MOSCOW, December 29 (RIA Novosti) - Russia will not subsidize foreign businesses operating in Ukraine, the Russian president said Thursday.

"Subsidizing our neighbors and friends who are transitioning from a state-controlled economy like we are is one thing, whereas subsidizing Indian business is another thing," Vladimir Putin told Ukrainian Fuel and Energy Minister Ivan Plachkov and national gas company Naftogaz CEO Oleksiy Ivchenko who took part in Russian-Ukrainian gas talks in the Russian capital.

Indian metal producer Mittal Steel's German subsidiary bought 93% of shares in Kryvorizhstal, which owns 20% of Ukraine's steel market, in an auction in October. Kryvorizhstal was re-privatized after the Orange Revolution in late 2004 that brought Western-leaning forces to power in the former Soviet republic.

Russian natural gas monopoly Gazprom has demanded that Ukraine pay a free market price of $220-$230 per 1,000 cu m, more than four times the current price, beginning January 1, 2006. Ukraine, which is heavily dependant on Russian gas for heating and industrial production, has resisted the demand, claiming it is politically motivated.

Ukraine has paid $50 for Russian gas imports. This year, Russia was to supply 23 billion cu m of gas and another 2.5 billion as payment to Ukraine for transit via its territory of an additional 8 billion cu m of gas to European markets.

Putin said Russia's subsidies of the Ukrainian economy in recent years had amounted to millions of dollars.