India Thursday sealed a $3 billion deal with Russia for leasing of anuclear-powered attack submarine for the Indian Navy for a period of 10years, military sources said, PTI has reported.

The two countries signed an inter-governmental agreement capping months ofnegotiations on price and various other aspects of the deal.

Under the pact, Russia will have to deliver the Akula class submarine, tobe known as Chakra III, to the Indian Navy by 2025.It will be the thirdRussian submarine to be leased to the Indian Navy.

A spokesperson in the Defence Ministry refused to comment when asked aboutthe deal. India has been significantly bolstering its naval prowess in thebackdrop of China’s attempts to expand its influence in the Indian Oceanregion.India Navy has taken two more submarines from Russia on lease.

The first Russian nuclear-powered submarine — christened INS Chakra — wastaken in 1988 under a three year lease. A second INS Chakra was taken onlease in 2012 for a period of 10 years.The lease of Chakra II will expirein 2022 and India is looking at extending the lease, sources said.

The deal for the Chakra III came days after Indo-Russian joint productionfacility to manufacture AK-203 assault rifles for the Indian Army wasinaugurated by Prime Minister Narendra Modi in Amethi in Uttar Pradesh.

In October, India signed a multi-billion dollar deal with Russia to procurea batch of S-400 air defence missile system.