Impact of sanctions on imports from Russia is being assessed

There is no formal decision yet on cancellation of deals with Russia for additional MiG-29 and Su-30 fighter jets and Ka-226T utility helicopters, according to defence sources.

Last week, a senior U.S. official told the Senate Foreign Relations Committee that what was seen in the “last few weeks” was the “cancellation of MiG-29 orders, Russian helicopter orders and anti-tank weapon orders” while also indicating that India could face difficulties in its defence exports because of the sweeping sanctions on Russia.

A couple of months back, the Defence Ministry has undertaken a review of all “Buy Global” deals which are direct purchases, as part of the push for indigenisation. As part of this, several deals including multi-role helicopters for Coast Guard, Ka-226T helicopters and shoulder–fired missiles were expected to be cancelled.

All deals are being looked at as part of the review to further boost ‘Make in India’ and there is a reconsideration on the Ka-226T deal due to cost and focus on indigenisation, a defence official said.

“A formal decision on cancellation has not been taken yet,” a defence official said on the Ka-226T deal.

Last Wednesday, U.S. Assistant Secretary of State for South and Central Asian Affairs Donald Lu told the Senate Foreign Relations Committee, “I think it’s going to be very hard for any country on the globe to buy major weapon systems from India because of the sweeping sanctions now placed on Russian banks. What we’ve seen from India in just the last few weeks is the cancellation of MiG 29 orders, Russian helicopter orders and anti-tank weapon orders.”

Further on the possible waiver for India from sanctions under CAATSA (Countering America’s Adversaries Through Sanctions Act) over the S-400 deal, Mr. Lu said the Biden administration will make a determination.

“I can assure you that the administration will follow the CAATSA (Countering America’s Adversaries Through Sanctions Act) law and fully implement that law and will consult with the Congress as we move forward with any of... [inaudible].”

Technically all deals are on the table for review and the Ka-226T has been stuck for a long time over indigenous content in the helicopters to be manufactured locally. With indigenous Light Utility Helicopter (LUH) developed by Hindustan Aeronautics Limited (HAL) now ready, there is a rethink on the deal, another official said.

Critical Necessity For Utility Helicopters

The Army has conveyed its critical necessity for utility helicopters with the ageing Cheetah and Chetak helicopters needing urgent replacement and has pushed for some Ka-226T helicopters to be brought off the shelf. The final decision on the Ka-226T deal is awaited, the official cited earlier said.

In 2015, India and Russia had concluded an Inter-Governmental Agreement (IGA) for at least 200 Ka-226T twin engine utility helicopters of which 60 would be directly imported and remaining 140 manufactured locally.

Additional MiG-29s And Su-30s

In July 2020, the Defence Acquisition Council had approved procurement of 21 MiG-29 fighter jets for the Indian Air Force (IAF) along with the upgradation of 59 existing MiG-29 jets estimated to cost ₹7,418 crore and 12 Su-30 MKI aircraft at an estimated ₹10,730 crore to be manufactured by the Hindustan Aeronautics Limited (HAL).

However, discussions have since been delayed over the high cost quoted by the Russian side and officials said they have now ironed out all differences and reached an understanding. The deal is now awaiting final approval from the Defence Ministry, a senior official said.

“There is really no alternative for these aircraft, which are only to augment the existing fleets and important as the IAF is facing a steep fall in its fighter strength. The deal is now ready to be signed,” the official said. If it is delayed or deferred now, the whole process will have to restart again and could see cost escalations as well, the official said.

The IAF has conveyed this to the Defence Ministry and a formal decision is awaited, it has been learnt. India has contracted 272 SU-30s from Russia and the 12 additional Su-30MKIs being negotiated are meant to replace the Sukhois lost in crashes over the years.

Officials are also assessing the impact the sanctions on the Russian firms may have on India’s defence exports. In January, India signed the first export order with the Philippines, a $374.96–million deal for the BrahMos supersonic cruise missiles which is a joint product of India and Russia. It is not clear as yet if that would be impacted in anyway.