Russian President Vladimir Putin signed the deal during his visit to New Delhi on Monday, RIA Novosti reported.
"We have agreed to further strengthen our partnership in the sphere of military cooperation," Putin said after a meeting with Indian Prime Minister Manmohan Singh.
India will buy 42 Sukhoi Su-30 fighter jets and 71 Mil Mi-17 helicopters from Russia.
Putin also said Monday that he wants to see annual trade between Russia and India to double from the current $10 billion in the coming years.
"Our trade turnover has overcome the consequences of global crisis, and in 2012 we expect to reach record numbers, over $10 billion," he said. Our next goal is to reach $20 billion by 2015."