The conflict in Ukraine has cast a shadow on delivery of critical military systems in the pipeline from Russia, with the West looking at additional economic sanctions that can impact weapons trade. Besides spares and supplies for existing equipment, adverse sanctions could impact delivery of at least three systems, including the S-400 air defence system and Talwar class frigates. These are in advanced stages of delivery, with payments being made through European banking channels.
The trickiest, officials say, is the $950-million contract for delivery of four advanced Talwar class frigates for the Indian Navy that was inked in 2018. The warships are designed to operate with a Ukrainian power plant, with no alternative option available.
India had to pull through a diplomatic coup of sorts in 2019 when it managed to convince Ukraine to supply engines for the first two ships that are being made in Russia, despite the Crimea crisis. These Zorya Mashproekt RPC gas turbine engines have been delivered to the Kaliningrad shipyard and are being integrated on the warships.
Deals under threat
• Project 11356: $950-m deal to supply four frigates to the Indian Navy
• Two being built in Russia. Gas turbine engines are Ukranian
• S-400: Delivery of first regiment has taken place
• Prolonged crisis could impact future deliveries
• JV with Russia: Brahmos-Russian venture recently bagged export order from the Philippines JV for production of AK
Closure of Any Project Unlikely
However, two additional ships are to be made at the Goa Shipyard with Russian assistance and power plants for them are yet to be delivered. There are concerns that uncertainty of supplies from Ukraine could adversely impact the project.
India has also received the first regiment of the S-400 air defence system from Russia but the delivery of four more is still hanging in the balance. There are no indications yet of any delay from the Russian side on the deliveries but a prolonged crisis in Ukraine is being seen as a matter of concern. In addition, US sanctions on India for the purchase under its CAATSA (Countering America’s Adversaries Through Sanctions Act) regime is now a distinct possibility. Till now, India had avoided the sanctions that have been imposed on Turkey and China in the past.
The sanctions will not lead to the closure of any projects as India is determined to go ahead with its Russian partnership but they cause delays in payments and procedural difficulties that take time to resolve. India and Russia have managed to evolve a process of payments for military systems that bypasses all US influenced banking controls. A significant part of these payments are being made through the Rupee-Rouble route.
Other Indian projects that can come under the scanner are the two joint ventures with Russia to manufacture missiles and assault rifles. The Brahmos project is jointly owned by the two nations and has recently won an export order to the Philippines, with more on the horizon. The other joint venture to produce Kalashnikov AK 203 assault rifles in India is yet to fully take off as production has not yet commenced in Amethi, where the factory has to be set up.
