The Indian government could purchase Russian arms using the euro so as to avoid the threat of U.S. sanctions for buying military hardware, the Economic Times reported citing sources.
The report says that the payments will be made to a Russia-nominated bank, with state-run lender VTB reportedly agreeing to the said euro transactions.
Earlier, India used the rupee-ruble route to carry out the existing defense transactions, hoping that it would allow it to dodge the sanctions for the military hardware purchases, which includes $1.5 billion contract for the S-400 air defense missile system.
Washington has threatened Delhi with sanctions on multiple occasions should the government decide to go through with the planned purchase of the S-400 system.
According to the report, India has to pay over $4 billion to Russia this year, with the biggest contract being that of the S-400, followed by the Chakra III submarine lease and procurement of four frigates for the Indian Navy.
Russia-based VTB Bank is ready to open a European account, while the Indian bank selected for the transaction of payment will have the least exposure to the U.S. dollar, the report added.
Last year, VTB Bank had processed an over $12 billion investment into India’s Essar Group, saving it from bankruptcy.