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NEW DELHI, Thursday (AFP) India and Russia Wednesday signed a historic accord to strengthen the strategic partnership between the two military allies and said bilateral defence cooperation had moved into a new dimension.

Russian President Vladimir Putin and Indian Prime Minister Atal Behari Vajpayee inked the strategic pact and said the defence relationship between the two countries was no longer confined to a mere "buyer-seller" relationship.

"The military and technology cooperation between India and Russia is acquiring a new quality and it is not confined only to the supply of modern Russian equipment and has now expanded to joint research and development of (military) projects," Putin said.

"The agreement on strategic partnership has been signed and this is a political document which forms a solid basis for our international relationship," the Russian president added.

Vajpayee endorsed Putin's statement at a press conference held in the Indian capital after the two leaders signed a string of agreements to expand ties between the two long-time Cold War allies.

"India-Russia defence cooperation has now transcended a buyer-seller relationship into the sphere of joint cooperation and (military) research," Vajpayee said.

Last year the two sides for the first time launched the joint development of the surface-launched Brahmos cruise missile although Moscow is keen to sell a naval version of the system along with artillery and other equipment to India.

Russia remains the largest supplier of military hardware to India, accounting for more than 70 percent of army, airforce and navy equipment.

Moscow has offered its ageing aircraft 'Admiral Gorshkov' carrier free of charge, on condition that India spends almost a billion dollars for its refit. It is also likely to lease a nuclear-powered submarine to India but the two sides did not spell out details of any military deals.

But experts said the details of possible military deals would be formalised by the commitments made by the landmark accord on strengthening strategic ties.

"Classified military deals and future joint research and development projects would be part of the agreement, which basically aims to speed up military cooperation which has somewhat slackened in recent years," said General V.N. Sharma, a former Indian army chief.

India and Russia signed 17 accords during Putin's last trip here in October 2000 which led to the supply of 300 T-90 battle tanks, SU-30 jets and the leasing of four TU-Backfire bombers to India.

However, a third of Indo-Russian defence deals, estimated to total 10 billion dollars, signed between 1999 and 2000 did not materialise because of issues of price or other contentious matters.

Earlier India and Russia Wednesday pledged to enhance economic relations and outlined ways to increase trade, which leaders of both countries agreed was essential to reinforce their close political ties.

A joint declaration on strengthening and enhancing economic, scientific and technological cooperation was signed by Indian Prime Minister Atal Behari Vajpayee and visiting Russian President Vladimir Putin after talks in New Delhi.

Both countries considered it "vitally important to expand economic relations... (because) along with the political and strategic dimensions, effective cooperation in the economic and allied fields is at the core of the Indo-Russian partnership," the joint statement said.

"Particular attention will be devoted to the issue of energy security, which is considered an increasingly important component of bilateral relations," the declaration said, adding long-term cooperation would be extended to the Caspian Sea area as well.

Access of funds for business, improving transport and infrastructure, customs overhauls and easing existing visa regimes for corporates were some of the steps agreed by the two sides to crank up two-way trade.

"It is true that our trade relations have not matched with the level of our political relations... the situation is not satisfactory," Vajpayee told reporters after signing the agreement.

In their joint statement, the two governments pledged to "jointly explore the possibilities of regional trade and economic cooperation with other countries, in a manner that is in harmony with their respective national interests."

Exploiting skilled manpower to create knowledge-based industries would also be prioritised, the statement said.

The two sides also signed an agreement to increase cooperation in telecommunications.

Addressing Indian business leaders earlier, Putin suggested part of India's debt -- currently about 100 billion rupees (two billion dollars) -- to Russia could be converted into setting up Indo-Russia joint ventures to enhance bilateral trade.

"Debt repayment to Russia can be adjusted against joint ventures by businessmen of both sides," Putin told Indian industrialists.

He added that "good results" could be achieved by investing part of Indian debt into joint ventures in India. He did not elaborate.

The Russian president, who is on a three-day visit here, also urged Indian industrialists to invest in his country, particularly in the energy and fuel sectors.

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