India will likely pay for Russian arms in euros so as to avoid the threat of US sanctions, the Indian newspaper Economic Times cited unnamed sources as saying.
The sources claimed that although some payments have already been made “through the rupee-rouble route”, Moscow and New Delhi clinched a deal which stipulated that Russia’s VTB Bank will receive the money in euros.
Several contracts for the supply of Russian military hardware to India worth a total of $4 billion have already been signed, including those for the purchase of the S-400 missile systems and four frigates, as well as the Chakra III submarine lease.
In addition, the sides are due to ink two more agreements related to the delivery of AK-203 assault rifles and Ka-226 helicopters to the Indian army.
The developments come after the US Department of State warned India against buying the Russian S-400 systems, proposing that New Delhi to consider another armament of that type.
“With respect to the S-400, we're urging all of our allies and partners, India included, to forgo transactions with Russia that risk triggering the CAATSA [Countering America's Adversaries Through Sanctions Act] sanctions […]. This is a time we will be encouraging India to look at alternatives”, a US Department of State official said.
CAATSA, which was signed into law in 2017, allows Washington to impose sanctions on any country that buys Russian-made defence hardware.
The warning followed the Indian Foreign Ministry’s statement that the Asian nation would not abandon its S-400 contract with Moscow despite possible US sanctions.
New Delhi announced its readiness to purchase the S-400 missile systems in 2015. The contract for the supply of these air defences, worth $5.43 billion, was signed during the visit of Russian President Vladimir Putin to India in 2018.