The US government, on October 30, sanctioned nearly 400 entities and individuals, including 19 Indian companies, for “supporting Russia’s military industrial base”. Two individuals, who are the co-directors of one of the sanctioned companies, were also sanctioned. Due to these sanctions, all properties of these entities, within the US or in control of US will be blocked and will be reported to the Office of Foreign Assets Control (OFAC). Americans and all those within the US are prohibited from conducting any transactions with the sanctioned entities.

Ajeet Samani, the owner of Maharashtra-based Khushbu Honing, said that hardly 30% of his ₹15 crore turnover depended on Russia. “Rest of our business is domestic. We are not doing any business with the US so we are not really affected. I am getting paid in INR, not in dollars or euros,” he said. This might affect Khushbu Honing’s future imports from and exports to the US. “Tomorrow, if I have to import or export something to or from the US, I may have to do it using another company, like a sister company. However, there is not requirement for my machines in the US because there are many manufacturers in the US,” he said.

But he still intends to talk to the Engineering Export Promotion Council of India to get a better picture as everything is still in the initial phase. “US and Europe cannot supply to Russia so Russia is naturally looking to India and China,” he said.

Khushbu Honing has been sanctioned for sending at least give shipments of advanced machine tools and accessories to Russia-based Unimatik that has been sanctioned by the US for supplying Russian defence with CNC machines and related parts. “As of January 2024, U.S.-designated, Russia-based Limited Liability Company AK Microtech sought to evade sanctions by purchasing microelectronics equipment via Khushbu,” the US Treasury Department said in its statement.

Rahul Kumar Singh, the director of Delhi-based TSMD Global, which has been sanctioned for shipping CHPL items worth $430,000 (~ ₹3.6 crore) to Russia based companies including Elektron Komponent and sanctioned companies LLC VMK, Alfa LLC, and Joint Stock Company Avtovaz, said he did not understand why they had been sanctioned.

In FY24, Singh said that TSMD Global’s turnover was more than ₹10 crore. TSMD Global buys products from the open Indian market and exports them to Russia and all the company’s income comes from Russia. The transactions are processed through Russia’s Sberbank which has a branch in Delhi. He doesn’t know how the sanctions will affect the bottom line.

“We don’t know who is sanctioned and who is not. We purchase from the open Indian market and then export it. Some of these products might have originated in the US, in EU, in Japan, in China, in Malaysia, in Hong Kong, and even in India,” he said. “We can’t control where electronic components are then used,” he said. As per the State Department’s statement, TSMD Global had shipped US and EU origin CHPL items such as electronic integrated circuits, central processing units and other fixed capacitors between July 2023 and March 2024.

“We export electronic parts, garments, parts for automobiles. We have been doing this for so long. We, in fact, want to closely work with Russia. We work according to Modi ji. He repeatedly goes to Russia. We are getting business from there,” Singh said. “At times the customs department asks us when we export whether it is used for aviation. We tell them that the same component is used in planes and in mobiles,” he said.

On Friday, he did not know if the company would continue to work with the sanctioned Russian companies. “If we are getting business from there and our government’s relations with that country are okay, why shouldn’t we?”

But Singh is clear that if the Indian government imposes restrictions, TSMD Global will stop, but it has not thus far.

Praveen Tyagi, director of Meerut-based Shreegee Impex Private Limited, said that his company is not affected by the sanctions at all because his company, which has an annual turnover of about ₹70 crore, deals only with Russia. The Treasury Department said that Shreegee had listed a Russian company sanctioned by the US, Kamaz Publicly Traded Company, as one of its customers and said that it had sent “hundreds of high-priority dual-use items, including aviation-related parts, as well as transmission belts and rubber products for automobile assembly, to Russia-based manufacturers”. Tyagi said that his company supplied transmission belts and hoses to Russian companies but not aviation-related products, and that Kamaz was not his customer.

The owner of Bangalore-headquartered Emsystech, Thirumala Raja, too said that he was not affected as his company was only importing small electronic components from the US and there are not many dealings with American clients. “Whatever components we have bought from the US, they are meant for use in India only because of the geopolitical issues. We exported some microprocessor components and other components to Russia that we imported from Hong Kong in 2022 but they were related to medical electronics, nothing defence related,” he said. This company has an annual turnover of about ₹20 crore, as per Raja.

The Treasury Department said that Emsystech had sent over 800 shipments, including of electronic integrated circuits and tantalum capacitors, to Russia-based end-users such as U.S.-designated Basis Trade Prosoft LLC, a supplier of industrial computers, components for automated process control systems, and radio-electronic components. Raja said that this happened until 2022 and the exports were meant for medical electronics. He said that his company has no defence-linked clients overseas, and that his company supplied power solutions and small microcontrollers to the Indian Navy via Bharat Electronics Limited.

A Delhi-based company, Denvas Services Private Limited, has been sanctioned because three of its four directors are Russian nationals who, as per the Treasury Department, are involved in defence procurement schemes and the company itself has been used by Russia to procure US-origin microelectronics for use in its advanced conventional weapons as recently as 2023.

Another company, Mumbai-based Shreya Life Sciences Private Limited, has been sanctioned for shipping US trademarked technology worth tens of millions of dollars, including advanced servers designed for AI, to Russia which Russia, as per the Treasury Department, “seeks to procure for its weapons programs”. On October 28, Bloomberg reported that Shreya exported 1,111 units of Dell Technologies Inc.’s most-advanced servers to Russia in April-August 2024 and 998 of these servers contained high-end processors optimised for AI made by Nvidia. Corp. or Advanced Micro Devices Inc., according to Dell’s website. These shipments, as per Bloomberg, were worth $300 million and imported by two Russian trading companies, Mein Chain Ltd. and I.S LLC. Mein Chain was also sanctioned by the Treasury Department for being a Russia-based wholesaler and importer of computer equipment founded in 2023 that offers “turnkey import” services.

Of the 19 sanctioned companies, at least two — Gujarat headquartered Galaxy Bearings Limited and Haryana headquartered Lokesh Machines — are publicly listed companies. Lokesh Machines’ clients include American companies such as John Deere and Cummins, Sweden’s Volvo, and Japan’s Honda and Suzuki. HT has reached out to both companies with a detailed questionnaire.

One of the sanctioned companies is Hyderabad-based RRG Engineering whose chairperson and managing director GM Ganga Rao was an industry expert for the Ministry of Civil Aviation’s 2018 task force on fast tracking unmanned aerial vehicle (UAV) technology headed by Jayant Sinha.

While sanctioning RRG Engineering, the US Treasury Department said that the company had sent over 100 shipments of microelectronics to a sanctioned, Russia-based company called Arteks since 2023.