Moscow and New Delhi are currently exploring the possibility of localizing the production of S-400 air defense systems, Su-30 jets and T-90 tanks in India.
“Yes, we are discussing the localization of S-400 production with India,” Sergey Chemezov, CEO, Rostec, was quoted as saying by the Russian media. Chemezov added that the closed deals on licensing of local production in India will include SU-30 jets and T-90 tanks.
The contract for the air defense systems was inked in October 2018 for $5.43 billion (over INR 38,000 crore). “New Delhi has made advance payments and will receive all five of the ordered S-400s by April of 2021,” Russian Deputy Prime Minister Yuri Borisov said earlier this month.
New payment method
America imposes secondary sanctions known as Countering American Adversaries Through Sanctions Act (CAATSA) against countries that buy Russian military equipment. The CAATSA was passed to punish Russia for its interference in the US elections and its involvement in Ukraine.
Washington is understood to have pledged to grant a sanctions waiver to India last September despite its plans to buy the S-400s; however, the waiver expired in early May.
India and Russia worked out a new financial mechanism to bypass US sanctions which prevents transferring of funds to accounts managed by Russian defense entities. Since the global currency movement happens through a US-controlled system known as SWIFT, almost all Russian defense firms have been shut out the dollar-denominated transfer system.
"We abandoned dollar payments two or three years ago. We have other options- payment either in the national currency, or barter system,” Chemezov said, adding that all issues related to payments for weapon deliveries to China and India have been resolved.