NEW DELHI: In a surprising development, India has risen to become the second-largest supplier of restricted critical technologies to Russia, surpassing $60 million in exports of sensitive items in April and May, with the figure soaring to $95 million in July, according to US and European officials. These exports include microchips, circuits, machine tools, and other dual-use technologies that can be used both for civilian and military purposes. This increase in shipments comes amidst global efforts to choke off supplies that could fuel President Vladimir Putin’s war machine as the conflict in Ukraine enters its third year.
The dramatic rise in India’s exports has caught the attention of Western officials, who have been trying to limit Russia’s access to technologies that strengthen its military capabilities. According to private assessments, India now accounts for nearly a fifth of the sensitive technologies that feed into Russia’s military-industrial complex. India is only exceeded by China in terms of supplying such restricted goods to Russia, underscoring the challenge Western powers face in enforcing sanctions and export controls against Moscow.
The export of dual-use technologies products that have civilian applications but can also be used for military purposes has been a critical point of focus for Western governments since Russia’s invasion of Ukraine in February 2022. The US and its allies have imposed sweeping sanctions on Russia, including a ban on exporting certain technologies directly to the country. However, Russia has managed to circumvent these restrictions by procuring these items through third countries, including India.
According to US and EU officials, Russia has tapped into a network of intermediaries and subsidiaries, some of which may not even be aware that their products are ending up in the hands of the Russian military. The latest data on Indian exports has raised alarms in Western capitals, where policymakers have been trying to prevent Russian forces from acquiring critical technologies needed for building and maintaining weapons systems.
On the other hand, India’s continued ties with Russia, its growing oil imports from the country, and now its role as a major supplier of dual-use technologies present significant diplomatic challenges.
Prime Minister Narendra Modi’s government has walked a tightrope in managing its relations with both Russia and the West. Since the war in Ukraine began, India has refrained from taking a clear stance against Russia, even as Western countries have sought to isolate Moscow economically and diplomatically. Instead, India has deepened its trade relations with Russia, emerging as a top buyer of discounted Russian oil a development that has kept Russia’s economy afloat despite sanctions.
According to officials, one of the key drivers behind the spike in India’s technology exports to Russia is the large stock of Indian rupees Moscow has accumulated through oil sales. With sanctions restricting the use of US dollars or euros for such transactions, Russia has increasingly relied on local currencies, including the Indian rupee, to facilitate trade. However, Russia has limited options for spending these rupees outside of India, which has led to an increase in its purchases of Indian goods, including sensitive technologies.
In recent months, US and EU policymakers have been focused on closing these loopholes by targeting key transshipment points, such as Turkey and the UAE, but India’s involvement has added a new layer of complexity. Western officials are now grappling with the reality that pressuring India too hard could strain important bilateral relationships at a time when India is seen as a key partner in countering China’s growing influence in the Indo-Pacific region.
As the war in Ukraine drags on, it remains to be seen whether the US and its allies will be able to find an effective way to limit Russia’s access to these critical technologies. What is clear, however, is that the global flow of dual-use goods has become a battleground in the broader geopolitical struggle surrounding the conflict in Ukraine, with India now playing a pivotal role.
