India's plans to buy strategic Russian weapons are in jeopardy. Here's why

In last year October, India disclosed its plan to buy strategic defense weapons from Russia that were to amount a fortune of $5.5 million which includes the shipbuilding as well. However, it seems that the plans are to face jeopardy as the Russian Firms appear to be unable in furnishing the requisite guarantee by the Indian Banks that owe the sanctions obligatory by the U.S.

Those who are familiar with the matter have shown their concerns regarding the purchase of S-400missile that India seeks mandatorily to seal and protect the air space of the country with Pakistan.

It was October last year when Russia and India signed a deal viz. inter-governmental agreement wherein the two finalize the sale of four Project 1135.6 class stealth frigates. Out of these four, two were to be made in India.  The deal also entails the creation of shipbuilding infrastructure in India.  Beside all these, India also volunteered to be the key runner in a forthcoming tender for a new class of conventional submarines which will be covered under the P75I project of the Indian Navy. However, all these projects seem to be fruitless after the U.S.-obligatory sanctions.

“No Indian bank can deal with any entity on the SDN list as this will get them into major trouble with the US. As international transactions involve trade in dollars, no bank can afford to be noncompliant with the sanctions list,” an official told a new daily.

According to the Indian rules, any foreign vendor, before bidding for any project related to defense equipment, has to provide guarantees with the reputed Indian Banks. 

But, as per the US-Obligatory Specially Designated Nationals (SDN) sanctions on Russia’s United Shipbuilding Corporation, Indian banks are not able to grant guarantees for the contract.

The only solution to this is the amendment of India rules to grant Russia an exemption from the guarantee rule.