From India's point of view, a firm development agreement that helps finance Russia's next-generation plane is one way to restrict Russian cooperation with China along similar lines. See Vijiander K Thakur's "Understanding IAF interest in the MiG fifth generation fighter" for more on the proposal to cooperate with MiG. Even so, India's procurement history is full of dead-ends and "almost weres" - which is why the March 1, 2007 "Advanced Combat Aircraft" release from India's Minister of State for Defence Production Shri Rao Inderjit Singh means very little at this point:
"The co-development of a Fifth Generation Fighter Aircraft has been identified as an important area of cooperation between the Indian and Russian governments. Technical discussions to work out the details are in progress. Efforts are on for negotiations and finalization of the draft Inter-Governmental Agreement in this regard."
Which may, or may not, come to funded fruition via Indo-Russian cooperation on a MiG 1.44 (if indeed it was a real project?) or "I-21" type aircraft. Especially given the cost pressures on India's limited defense budget and pressing need to refurbish its existing fleet, modernize its fighters via the MRCA competition, bring the Tejas LCA on line to replace its MiG-21s, and add new platforms to patrol India's vital sea lanes, fulfill naval fighter needs, upgrade its transport aircraft fleet, and extend the IAF's reach. Meanwhile, India's SU-30MKIs remain one of the best 4th generation aircraft in the world, with a comfortable edge over regional rivals, good growth prospects, and superiority over most current and planned US aircraft as well.