Yeltsin, raising a glass of champagne to the Indian prime minister after talks under the golden domes of the Kremlin, predicted booming links between the two nations.
"Now the task is to forge new political, economic and cultural links and to boost our relations to a level beyond those we had before the Soviet Union broke up," Yeltsin said.
During his four-day visit that started Wednesday, Rao hopes to ensure a steady supply of Russian arms for the Indian military whose equipment is estimated to be 70 percent Russian.
Russia was India's main arms supplier but sales have slumped since the collapse of the Soviet Union in 1991.
Yeltsin and Rao signed 10 bilateral pacts to boost economic, political and trade ties.
There was no breakthrough on the thorny issue of India's foreign debt repayments to Russia, a top Yeltsin adviser said. "There was no agreement on debt," Dmitry Rurikov, Yeltsin's adviser on international affairs, said.
"Of course, this is an important issue. We are interested in debt repayments without damaging India's economy," Rurikov said. "We would like to use all possible means including direct repayments and payments in goods."
In the Soviet era, India's debt to Russia was denominated in rubles convertible to rupees at a special rate based on the 1978 value of the ruble. The ruble has since tumbled in value.
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