MOSCOW, Oct 21: Russia will lease to India a nuclear-powered submarine capable of firing nuclear and conventional missiles, Russian news agencies reported on Thursday.

"Moscow and New Delhi have signed a contract under which the Indian navy will get a multi-purpose submarine Project 971 on a 10-year lease," Interfax news agency quoted an unnamed senior Russian military industry source as saying.

The official said the contract was signed earlier this year, but gave no further details. Interfax said the submarine will be ready by 2007.

Last month Russian media reported that Amur Shipyards in Russia's far eastern city of Komsomolsk-na-Amure had resumed construction of two Project 971 submarines stalled for several years because of lack of cash.

Itar-Tass news agency said the submarine, which belongs to Russia's most advanced Akula-II class and is comparable to the US Sea Wolf and modernized Los Angeles-class submarines, costs $1.7 billion. Interfax quoted experts as saying the price of the lease could be "tens of millions of dollars".

Project 971 submarines can be equipped with nearly 30 cruise missiles capable of delivering nuclear or conventional warheads as far as 3,000km.

But according to Russian media reports the submarine leased to India will be armed with nuclear-capable missiles of shorter range not exceeding several hundred kilometres.

India has been developing nuclear weapons and missiles since it carried out nuclear explosions in May 1998 and declared it a N-weapons state. -Reuters