Russia will build four nuclear power reactors in India under a draft deal signed by their two leaders in the Indian capital, Delhi.
It came on the first day of President Vladimir Putin's visit to India. On Friday he will be the guest of honour at Republic Day celebrations.
Indian Prime Minister Manmohan Singh said energy was at the core of Indian-Russian relations.
Russia and India have had historically close links since Soviet times.
On the eve of Mr Putin's visit, the two countries signed two deals on the production and joint development of aircraft and fighter plane engines.
Series of agreements
"Energy security is the most important of the emerging dimensions of our strategic partnership," Mr Singh said as he and Mr Putin signed a memorandum of understanding on the new nuclear reactors.
"Russia's position as a global leader on energy issues is widely recognised."
He also thanked Russia for its support "in lifting international restrictions on nuclear co-operation and assisting India in the expansion of our nuclear energy programme".
The Indian ministry of external affairs press said the four new reactors would be built at Kudankulam, in southern India.
It says the two countries have also signed a series of agreements on scientific, space, aviation and economic cooperation, including giving India access to Russia's satellite navigation system, Glonass.
Russia is already helping India build two nuclear reactors to meet its growing energy needs.
Reacting to China's satellite-destroying weapons test earlier in the week, the two leaders called for a "weapons free outer space".
"The fundamental position of the Russian Federation is that outer space should be absolutely weapons free," Mr Putin told a joint press conference in Delhi.
New Challenges
Mr Singh said he shared that position. "Our position is similar in that we are not in favour of the weaponisation of outer space."
Mr Putin arrived in Delhi on Thursday morning and in a departure from protocol, Prime Minister Manmohan Singh personally was at the airport to receive him.
The two countries have close ties, with India remaining a top buyer of Russian weaponry.
However, the relationship faces new challenges, including competition from the West and the growing economic and military might of China
Signing new co-operation agreements with his Indian counterpart on Wednesday, Russia's Defence Minister, Sergei Ivanov, said a close and trusting relationship with India remained a top priority.
Russia is currently bidding to supply more than 120 fighter planes to Delhi. Moscow faces stiff competition from Western manufacturers, leading a top Russian official to warn of "consequences" should India choose a Western manufacturer.
Russia and India are also rapidly deepening co-operation in the energy sector.
Strategic triangle
Russia has identified India as a new market for its civilian nuclear technology.
For its part, India has declared an interest in securing a stake in future Russian oil and gas field developments.
Future plans aside, businessmen from both countries say urgent action is needed to tackle insurmountable bureaucracy.
The BBC's Russian affairs analyst Steven Eke says when weapons are left out of the equation, trade between Russia and India has actually fallen to its lowest level for more than two decades.
Nonetheless, many Russian diplomats see a special place for India, our analyst says.
They have repeatedly raised the idea of a strategic triangle, uniting Russia, India and China, in an axis opposed to the global dominance of the United States.
It has been stymied by realities on the ground, including the fact that Russia and India are both wary of China's status as an emerging economic and military super-power, our analyst adds.
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