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Assessing India’s CAATSA Sanctions Waiver Eligibility

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Assessing India’s CAATSA Sanctions Waiver Eligibility

Whether the U.S. sanctions India or not under the 2017 law will crucially depend on a single question: Between Russia and China, who is the bigger threat?

Assessing India’s CAATSA Sanctions Waiver Eligibility

Indian Army soldiers fire their weapons during a room clearing demonstration as part of Yudh Abhyas, an exercise that enhances the joint capabilities of both the U.S. and Indian army through training and cultural exchange, Sept. 21, 2018.

Credit: Flickr/U.S. Indo-Pacific Command

The U.S.-India 2+2 Ministerial held in New Delhi in late October 2020 put a solid endcap on another strong four-year run in defense relations between the two countries. However, a threat to the emerging relationship looms large — potential sanctions against India for procuring Russian military equipment under the Countering America’s Adversaries through Sanctions Act (CAATSA). It is not clear whether the existing waiver authority is wide enough for India, much less whether sufficient political interest exists to use such a waiver. Thus, CAATSA relief will likely hinge on whether India’s increasing contribution to Asian security overrides India’s continued reliance on Russian military equipment.

U.S.-India relations have come a long way since the Cold War. There are still places India falls short of some U.S. security analysts’ expectations. Some examples include playing a more active role in supporting stability in the South China Sea; maintaining distance from Iran; and supporting U.S. counterterrorism efforts against the Islamic State. Yet, India faces significant threats from China across a range of domains and has stepped up in important ways. As a result, India is emerging as a key U.S. strategic partner. The two nations have made significant strides in defense cooperation through the signing of four foundational agreements, expanded joint military exercises, personnel exchanges, and a common strategic outlook toward containing the Chinese threat. U.S.-India defense trade is today worth over $20 billion. This expanding level of cooperation will be seriously threatened if CAATSA sanctions are enforced when India takes possession of Russian-made S-400 Triumf missile defense systems, likely toward the end of this year or in 2022. The sanctions will come into place automatically unless the CAATSA waiver authority is utilized 30 days before sanctions are to take effect. Additionally, India is also procuring other defense items from Russia that could trigger a review.

CAATSA was signed into law in 2017, imposing new sanctions on Iran, Russia, and North Korea. The Russian sanctions were put in place given Russia’s aggression toward Ukraine and its meddling in the 2016 U.S. elections. The sanctions notably also include secondary sanctions on entities conducting significant transactions with the Russian government. In 2018, the United States passed a modified waiver authority through an amendment to Section 231 of CAATSA, presumably with India in mind. Despite this widened waiver authority the possibility of sanctioning India remains on the table — and the pathway to an exemption is uncertain.

Below we look at the relevant sections and outline the key issues for consideration related to India’s case:

Modified Waiver Authority: Section 231 CAATSA                  Does India Qualify?
(A) the waiver is in the national security interests of the United States; Likely meets criteria for waiver consideration

India is emerging as a significant security partner to the United States, and individually engages in missions important for regional stability and security.


(B) the significant transaction described in subsection (a) that the person engaged in with respect to which the waiver is being exercised— Needs to meet both criteria listed in (B) – (i) and (ii)
(i) is not a significant transaction with (I) the Main Intelligence Agency of the General Staff of the Armed Forces of the Russian Federation; (II) the Federal Security Service of the Russian Federation; (III) the Foreign Intelligence Service of the Russian Federation; (IV) Autonomous Noncommercial Professional Organization/Professional Association of Designers of Data Processing (ANO PO KSI); (V) the Special Technology Center; (VI) Zorsecurity; or (VII) any person that the Secretary of State, in consultation with the Director of National Intelligence, determines— (aa) to be part of, or operating for or on behalf of, the defense or intelligence sector of the Government of the Russian Federation; and (bb) has directly participated in or facilitated cyber intrusions by the Government of the Russian Federation; and Does not meet criteria for waiver consideration

India qualifies as having significant transactions with Russia’s defense sector as it expects delivery of S-400 Missile Systems (by Almaz-Antey), Sukhoi MK1 (by United Aircraft Corporation), and MiG-29 upgrades (by Russian Aircraft Corporation MiG).


