The US wants to sensitise the Indian industry against exporting certain items to Russia such as chemicals, defence equipment, aeronautical parts and components that could be used for missile systems, which may purportedly aid Moscow in its war against Ukraine and attract secondary sanctions from the West, sources have said.
The communication is taking place at a time when India’s exports of engineering goods and chemicals to Russia is on the rise.
“The US has held consultations with Indian exporters to make them more aware about the economic sanctions against Russia and sensitise them about items that shouldn’t be exported such as chemicals, defence equipment, aeronautical parts, and parts that could go into missile systems. These could attract secondary sanctions,” an official tracking the matter told businessline.
As Russia’s war with Ukraine, which started in February 2022, has continued unabated for over two years, leading to loss of lives, livelihood and property in Ukraine and turmoil across the globe, the US and its Western allies have been tightening sanctions against Moscow.
There are companies based in India already grappling with such actions. Bengaluru-based Si2 Microsystems, which designs and manufactures electronics equipment, was slapped with sanctions late last year by the US, followed by the EU and Japan, for allegedly aiding Russia militarily.
“Two Indian individuals and some entities operating from India were placed on the sanctions list of the US Treasury’s Office of Foreign Assets Control recently for collaborating with Russia,” another source said.
Last month, a US Treasury official reportedly wrote to the Indian Banks’ Association warning that foreign financial institutions doing business with Russia’s military industrial base may face sanctions themselves.
Washington’s increased supervision could act as a dampener for India’s growing exports to Russia, especially of engineering goods and chemicals. In 2023-24, India’s exports to Russia increased 35.41 per cent to $4.26 billion. Engineering goods exports doubled to $1.22 billion, while chemicals exports increased to over $500 million in 2023-24.
Despite its rising exports, India runs a huge trade deficit with Russia, which exported goods, mostly petroleum, worth $61 billion to the country last fiscal.