The deal, signed on Tuesday, is the largest military contract between India and its main arms supplier since the 1991 breakup of the Soviet Union.
The deal includes overhauling the carrier Admiral Gorshkov and supplying 28 MiG-29 maritime jets and other components to India.
“World developments today insistently and persistently dictate the need to have a pooling of international efforts… so that we can… successfully confront challenges we face,” said Russian Defence Minister Sergei Ivanov after the deal was inked in New Delhi.
“It is within the framework of a strategic programme that we have signed an important serious landmark contract which is package deal for the shipment of… the heavy duty Admiral Gorshkov and a new batch of deck-based MiG 29 aircraft,” Ivanov added.
Indian Defence Minister George Fernandes said relations with Russia were on “excellent tracks.”
“This visit will go down as a very significant milestone in our bilateral relationship,” Fernandes said.
The delivery of the 44,570-tonne Gorshkov is set for 2008.
The deal was signed after protracted talks between the Russian and Indian defence ministers.
But the deal is likely to be viewed with suspicion by Pakistan –India’s nuclear neighbour.
Analysts say Pakistan may seek to match Indian military prowess by seeking new arms, throwing the region into another arms race.