US sanctions Indian firms, people amid Russia Ukraine war: Why, what exactly are sanctions

Which Indian firms have been sanctioned by the US, and why? Also, what does it mean to ‘sanction’ a firm or a country? We explain.

Indian firms sanctioned

One of the Indian firms named in the US State Department statement is Ascend Aviation India Private Limited that “sent over 700 shipments to Russia-based companies” between March 2023 and March 2024. “These shipments included over $200,000 worth of CHPL items, such as US-origin aircraft components,” the US State Department said, and named its directors as well.

CHPL stands for Common High Priority List. According to a statement by Bureau of Industry and Security (BIS), which came up with this list, “certain items are more significant to Russian weaponry than others. Working with the European Union, Japan, and the United Kingdom, BIS has developed the Common High Priority List (CHPL), which includes 50 items…that Russia seeks to procure for its weapons programs.”

The US also named Mask Trans, “an India-based company involved in the supply of over $300,000 worth of CHPL items such as aviation components to Russia-based and U.S.-designated S 7 ENGINEERING LLC from June 2023 to at least April 2024”.

The third Indian company is TSMD Global private limited, which “shipped at least $430,000 worth of CHPL items to Russia-based companies…these shipments, which occurred between July 2023 and March 2024, included U.S.- and EU origin BIS CHPL Tier 1 and 2 items such as electronic integrated circuits, central processing units, and other fixed capacitors”.

It added, “Futrevo is an India-based company involved in the supply of over $1.4 million worth of CHPL items such as electronic components” to Russia-based SMT-ILOGIC, the manufacturer of Orlan drones. “The shipments were from January 2023 to at least February 2024.”

Along with this, other firms have also been sanctioned.

The two Indian nationals sanctioned are Vivek Kumar Mishra and Sudhir Kumar, the directors of Ascend Aviation India.

What are economic sanctions?

Sanctions basically restrict or entirely scrap the economic relations between the entity applying the sanctions and the one they are being applied on. Sanctions can take the form of import or export ban, refusal to trade, freezing of assets, ban from using banking systems and currency of a country or group of countries, etc.

According to the Council on Foreign Relations, “Sanctions may be comprehensive, prohibiting commercial activity with regard to an entire country, like the long-standing US embargo of Cuba, or they may be targeted, blocking transactions by and with particular businesses, groups, or individuals.”

The US, for example, has imposed sanctions on a host of countries, including Iran, North Korea, China, etc. Russia, after the breakout of the Ukraine war, has become the most sanctioned country in the world.

Apart from individual countries, the UNO also imposes economic sanctions, after they are approved by its Security Council. The European Union (EU), too, has a mechanism for imposing sanctions.

While sanctions act as a tool of punishment or pressure tactic on the country or entity they are being applied to — the logic being that economic losses will force it to reconsider its moves — their efficacy has been debated. Critics have pointed out that targets can easily find ways to circumvent sanctions, and enforcing them hurts the other party too.

For example, Russia’s economy has not been derailed despite heavy Western sanctions, as other countries, such as India and China, continue to trade with it. When an international organisation like the UN imposes sanctions, it has no means to enforce it, and that is left to individual member countries. Also, if a country were to ban imports from another country, its industries that need the imported raw material also suffer.