India Climbs to No. 2 in Supplying Russia with Restricted Tech

India has surged to become the second-biggest supplier of restricted critical technologies to Russia, US and European officials said, highlighting the challenge in efforts to choke off exports fueling President Vladimir Putin’s war machine.

India’s new role

• India has become the second-largest supplier of restricted technologies, such as microchips, circuits, and machine tools, to Russia, following China.

Surge in exports

• Indian exports of restricted items to Russia have surged significantly, with exports in April and May surpassing $60 million and reaching $95 million in July, which is double the amount earlier in the year.

Strategic challenge for the West

• The increased export of critical technologies from India to Russia poses a major challenge for the US and European Union in their efforts to curb Russia’s military capabilities, particularly in the context of the ongoing Ukraine conflict.

Lack of response from India 

• Ukraine’s allies have expressed frustration with the lack of response from India when approached about the issue. 
• India’s Ministry of External Affairs has not commented on the growing trend of restricted exports.

Impact on Russia’s military-industrial complex 

• Almost 20% of sensitive technologies used in Russia’s military-industrial complex are believed to be coming through India, according to officials. 
• This highlights India’s growing role in supplying dual-use items that have been banned for direct export to Russia.

Global supply chain dynamics

• Since the US and EU have imposed bans on exporting dual-use technologies directly to Russia, Russia is relying on third countries such as India to obtain these goods. 
• Some of these technologies may be sourced unknowingly by western subsidiaries or through networks of intermediaries.

US and EU concerns

• The US State Department has raised concerns and will continue to engage Indian officials and companies on this matter.
• India has emerged as a transshipment point, complicating efforts to restrict such trade.

India’s delicate balance 

The US and EU face a diplomatic balancing act, as they seek to maintain strong ties with Prime Minister Narendra Modi’s government while also addressing India’s ties with Russia, particularly in trade involving sensitive technologies.

India’s growing trade with Russia 

• India is a significant buyer of Russian oil, further complicating the US and EU’s efforts to limit Russia’s economic resources. 
• Russia has accumulated a vast stock of Indian rupees from oil sales, driving this trade relationship.
  

Western sanctions on Indian firms

• Indian companies involved in trade with Russia’s military-industrial complex have come under Western sanctions, with US and EU officials visiting India to push for greater oversight on shipments.