The Russian Direct Investment Fund (RDIF), the Russian sovereign wealth fund, has entered into an agreement with State Bank of India (SBI) for setting up a $2 billion investment consortium with an aim to promote investment between the two countries.

The RDIF and SBI have agreed to infuse up to $1 billion in the consortium initially. The fund will offer a source of long term finance in India and Russia and also work to promote mutual investment between the two countries.

RDIF CEO Kirill Dmitriev and SBI Chairman Pratip Chaudhuri signed the memorandum of understanding (MoU) that lays down the ground for the foundation of the consortium. The MoU was singed in the presence of Prime Minister Manmohan Singh and Russian President Vladimir Putin.

Dmitriev said, "Basically we are creating this platform that has capital allocated for high-return projects in interesting sectors, with synergy between India and Russia."

"Basically we are creating this platform that has capital allocated for high-return projects in interesting sectors, with synergy between India and Russia," The trade between Russia and India is estimated to be above $10 billion mark but the growth has seen a slowdown in recent times. Mr. Putin has said that he wanted to increase the bilateral trade to $20 billion by 2015.