India, Russia agree arms pact likely worth $5 bln

An Indian soldier stands guard near a truck mounted with Brahmos cruise missiles during a rehearsal for the Republic Day parade in New Delhi in this January 20, 2006 file photo.

NEW DELHI (Reuters) - India and Russia agreed two military pacts on Thursday, including a 10-year deal on weapons, aircraft and maintenance contracts potentially worth at least $5 billion, Indian defence officials said.

India's Defence Minister A.K. Antony and his Russian counterpart Anatoly Serdyukov agreed the deals in Moscow.

"All defence deals, all contracts, will come under the 10- year agreement," Defence Ministry Spokesman Sitanshu Kar said in New Delhi. Defence officials told Reuters that the pact had business potential worth at least $5 billion.

The 10-year deal, to be signed when Prime Minister Manmohan Singh visits Russia this year, would include a $1 billion deal for 80 Russian Mi-17 helicopters and contracts for fitting Brahmos missiles onto Russian-made Sukhoi fighter planes.

They are also building a modern supersonic fighter aircraft invisible to radars like the U.S. F-22 Raptor stealth fighter, P.K. Barbora, a top Indian Air Force official told Reuters.

The second pact covers after-sales product support for defence equipment of Russian origin.

India's growing ties with the United States, underscored by a civilian nuclear deal, has put Russia at unease, as New Delhi seeks to reach out to other countries to modernise its military inventory of mostly ageing Russian-made arms and fighter jets.

New Delhi also complains of delays in supply of Russian defence equipment, including a refitted aircraft carrier, resulting in huge cost overrun and affecting military planning.

The 10-year deal could now help iron out differences in the relations between two former Cold War allies, analysts say.

"We are overcoming problems and getting along," Barbora said.

New Delhi plans to spend $30 billion over the next five years to buy modern weapons systems and attack planes.

"The agreement will certainly help as Russia needs a market and India needs a strategic reassurance to sort out relations that were going sour," retired Major General Ashok Mehta said.

Experts say India also wants to use the renewed focus on Russia as a counter-weight to China, while a strong presence in South Asia could help Moscow keep an eye on Beijing.

India fears China is trying to encircle it as they jostle for resources and global influence. The two sides have faced off at several multilateral forums this year over their long festering border dispute that led to a brief but bloody war in 1962.

"China is a greater anxiety for Russia in the long run and politically it is desirable for India to strengthen relations with Russia," said Uday Bhaskar, a strategic analyst.

(Editing by Krittivas Mukherjee and Jeremy Laurence)