Russia, India Reach Accord on Debt, Trade, and Defense

RUSSIAN-INDIAN relations got a double boost yesterday as Russian President Boris Yeltsin announced a debt agreement and said the two countries would set up a factory in India to make military spare parts.

Mr. Yeltsin also rejected United States efforts to block the sale of Russian cryogenic rockets. US experts say the rockets could be used for military purposes, but Indian officials say they want to use them to boost a telecommunications satellite into orbit.

After nearly five hours of talks with Prime Minister Prime Minister P. V. Narasimha Rao, Yeltsin announced the two countries had resolved a dispute over how much India owes Russia for military and commercial trade during the Soviet era. But he did not say how much India would pay.

India claims it owes Russia $12 billion, while Russia insists the debt is $15 billion. The dispute stems from the sharp drop in the value of the ruble.

Russians want to restore the arms trade with India to bolster its defense industry. Arms sales were a major part of India's trade with the former Soviet Union; trade has fallen from $5.5 billion in 1990 to less than $3 billion projected for 1993. India at one time bought 80 percent of its military hardware from the Kremlin.

Yeltsin also announced plans to build a factory in India to manufacture spare parts for airplanes, tanks, and other equipment that the former Soviet government had sold to India at bargain rates.

Since the fall of the Soviet Union in 1991, India has been unable to get enough spare parts for its mostly Soviet military arsenal.

In another possible arms deal, Russia is vying with British Aerospace and Dessault of France to sell India 88 military jet trainers, a deal valued at $500 million, according to Indian sources. The planes can also be used as short-range fighter jets.

During the cold war, Moscow cultivated close ties with India in part to acquire leverage against the West, and India sought arms and diplomatic support to counter Pakistan and China.

Yesterday was the second day of Yeltsin's three-day visit to New Delhi, during which Russia is making its first attempt to normalize relations with India.

"We will base our relations on mutual benefit and mutual respect," Yeltsin told reporters at the presidential palace.