To avoid US sanctions , India and Russia find a new payment method for the multi billion dollars defence deals
In order to avoid further sanctions by the United States (U.S)., India and Russia have decided on a new payment mechanism involving Indian National Rupee and Russian Ruble for honouring Indo-Russian multi-billion-dollar defence deals.
With this new agreed mechanism, India will pay the first installment of 2 warships that Russia is building for India Navy, very soon. Under the same agreement, Russia will also build 2 warships at a shipyard in India on a technology-transfer agreement. Other deals with Russia include joint production of Kamov Ka-226T helicopters and a U.S. $ 5 billion deal for procuring S-400 air defence missile systems from Russia. The total market value of all the deals India has signed with Russia is in tune of U.S. $ 10 billion.
In 2017, the State Bank of India stopped making payments to Russia in pursuance to signed defence deals after U.S. imposed sanctions on Russian arms manufacturer Rosoboronexport.
Last year, Russia struggled to earn only U.S. $ 19 billion form sale of its defence equipment to various countries. Most of the countries fear sanctions from U.S. President – Donald Trump’s Administration, if they go ahead striking an arms deal with Russia. The U.S. has been actively pushing Countering America’s Adversaries Through Sanctions Act (CAASTA) 2017, under which, it imposes sanctions on individuals, entities and countries who engage with Russian defence or intelligence sector. It has recently warned Turkey of sanctions as Turkey received the first shipment of S-400 missiles from Russia.
However, the U.S. National Defence Authorization Act 2019 contains a provision where CAASTA sanctions can be revoked by the President of U.S., provided the President’s Administration is given all the required details and certifications.
As far as India is concerned, it has clearly informed the U.S. Secretary of State – Mike Pompeo about its deal with Russia during his visit to India in June 2019.
The Minister of State for External Affairs of India – V. Muraleedharan said, “Our requirement for the S-400 system has been clearly conveyed to the U.S. side, including during the visit of U.S. Secretary of State to India on June 26, 2019.”
Earlier in March, the Prime Minister of India – Narendra Modi had inaugurated a rifle plant in Amethi that will produce 7,50,000 Kalashnikov AK-203 rifles under a Joint Venture (JV) between India and Russia.
For the records, Russia is world’s second largest arms exporter, after U.S. It witnessed a drop of 17% in global exports. The sale from its leading importers, i.e., India and Venezuela also declined. Between 2014-2018, Russia accounted for 58% of the South Asian nation’s arms imports.
