictions are unlikely to be lifted until a deal between India and the United States on civilian nuclear cooperation is ratified. Singh's communist allies oppose the U.S. deal, threatening to withdraw support for his coalition.

Russia is building two 1,000 megawatt reactors at Kudankulam as part of a deal signed in 1988. Russia agreed in January that it intended to build four more reactors at the site.

"An intergovernmental agreement to that end is work in progress," Singh said. "We look forward to expanding cooperation in the sphere of nuclear energy in the future."

When asked about the agreement to build four more reactors, which Russian experts say are worth up to $2 billion each, the chief of Russia's nuclear energy agency, Sergei Kiriyenko, said the agreement was ready to be signed.

"The text is ready, the text is agreed -- it is a technical thing. Work is going on," Kiriyenko told Reuters. "We have no outstanding questions."