Russia supplies 70 per cent of India's military hardware but in recent years New Delhi has looked to other military suppliers, including Israel and the US.
Other deals Putin will seal include a contract to sell India 29 MiG fighter jets and an agreement to install additional nuclear power units in the southern Indian state of Tamil Nadu, where two reactors are being built.
Yury Ushakov, Putin's foreign policy aide, said the new accord would "suit both sides" and help put the dispute over Admiral Gorshkov behind them.
"We have an enormous interest in India," he told reporters ahead of Putin's arrival in New Delhi.
The strong ties between Moscow and New Delhi date back to the 1950s.
But India has in recent years also taken care to balance this friendship by fostering closer relations with the US.
Uday Bhaskar, a New Delhi-based defence and security analyst, told Al Jazeera that Putin's visit was significant in many ways.
"This trip is about consolidating their relationship. There are a number of defence and strategic deals that will be signed and I also think there will be some political issues talked about such as how to deal with Afghanistan and also the rise of China."
Vishnu Prakash, India's foreign ministry spokesman, described Russia as a "valued partner and time-tested friend".
"We have a similar outlook on a whole host of regional and international issues," Prakash said.
Together with Brazil and China, Russia and India make up the so-called BRIC grouping of major developing economies seeking to promote a multipolar world economy not dominated by the US.
But at just over $7.5bn in 2009, trade turnover ramains minuscule and the two countries will aim to increase it to $20bn by 2015.
According to Indian officials, energy is emerging as a new focus of co-operation between oil and gas-rich Russia and energy-starved India, which is always on the lookout for new fuel sources to power its growing economy.