US sanctions pose challenge for Russia-India arms trade

Indian payments for weapons amounting to over $2 billion have been stuck for about a year

Russian deliveries of military supplies to India have ground to a halt as the countries struggle to find a payment mechanism that doesn't violate US sanctions, according to Indian officials with knowledge of the matter.

Indian payments for weapons amounting to more than $2 billion have been stuck for about a year, and Russia has stopped supplying credit for a pipeline of about $10 billion worth of spare parts as well as two S-400 missile-defence system batteries that have yet to be delivered, according to the officials, who asked not be identified due to the sensitivity of the issue. Russia is India's biggest supplier of weapons needed to deter Pakistan and China.

India is unable to settle the bill in US dollars due to concerns about secondary sanctions, while Russia remains unwilling to accept rupees due to exchange-rate volatility, the officials said. New Delhi also doesn't want to complete the deal in Russian rubles due to concerns about being able to purchase enough on the open market at a fair rate, they said.