India on Tuesday signed its biggest ever defence deal with Russia for the acquisition of Soviet-era 45,000 tonnage aircraft carrier Admiral Gorshkov with its complement of 28 MiG 29-K fighters.

The deal is expected to cost around Rs 7,000-crore.

Defence Minister George Fernandes and his Russian counterpart Sergei Ivanov announced the deal at a press conference in Delhi.

The two leaders, however, denied that negotiations had also covered the leasing out of two Russian Akula-class nuclear submarines.

Though the two leaders were tight-lipped, Russian officials indicated that India might be planning to buy a total of 60 MiG-29 K aircraft in phases at an estimated cost of $1.5 billion dollars to operate from Gorshkov and also for its 32,000 tonnage indigenous new air defence carrier now being built at Cochin Shipyard.

But sources told rediff.com the contract would cover only 12 MIG-29Kand four twin-seater trainer version of MIG-29K.

Ivanov was accompanied by a high level delegation including the Commander-in-Chief of the Russian Navy Admiral of the Fleet Vladimir Ivanovich Kuroedov. During his stay in Delhi, Ivanov also called on Prime Minister Atal Bihari Vajpayee and National Security Adviser Brajesh Mishra.

Among the recent Indian acquisitions are T-90 tanks, Smerch multi-barrel rocket launchers, Tunguska M anti-aircraft defence systems, Su-30 fighters, and frigates. A note from Russian side said the country is leasing India airborne early warning A50 aircraft, and TU-22M3 long-range bombers fitted with cruise missiles.

In a significant move, both countries agreed to take their military-technical cooperation to a 'higher technological level', indicating that the two sides were moving towards joint development and investment sharing in key projects like fifth generation aircraft, on the lines of existing projects like the BrahMos cruise missile.

Ivanov said the Gorshkov deal incorporated lifetime upgrades, technical assistance as well as setting up of infrastructure for the carrier in India. The Russian minister also offered New Delhi more T-90 tanks in case India was interested.

Top defence officials of the two countries signed the deal in the presence of the ministers. This is the second biggest defence deal India has signed with a foreign country after the recent Rs 8000-crore contract to acquire 66 British Aerospace Hawk 115-Y Advance Jet Trainers.

Replying to questions, the Russian minister said negotiations would continue for the 'future contracts' regarding technical assistance as also on creating 'infrastructure' for the Gorshkov and refused to provide any figure for the costs.

Ivanov did not elaborate on future cooperation. "These are highly sensitive matters and in a highly competitive world market (elaborating on it) would prejudice commercial aspects."

He said the Indo-Russian talks, besides dwelling on naval cooperation, also touched sale of equipment and spares to the Indian Army and air force. Russian officials said that they have sent over 350 commercial proposals to India.

The aircraft carrier was handed over to the USSR Navy in 1987 when it used to be called 'Baku'. It has a length of 273 metres, displacement of 45,500 tonnage, with an angular deck of 49 metres, a speed of more than 30 knots and sea-endurance of 30 days.

The ship is armed with Bazalt and Kinzhal missile systems, four anti-submarine torpedo tube units, two long-range guns and provision for a crew of 1,950 men. The deal also includes the sale of six Kamov-31 anti-submarine helicopters.

Ivanov, on his arrival Monday, had said the aircraft carrier would be delivered to India by 2008 in time as the Indian Navy's sole aircraft carrier, INS Viraat, is scheduled to be phased out around that time.

Saying that India and Russia had 'complete meeting of mind' on counter-terrorism and non-proliferation, Ivanov stoutly rejected that leasing of nuclear-capable TU-22s would breach the strategic weapons conventions.

"These are non-strategic aircraft and their range of action is limited to long-range maritime reconnaissance," Ivanov said, as he maintained that other aircraft from the Tupolev family, like TU-160 and TU-95, were based in Arabian Sea during the biggest ever Indo-Russian naval exercise in the Persian Gulf late last year.

Some of the MiG-29 Ks for which India would be the first buyer -- as they are not in service even in the Russian Navy -- might be also shore-based. The Indian MiG-29 order, they said, was expected to include both the standard single-seat model and yet to appear navalised two-seat MiG-29 KUV combat trainer versions, with more steeply stepped tandem cockpits.

The MiG-29s for Indian Navy combined avionics with extensive airframe modifications, moving the wing-fold inboard and folding the tail stabilizers to reduce overall stowage space.

This would allow the refurbished Gorshkov to accommodate full wing of up to 24 MiG-29 Ks as well as six Kamov Ka-28 and 31 helicopters. The MiGs would be capable of flying up to 2,300 kms per hour and would be armed with air-to-ground and air-to-air guided missiles.

Describing the Gorshkov deal as "historic", Fernandes said cooperation in programmes like BrahMos missiles, Talwar and Trishul class frigates, T-90 tanks and frontline SU-30 MKI fighters proved 'a major landmark in Indo-Russian cooperation and reaffirmed our strategic relationship'.

"We held wide-ranging discussions on international relations, bilateral relations and relations with key countries. Our talks were frank, fruitful and productive," Fernandes said, as he indicated that the two countries had expressed readiness to move this relationship to 'new and high qualitative levels'.

Reciprocating, his Russian counterpart said, "World developments today dictate the need to pool in to successfully meet the challenges that we face."

"We hope to move from buyer-seller relations to research and development," he said. He also said the two sides had touched on issues like Afghanistan and Iraq, adding that there were commonality of views.

The Russian minister also said that during negotiations it had been stressed that the two countries should increase the quality and quantity of joint military exercises.

Referring to media reports of technical snags in the T-90 tanks, the Russian minister said the tank, during its short service with the Indian Army, had proven itself in both high humidity and heat wave conditions.

The two sides held two rounds of delegation-level talks during which the Russians pressed India to give its nod for hard currency investments for the development of the fifth-generation aircraft for which Sukhoi group design has been accepted.

The Russian project is facing severe financial crunch as it competes with the US Lockheed-Martin F-35 joint strike aircraft and the European Eurofighter.

India, after China, is Russia's second biggest arms buyer and has bought weapons worth more than $30 billion.