24/12/2015 8:02 PM IST | Updated 29/08/2016 9:02 PM IST

Modi's Russia Visit: Reliance Defence Signs $6 Million Pact With Russian Arms Firm

Mikhail Svetlov via Getty Images
MOSCOW, RUSSIA - DECEMBER 24: (RUSSIA OUT) Russian President Vladimir Putin meets Indian Prime Minister Narendra Modi in Grand Kremlin Palace, on December 24, 2015 in Moscow, Russia. Narendra Modi is on a two-day state visit to Russia. (Photo by Mikhail Svetlov/Getty Images)

NEW DELHI--Reliance Defence said on Thursday it had signed a manufacturing and maintenance deal potentially worth $6 billion with Russia's Almaz-Antey, the maker of an air defence system that sources said the Indian military was poised to buy.

The partnership between the Indian firm controlled by billionaire Anil Ambani and the Russian firm was announced as Prime Minister Narendra Modi began a trip to Moscow aimed at strengthening defence ties.

Earlier this week, Indian defence ministry sources said the government had cleared the purchase of five S-400 air defence systems that are estimated to cost about $4.5 billion in a bid to modernise the country's defences against airborne attacks.

"The two sides identified the air defence missile systems.... radars and automated control systems as areas of partnership.... as well as offset policies of the Indian Ministry of Defence," Reliance said in a statement.

Under the offsets policy, global defence contractors are required to invest a percentage of the value of any deal in India to help it build a defence industrial base and reduce imports for a military that has emerged as the world's biggest buyer of arms in recent years.

India is forecast to spend $250 billion over the next decade to upgrade its military and Modi's government wants a greater role for Indian state and defence firms.

Reliance is forging close ties with Russia to jumpstart its ambitions to develop a defence business from scratch. It said it had also

discussed joint implementation of modernisation, repair and overhaul of Almaz-Antey systems already in service in India.

The company also plans to bid for contracts for local manufacture of helicopters, submarines and ships. Earlier this month, Ambani's Reliance Infrastructure took sole management control of Pipavav Defence and Offshore Engineering Co which has built patrol vessels for the Indian navy.

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