Inaugurating the joint meeting organised by the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (Ficci), which was later addressed by the visiting Russian President Vladimir Putin, Mr Sinha said: ``The rupee balances are going to come down over the next few years and we have to find new ways to expand bilateral trade.''

Mr Sinha said while the agreement had functioned very well, it was time to move on. Under the agreement, India pays Russia Rs 3,000 crore every year over a period of time.

Stressing the role of the private sector in forwarding the economic ties between India and Russia, he said with liberalisation the private sector must be allowed to occupy its natural space. ``Tie-ups in the financial sector will be the vehicle for forging closer economic cooperation between the two nations.''

Mr Putin, in his speech, said his government's proposed move to introduce a unified tax system and simplify customs regime will help further strengthen bilateral trade and economic ties. The unified tax structure, which is likely to be in place from January next year, ``will be a step in the direction to promote bilateral trade and investments.''

He strongly defended the ongoing liberalisation policies in Russia and stressed that ``it will go a long way.'' The process of liberalisation initiated by his government is moving at a fast pace.

The Russian president called upon Indian entrepreneurs to make use of the abundant opportunites available in Russia during its transition and assured them of adequate protection to their investment.

His government, in a serious bid to create a favourable atmosphere for Indian investments, has already revamped the power and administrative structures and put in place a common legal system. He agreed that the customs duties in Russia need to be rationalised and announced that his government is in the process of simplifying customs procedures.

Mr Putin said that Russia has witnessed a GDP growth of seven per cent, inflation is ruling around three per cent while currency and gold reserves have grown 1.5 times in the last one year.

He claimed that Russia has achieved both political and economic stability and there has been good harvests this year and the industrial output has gone up. ``Thus, both political and economic conditions provide good opportunity for investment,'' he said.

Mr Putin said the transportation agreement signed between the two countries will lead to the development of a North-South transportation corridor, which could spur trade. He agreed to the suggestion from a participant to set up a joint fund for the development of the civil aviation industry in India and to extend credit to Indian buyers.

On the issue of opening up of financial and insurance sector, he said it will be done in phases and added that the Indian entrepreneurs wanting to participate in the sector can make use of the new regulations being worked out by the Russian central bank.

The Russian leader stressed the need for India's assistance in the development of his country's banking sector, stock markets and also to ensure efficent utilisation of savings. All help would be extended by his country in modernising and upgrading steel plants in India set up with Russian help.

Nor is his government averse to supporting any Russian private steel company's attempt to acquire a stake in the ailing India Iron and Steel Company (IISCO), but ruled out any ``direct intervention.'' Russia will also provide all assistance to India in executing the Kudankulam Nuclear Power Project (Tamil Nadu) of the Nuclear Power Corporation, he said.

Maharashtra Chief Minister Vilasrao Deshmukh said the state had benefitted the most from Indo-Russian economic ties and pointed out that investment possibilities in the field of infrastructure, biotechnology, pharmaceuticals and information technology can be explored between Maharashtra and Russia in the days to come.

CII president Arun Bharat Ram said the confederation had identified pharma, IT, the financial, automotive and aviation sectors as areas of focus for furthering bilateral ties so as to reach a two-way target of $5 billion by 2002 as against $1.57 billion in 1999.

To facilitate trade and industry ties betwen the two countries, the CII would soon open a representative office in Moscow, he added.

FICCI president GP Goenka said India was yet to explore 75 per cent of its hydrocarbon reserves and that Russia's expertise in the oil and natural gas sector as also mining should be sought.

He said IT and micro electronics, hydrocarbons, mining, metallurgy & material sciences and biotechnology were the fields which could give a fillip to the economic ties between the two countries. He referred in this regard to the Indian government's initiatives in opening mining and aviation to the private sectoror.

Mr Putin later visited the Bhabha Atomic Research Centre.