Arms exports from the Russian Federation to India have stopped due to fears of sanctions – mass media
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Supplies of military products from the Russian Federation to India have stopped, because the countries are trying to find a payment mechanism that would not violate US sanctions.
It is reported Bloomberg citing Indian officials familiar with the matter.
Indian payments for weapons worth more than $2 billion have been blocked for about a year. At the same time, Russia stopped crediting the planned delivery of spare parts and components of weapons worth about 10 billion dollars, as well as two batteries for the S-400 anti-missile defense system, which have not yet been delivered.
Russia remains the largest supplier of military equipment to India, although purchases have slowed by 19% over the past five years due to sanctions and increased competition from other manufacturing countries.
India is unable to pay the bill in dollars due to fears of secondary sanctions, officials said, and Russia remains reluctant to accept rupees due to exchange rate volatility. According to them, New Delhi also does not want to conclude a deal in rubles due to fears that it will not be able to purchase a sufficient amount of the currency on the open market at a fair rate.
The Indian government has offered Moscow to use rupees received from arms sales to invest in Indian debt obligations and capital markets, but the Russian Federation does not consider this proposal attractive.
One of the possible solutions could be the use of euros and dirhams – currencies used to pay for Indian imports of Russian oil, one of the interlocutors noted. However, using these currencies to pay for arms could attract more attention from the US due to sanctions than oil, and also lead to increased costs due to an unfavorable exchange rate for India.
Another option under discussion is a mechanism by which Russia could offset purchases of Indian imports against the price of weapons. But it is not easy, because last year Russia had a positive balance in trade with India in the amount of 37 billion dollars, which is the third largest indicator after China and Turkey.
India currently has more than 250 Russian-made Su-30 MKI fighters, seven Kilo-class submarines and more than 1,200 Russian-made T-90 tanks – all of which will be in service for another ten years and need spare parts. Three of the five S-400 anti-missile defense systems have already been delivered.
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