Russian weapons sales to India take a hit over US sanctions fears

Indian payments for arms amounting to more than US$2 billion have been stuck for about a year as both sides struggle to find a way to avoid breaching sanctions

The Indian air force, which depends on a Russian fleet of fighters and helicopters, is among the worst hit from the disruption in supplies from Moscow

3-MIN READ3-MIN

India is yet to take delivery of two Russian S-400 missile defence system batteries. File photo: Russian Defence Ministry/AFP

Published: 3:42pm, 21 Apr 2023

Russian deliveries of military supplies to India have ground to a halt as the countries struggle to find a payment mechanism that doesn’t violate US sanctions, according to Indian officials with knowledge of the matter.

Indian payments for weapons amounting to more than US$2 billion have been stuck for about a year, and Russia has stopped supplying credit for a pipeline of about US$10 billion worth of spare parts as well as two S-400 missile defence system batteries that have yet to be delivered, according to the officials, who asked not be identified due to the sensitivity of the issue.

Russia is India’s biggest supplier of weapons needed to deter Pakistan and China.

India is unable to settle the bill in US dollars due to concerns about secondary sanctions, while Russia remains unwilling to accept rupees due to exchange-rate volatility, the officials said. New Delhi also doesn’t want to complete the deal in Russian roubles due to concerns about being able to purchase enough on the open market at a fair rate, they said.

India’s government has proposed Moscow use the rupees from weapons sales to invest in Indian debt and capital markets to avoid stockpiling rupees, they added, but Vladimir Putin’s government doesn’t find that appealing.