Mumbai: Russia has agreed to use the $1 billion rupee debt that India owes for financing investments in this country. The two countries would identify specific projects that would benefit from the arrangement at a later date, commerce and industry minister Kamal Nath said. "Both sides have agreed on the broad principles of using the debt that India owes to Russia. The funds would now be invested as Russian equity in projects in India that would be set up in partnership between the entities of both countries," the minister told the concluding session of the first India-Russia Forum on Trade and Investment.

Although both sides have already decided in-principle to invest the money in India, differences over the projects that could be funded was delaying its implementation. The deal was finalised by agreeing to identify the projects later.

Today''s deal will provide a big boost to economic relations between the two countries that have been languishing since the fall of the Soviet Union. Russia has so far invested $94 million in India and with this agreement another $1 billion will be available for Russian entities to invest in India.

To give a boost to economic ties, both countries have agreed to work towards a comprehensive economic partnership agreement (CEPA) with a joint study group examining the issue involved. "During the two-day meeting of the forum, both sides also agreed on a protocol to boost bilateral trade and investment and identified sectors for boosting trade."

Trade between two countries currently stands at $2.6 billion of which India''s exports are $729 million dollars. Earlier, Soviet Union used to account for nearly a quarter of India''s foreign trade.