India has signed a deal with France to purchase 36 Rafale fighter jets, Indian Prime Minister Narendra Modi said.

The announcement about the inter-governmental agreement followed Modi's talks with French President Francois Hollande in Delhi.

Modi said the two countries would work to sort out financial issues on the deal.

Hollande is in India for three days, and will be the chief guest at the country's Republic Day celebrations.

"We have completed an inter-governmental agreement for the purchase of 36 Rafales, with the exception of the financial aspects," Mr Modi said after meeting Hollande.

India is looking to modernise its ageing Soviet-era military and the deal is the fruition of years of negotiation, with India intent on buying 126 jets in total for an estimated cost of $12bn (£8.2bn).

Correspondents say this is one of the world's biggest defence deals.

Modi announced the purchase of 36 Rafale jets from France last April.

The two sides signed 13 agreements on Monday, including those on space cooperation, science and technology and the renovation of railway stations in India.

The Reuters news agency quoted Hollande as saying that the two sides also hoped to conclude agreement within a year on a French nuclear company building six nuclear reactors for India.

The two leaders also discussed ways to increase security and intelligence cooperation.

"France and India are two great democracies... therefore we are prime targets for terrorists who cannot abide liberty, democracy or culture. We must therefore cooperate more on security," Hollande said on Sunday.

On Monday, the two leaders will lay a foundation stone at the new headquarters of the International Solar Alliance, a 121-nation group launched by Modi at the Paris climate summit in November to expand affordable solar power.

Hollande landed in the northern city of Chandigarh on Sunday where Modi joined him at official engagements and lauded France's decision to invest $1bn every year in India in various sectors.