Most Indian companies say US sanctions are unlikely to have an impact

Many of the 19 Indian companies sanctioned by the United States for trading with Russian companies said they were largely unaffected, citing their focus on Russian markets and the Indian government’s lack of restrictions on such trade.

The U.S. Department of the Treasury building in Washington, DC. (AFP)

The US Treasury Department on October 30 imposed sanctions on nearly 400 entities and individuals, including 19 Indian companies, for allegedly “supporting Russia’s military-industrial base.” The sanctions block all properties of these entities domiciled or controlled by the US and require reporting to the Office of Foreign Assets Control (OFAC). U.S. citizens, entities, and non-U.S. persons are prohibited from transacting with sanctioned organizations.

“Almost 30% of ours ₹15 crore turnover depends on Russia. The rest of our business is domestic,” said Ajeet Samani, owner of Maharashtra-based Khushbu Honing. “We don’t do any business with the US, so it doesn’t really impact us. I earn in rupees, not dollars or euros.”

The U.S. Treasury Department alleges that Khushbu Honing shipped advanced machine tools to Russia’s Unimatik, which reportedly supplies the Russian defense sector with CNC machines used to automate the movement of industrial machines using software. “Since January 2024, AK Microtech, a U.S.-designated, Russian-based limited liability company, sought to avoid sanctions by purchasing microelectronic equipment through Khushbu,” the department said.

TSMD Global, a Delhi-based company with annual revenues of over ₹10 crore, was booked for allegedly sending controlled items worth $430,000 (approx. ₹3.6 crore) to Russian companies. “We don’t know who is punished and who is not. We buy from the Indian open market and then export,” said director Rahul Kumar Singh. “We have no influence on where the electronic components are then used.”

He did not know on Friday whether the company would continue to cooperate with Russian companies subject to sanctions. “If we’re going to do business there and our government’s relationship with that country is fine, why wouldn’t we do it?”

However, Singh makes it clear that if the Indian government imposes restrictions, TSMD Global will cease operations, although this has not happened so far.

Praveen Tyagi, director of Meerut-based Shreegee Impex Private Limited, said the sanctions had no impact on his company as his company, which has an annual turnover of around ₹70 crore, works only with Russia. The Treasury Department said Shreegee had listed U.S.-sanctioned Russian company Kamaz Publicly Traded Company as a client and said it had shipped “hundreds of high-priority dual-use items, including aerospace parts.” as transmission belts and rubber products for car assembly, to manufacturers from Russia.” Tyagi said his company supplied transmission belts and hoses to Russian companies, but not aviation-related products, and Kamaz was not his customer.

The owner of Bengaluru-based Emsystech, Tirumala Raja, also said his company was not affected as his company only imported small electronic components from the US and does not have much contact with American customers. “Whatever components we have purchased from the US, they are intended for use in India only for geopolitical reasons. We exported to Russia some microprocessor components and other components that we imported from Hong Kong in 2022, but they were for medical electronics, not defense,” he said. This company achieves an annual turnover of approx ₹20 crore, according to Raja.

The Treasury Department said Emsystech shipped more than 800 shipments, including electronic integrated circuits and tantalum capacitors, to end users in Russia such as U.S.-designated Basis Trade Prosoft LLC, a supplier of industrial computers, components for automated process control systems and radio-electronic components.

Of the 19 sanctioned companies, at least two – Gujarat-based Galaxy Bearings Limited and Haryana-based Lokesh Machines – are listed companies. Lokesh Machines’ clients include American companies such as John Deere and Cummins, Swedish Volvo and Japanese Honda and Suzuki. HT contacted both companies and provided a detailed questionnaire.

The sanctioned companies include Mumbai-based Shreya Life Sciences Private Limited, which provides tens of millions of dollars worth of US-trademarked technologies, including advanced servers designed for artificial intelligence. On October 28, Bloomberg reported that Shreya had exported 1,111 units of Dell’s Technologies Inc.’s most advanced servers to Russia. worth $300 million through two Russian trading companies, including Mein Chain Limited, which was also sanctioned by the US Treasury. 998 of these servers featured high-end AI-optimized Nvidia processors.