India will buy 347 T-90 battle tanks from Russia and build 1,000 more locally with Russian help, the defence minister said, as the two nations decided to iron out differences that had delayed several arms deals.

India, one of the world's biggest arms buyers and Russia, a long time supplier, also agreed to speed up delivery of an aircraft carrier that has been slated for delivery in 2012, a defence official said.

The announcement came after a meeting between Russian defence minister Anatoly Serdyukov and India's defence minister AK Antony, who said the two countries had also decided to extend a defence cooperation deal by another 10 years.

India is moving closer to the West in a challenge to traditional ally and supplier Russia. European and US firms are bidding for India's $10 billion deal to buy 126 fighter jets, one of the biggest arms contracts in the world.

In 2004, India and Russia had signed a $1.6 billion deal to bring the Admiral Gorshkov to India by 2008. India may now have to pay an extra $1.2 billion for the carrier's refitting costs.

"The Indian side has considered the Russian demand for an escalation in price, the same has been considered and would be placed before the cabinet for consideration," Antony said in a statement on Monday.

India plans to spend $30 billion over the next four years to modernise its largely Soviet-era arms.

The two countries agreed to speed up pending projects, including delivery of Sukhoi-30MKI fighters, battle tanks, stealth frigates and missile destroyers, officials said.

While analysts say Russia was delaying some arms deliveries because it was uneasy about India's growing ties with the US and France to buy more weapons, India says Russia was still their tried and tested friend.

"A major part of our defence inventory is of Russian origin, and continues to remain so even now," Antony said.

The defence deal between the two countries is over $35 billion since they started a partnership in the 1960s, officials said.-Reuters