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Products with two uses: US alerts Indian companies about Russia’s acquisition of defense technologies

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This comes before the revelation of sanctions imposed in November of last year on Si2 Microsystems, a Bengaluru-based company, over its alleged involvement in supplying dual-use technology to Russia.

Western sanctions, Russian missiles, dual-use commodities, Indian enterprises, US warnings, defense exports, Indian defense exports to Russia, technology exports to Russia, and Indian Express newsAmong the dual-use products covered by the Western sanctions list in relation to the Ukrainian crisis are drones, drone software, machine tools, and electrical components. These products are suitable for both military and non-military uses.

“To increase the awareness of Indian companies about the significance of not exporting certain products, like chemicals, aeronautic parts, and components that can be used in missile systems and other defense equipment, they (US government officials) are leading consultation and sensitization meetings with the industry,” the official stated.

Also Read | Experts think China’s clandestine spacecraft is probably testing “dual use” technologies.
Furthermore, as Reuters had reported in July of this year, a US Treasury official had also forewarned India’s banks that financial institutions that do business with Russia’s military industrial base risk losing access to the US financial system. “The Russian military is known to rely on the importation of sensitive goods, such as microelectronics and machine tools, and it looks to foreign financial institutions to help with these transactions,”
Moreover, Chinese shipments of dual-use products had raised concerns in June of this year, according to US Treasury Secretary Janet Yellen. China is the leading supplier of machine tools, microelectronics, and nitrocellulose, which are essential for producing munitions and rocket propellants, as well as other dual-use goods that Russia is using to strengthen its defense capabilities, according to the US, which put over 300 companies on an export blacklist.

According to the Ministry of Commerce and Industry, export regulations for some goods with dual-use applications are being liberalized by the government as of January 2024. The official did clarify, though, that the products the US has identified are not Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) products, which call for a license in order to be traded. Dual-purpose products fall under the Indian SCOMET list. “The US is closely examining a lot of things. Although the US thinks they are joining the (Russian) defense industrial system, these are not SCOMET goods. The representative explained, “The two or three companies that the US identified do not export SCOMET goods. India is increasingly exporting machinery, auto components, steel and aluminum products, pumps, internal combustion (IC) engines, and other goods to Russia.

According to official ministry statistics, India’s overall exports to Russia reached over $4 billion in 2023, a 40% rise. The main cause of this growth is engineering goods, which nearly doubled from $680 million in 2022 to $1.32 billion in 2023. Notable gains were also observed in the medication and pharmaceutical sector.

Alongside this increase in exports, Russia has expanded its defense spending. A July World Bank report states that a significant uptick in military-related operations in 2023 will affect Russia’s economic activity. The Stockholm International Peace Research Institute (SIPRI) estimates that in 2023, Russia would spend $109 billion on military expenditures, a 24% increase from the previous year.

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