Russian President Vladimir Putin is in India for talks aimed at boosting trade and tightening defence links.
The 60-year-old former KGB officer met Manmohan Singh, prime minister of India, on Monday and finalised a deal which will see Russia selling India 71 military helicopters for $1.3 billion and kits to assemble 42 Sukhoi jet fighters for a further $1.6 billion, Kremlin officials said after the meeting.
India is one of Russia's top clients for arms sales.
"I would like to stress that [the] deepening of friendship and cooperation with India is among the top priorities of our foreign policy," Putin wrote in an article for The Hindu, an Indian daily newspaper.
"The strategic nature of partnership between India and Russia is witnessed by the unprecedented level of our military and technical cooperation," Putin wrote, saying "the joint development of advanced armaments rather than just purchasing military products" would be key to future relations.
The venue for the day-long visit - the first to India since Putin was returned to power in May - had to be changed following unrest in India's capital, which saw thousands taking to the streets of New Delhi after a gang-rape caused national outrage.
Following the meeting, Singh told reporters that the two nations also discussed security in the region.
"India and Russia share the objective of a stable, united, democratic and prosperous Afghanistan, free from extremism," he said.
India is now the world's largest arms importer and Russian-made military equipment accounts for 70 percent of Indian arms supplies.
"India is committed to strengthening and enhancing this relationship, both on economic and strategic ties," said Indian Foreign Minister Salman Khurshid.
Deals speculated to be secured during the visit included a combined Russia-India project to design and build the next generation of Sukhoi warplanes, said to Igor Korotchenko, director of the Centre for Analysis of World Arms Trade.
That deal has yet to be formally confirmed, though Indian foreign ministry officials said that Russia Helicopters and India's Elcom Systems Private Ltd would be setting up a joint venture to manufacture helicopters.
According to Indian government figures, bilateral trade has been growing steadily and is expected to reach around $10 billion dollars in 2012, up from $7.5 billion in 2009.
Putin set out a goal of doubling trade in the next three years.
"Our trade turnover has overcome the consequences of global crisis," said the Russian leader. "Our next goal is to
reach $20 billion already by 2015."