All three companies have been identified in Section 231(e) of CAATSA. S-400 has been identified as a significant and sanctionable transaction, as seen from sanctions on Turkey.

(ii) would not—
(I) endanger the integrity of any multilateral alliance of which the United States is a part; Meets criteria for waiver consideration
(II) adversely affect ongoing operations of the Armed Forces of the United States, including coalition operations in which the Armed Forces of the United States participate; Meets criteria for waiver consideration
(III) result in a significant negative impact to defense cooperation between the United States and the country whose government has primary jurisdiction over the person; and Meets criteria for waiver consideration


(IV) significantly increase the risk of compromising United States defense systems and operational capabilities; and Raises concern for waiver consideration

The United States has raised concerns about Russian access to U.S. defense data through possible comingling of technology. Other countries like France and Israel can also have similar concerns as more advance defense transfers take place.

(C) the government with primary jurisdiction over the person— Need to meet one of the two criteria as listed in (i) and (ii)
(i) is taking or will take steps to reduce its inventory of major defense equipment and advanced conventional weapons produced by the defense sector of the Russian Federation as a share of its total inventory of major defense equipment and advanced conventional weapons over a specified period; or Meets criteria for waiver consideration

Per the Stockholm International Peace Research Institute, between 2008-12 and 2013-17, Indian defense procurement from the United States increased by 557 percent; India has also increased procurement from U.S. partners like France and Israel.

(ii) is cooperating with the United States Government on other security matters that are critical to United States strategic interests. Likely meets criteria for waiver consideration

Afghanistan– Civilian aid; defense equipment transfers

Iran sanctions- reducing oil imports

Supporting democratic elections in Maldives and Sri Lanka

Conducting developmental programs in Africa

Joint Exercises like Yudh Abhyas, Shatrujeet, Vajra Prahar, Tiger Triumph; Multilateral exercises like coordinated naval drills in the South China Sea, MALABAR, RED FLAG, RIMPAC

Disaster relief efforts through the Tsunami Core Group and the U.S.-India Disaster Relief initiative; rescuing Americans through Operation Raahat

Authors’ compilation and analysis; data source: Section 231 of CAATSA

As seen from the table above, India does not necessarily meet the modified waiver authority criteria. While India is diversifying its defense purchases away from Russia, some level of path dependency remains.

The CAATSA sanctions will reinforce longstanding concerns in India that the United States will not prove to be a reliable partner; the damage will be more severe than the sanctions themselves. This will push India closer to Russia as the country’s “all-weather friend.” The sanctions would harm India’s military capabilities and possibly put a pause to the range of India’s joint efforts with the United States within the Indo-Pacific, as outlined above. The negative attitudes produced by CAATSA defense sanctions would likely affect many other aspects of our cooperation as well. CAATSA contains 12 types of sanctions, at least five of which must be imposed. Some of these sanctions have far reaching consequences that can thwart the overall commercial relationship and adversely affect both U.S. and Indian companies, such as curbing export-import bank assistance for exports, blocking exports to the sanctioned entity, blocking loans from U.S. and international financial institutions, procurement sanctions, bans on investment in equity and debt of the sanctioned party, and sanctions blocking foreign exchange, banking, and property transactions.

This moment is particularly crucial due to increasing tensions between India and China. Sanctions against a friendly nation when it is attempting to uphold stability on China’s western flank is poorly timed, at a minimum.  But Russia presents a different kind of threat that cannot be easily dismissed. The Biden administration will need to determine if India’s emerging actions in support of Asian security is more important than its narrow armaments partnership with Russia.

Richard M. Rossow is senior advisor and the Wadhwani Chair in U.S.-India Policy Studies at CSIS; full bio here. Kriti Upadhyaya is a research associate at the Wadhwani Chair in U.S.-India Policy Studies at CSIS; full bio here.