India Seeks to Add More U.S. Hardware but Sanctions Regime Remains Concern

India is readying a package of defense acquisition deals with the U.S. over the coming few years at an estimated price range of roughly $10 billion.  The future requests would, however, unfold against a backdrop where U.S. sanctions cloud the picture.

The Countering American Adversaries through Sanctions Act (CAATSA) bill signed into law by President Trump on August 2, 2017, seeks to prevent countries from purchasing Russian weapons systems.  This sanctions regime is particularly thorny for American allies who traditionally have conducted arms agreements and transfers with Russia.

Under the sanctions regime, any third party that conducts sizable transactions with the individuals or entities outlined in the CAATSA is liable for punitive sanctions.

As a result, Indian banks with significant exposure to the U.S. have opted to suspend payments and installments to Russia.  This in turn has led the Indian and Russian sides to devise a road map for circumventing the sanctions in order to push ahead on delivery of Russian military hardware via a mix of foreign currencies and a rupee-ruble transfer mechanism.

For India, which has traditionally utilized a Russian arms pipeline to arm its forces, the U.S.-Russia spat presents a unique frustration.

From the early 1960s through today, India has purchased nearly $65 billion worth of Russian armaments.  Russian-sourced equipment predominates in the Indian military, with over 60 percent of total hardware of Russian origin.

While the Indian Ministry of Defense has cleared projects involving procurement from the U.S. of 10 additional Boeing P8I Neptune long-range maritime multimission aircraft – with others being lined up in queue – there remains the tricky issue of New Delhi’s acquisition of five S-400 Triumf self-propelled surface-to-air missile (SAM) systems under a $5 billion-plus deal consummated in October 2018.

Indian officials no doubt are eyeing the ongoing Turkey-U.S. dispute over Ankara’s acquisition of the S-400 as a test case of U.S. resolve.  But Turkey’s case is different in that it already was a member of the F-35 Joint Strike Fighter program and had an eye on acquiring up to 100 of the fifth-generation stealth combat aircraft.

U.S Principal Deputy Assistant Secretary for South and Central Asia Alice Wells stated at a June meeting of the U.S House of Representatives Foreign Affairs Subcommittee that India’s S-400 acquisition may effectively limit the country’s ability to increase interoperability with the U.S.  She added that there is no blanket country waiver as it applies to an S-400 purchase.

But interoperability with U.S. forces and receiving a CAATSA waiver represent two different things.  For India, diversification of military hardware supply and foreign policy non-alignment represent long-standing norms.  The latter may be easily maintained, but the former becomes difficult when the purchaser is pressured by a third party to choose one over the other.

India’s proposed 10-unit P-8I purchase – which would supplement an eight-unit order in 2009 and a follow-on order for four more units placed in 2016 due for delivery between 2020 and 2021 – is expected to cost $3 billion.  India also has on tap potential buys of 24 multimission MH-60R Romeo Seahawk naval helicopters, the National Advanced Surface-to-Air Missile System-II (NASAMS-II), and six additional Apache attack helicopters.  These and other procurements are part of a larger push to meet some of the $230 billion worth of armament and systems required being pursued by New Delhi through 2027.

India’s first delivery of an S-400 system is set for 2020.  Once that unit is handed over, the CAATSA sanctions are triggered.  Hence the clock is ticking on India and the U.S. working out an agreement because the hope in Washington for a de-linking of Indo-Russia defense cooperation is an unrealistic one.

Photo via U.S. Aid

About Daniel Darling

Dan Darling is Forecast International’s director of military and defense markets. In this role, Dan oversees a team of analysts tasked with covering everything from budgeting to weapons systems to defense electronics and military aerospace. Additionally, for over 17 years Dan has, at various times, authored the International Military Markets reports for Europe, Eurasia, the Middle East and the Asia-Pacific region. Dan's work has been cited in Defense News, Real Clear Defense, Asian Military Review, Al Jazeera, and Financial Express, among others, and he has also contributed commentary to The Diplomat, The National Interest and World Politics Review. He has been quoted in Arabian Business, the Financial Times, Flight International, The New York Times, Bloomberg and National Defense Magazine. In addition, Dan has made guest appearances on the online radio show Midrats and on The Media Line, as well as The Red Line Podcast, plus media appearances on France 24 and World Is One News (WION).

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