Express View on US sanctions on Indian companies: Delhi should tread cautiously

On Wednesday, the US imposed sanctions on about 400 entities and individuals across the world, including 19 Indian firms and two Indian nationals, for allegedly helping Russia’s war efforts in Ukraine. Most of the Indian entities sanctioned are suppliers of electronic components, a few supply aircraft parts and machine tools and components, among other items. The US State Department says that the move aims to address evasion of sanctions and target entities in multiple countries, including China, Malaysia, Thailand, Turkey and the UAE, apart from India, for selling “items and other important dual-use goods to Russia, including critical components that Russia relies on for its weapons systems to wage war against Ukraine”. Dual-use goods can be utilised for both civil and military applications. Many such items are part of the Common High Priority List (CHPL) made jointly by the US, the EU, Japan, and the UK. The CHPL lists numerous items that Russia “seeks to procure for its weapons programmes”.

In the aftermath, while there may be a temptation to grandstand against the US sanctions, it would help to understand their context, and to assess their consequences for India’s domestic interests. There is a war raging in Europe and there is a growing sense that it is likely to escalate. As such, the West is tightening sanctions to prevent Russia’s military capability from growing. The second critical aspect is that the sanctions have a broad sweep, across several countries. India or Indian firms have not been specifically targeted or singled out. The third key point is that while India has differences with the US on Russia, it is also true that India has a strong partnership with the US when it comes to China.

The Indian government should neither take offence at the sanctions, nor ignore them as the decision of an outgoing US President. It should, instead, treat them as a caution. In the past, when it came to crude oil sanctions, the US had provided India some relief but the current restrictions refer to goods the US views as directly boosting Russia’s military capability. Delhi would do well to focus on the need to protect Indian businesses from getting caught in the crossfire. India had set up export control mechanisms as part of the nuclear deal with the US — it is time to update them. The government needs to educate industry about the export restrictions, and possibly even licence some of the critical items, to ensure that Indian businesses are not adversely affected by the ongoing conflict.