New  Delhi: Russia yesterday  (Feb 13, 2007)agreed to use its long-standingdebt to India to finance investments in the country, after both sides decidedto identify the specific projects that would benefit from the arrangement at alater date.

"Both sides have agreed to broad principles of using the debt that India owes to Russia. The funds would now beinvested as Russian equity in projects in India that would be set up in partnershipbetween the entities of both countries," Commerce and Industry MinisterKamal Nath said on the conclusion of first India-Russia Forum on Trade andInvestment.

Earlier, both sides had decided in-principle for investment of the money in Indiabut differences over the projects that could be funded was delaying theagreement. By agreeing to identify the projects later, the deal was finalised.

According to officials, Indiaowes one billion dollars to Russia,including interest, and the funds have been lying with Reserve Bank of India.

Today's deal will provide a big boost to economic relations between the twocountries that have been languishing since the fall of Soviet Union. Russiahas so far invested 94 million dollars in Indiaand with this agreement one billion dollars will be available to Russianentities for investment in India.

Trade between two countries stands at 2.6 billion dollars of which India'sexports are 729 million dollars

. Earlier, Soviet Union used to account for nearly a quarterof India'sforeign trade.