The S-400 surface-to-air missile system is capable of tracking and taking down aircraft hundreds of miles away, and India believes it needs it to defend the country against not only China but also Pakistan.
The bonhomie between the two leaders was very much in evidence as Modi welcomed the Russian leader with a hug before the two leaders went into a restricted meeting followed by delegation-level talks at the majestic Hyderabad House.
Besides the S-400 deal, India and Russian Federation are also expected to sign a number of crucial energy deals.
He will also interact with a group of talented children and address an India-Russia business meet.
India had already given indications that it will go ahead with the deal notwithstanding the U.S. sanctions.
India has also developed closer defense ties to the U.S. in recent years with joint military drills and defense sales.
India has signaled it will ask Washington for a special waiver from sanctions, though a US official last week said there is no guarantee it would do so.
The deal was signed on the sidelines of the summit between Putin and Prime minister Narendra Modi, Kremlin spokesman Dmitry Peskov told reporters. America's threat of sanctions, however, did impact the progress of negotiations between India and Russian Federation.
The eight agreements that were signed on Friday spanned diverse areas ranging from space and nuclear cooperation to railways and agriculture.
India has requested that the USA grant it a waiver for the deal from sanctions prescribed by the Countering America's Adversaries Through Sanctions Act, a US law passed in August 2017 that is meant to punish Russian Federation for its annexation of Crimea and alleged interference in the 2016 US elections.
Addressing the businesses, Putin said the economic cooperation between the countries is growing at a healthy rate.
With the U.S. administration breathing down India's neck with sanctions under CAATSA and no presidential waiver in sight, India is still going ahead with multilateral-billion dollar deals with Russia emphasising the importance of India-Russia strategic partnership.
Last year, Russian oil major Rosneft purchased Indian refiner Essar Oil - the biggest foreign acquisition ever in India - in a $12.9bn deal.
"It is also important for India to keep friendly relations with Russians so that they don't completely move into the Chinese camp", said Manoj Joshi from New Delhi based Observer Research Foundation think-tank.