India has waived the requirement of a bank guarantee (BG) from Russia's United Shipbuilding Corp hit by US sanctions which prevented it from participating in an Indian submarine project.
Instead, a sovereign guarantee from Russia will be accepted for the project, The Economic Times reported Friday.
The Indian government last week provided a special 'one-time exemption' to clear a project for upgrading and overhauling of a Kilo class submarines in Russia as part of an ongoing contract for the Indian Navy fleet.
A US imposed banking sanction against Russia had halted many contracts with India as Russian companies were unable to furnish guarantees from Indian banks that are mandatory to secure military tenders in India.
Contracts worth over $5.5 billion were hit with the US imposed 'Specially Designated Nationals' (SDN) sanctions on Russia's United Shipbuilding Corporation (USC), which were extended last year to include all entities attached to it.
“With the waiver made for the submarine overhaul, similar arrangements are expected to ensure that the inter-governmental agreement with India in October 2016 for the sale of four Project 1135.6 class stealth frigates also goes through,” an unnamed official was quoted by the publication as saying.
The frigate project also involves creating shipbuilding infrastructure at the Goa Shipyard that has been nominated by the defence ministry, with the Navy likely to procure engines and other parts from Ukraine to complete the four frigates.
Other Russian defence entities dealing with the defence sector in India may be brought under the sovereign guarantee system.