Perspective- CAATSA Waiver for India | Gist of Rajya Sabha TV / RSTV (now Sansad TV) - UPSC PDF Download

Context

• The US House of Representatives has passed by voice vote a legislative amendment that approves waiver to India against the punitive CAATSA sanctions for its purchase of the S-400 missile defence system from Russia.
• The amendment was authored and introduced by Indian-American Congressman Ro Khanna.
• It had urged the Biden administration to use its authority to provide India with a CAATSA waiver to in the face of aggression from China.

What is the CAATSA?

• CAATSA is a law that came into effect in the US in 2017, meant to punish countries having deep engagements with Russia, North Korea, and Iran using economic sanctions.
• It said countries having a “significant transaction” with Russian intelligence and military agents will be subject to at least five kinds of sanctions.
• Ordinary transactions will not invite sanctions, and the decision of who has sanctions imposed on them comes down to the interpretation of “significant transaction”.
• This is one of the various waivers or exemptions mentioned, such as the transaction not affecting US strategic interests, not endangering the alliances it is a part of, etc.

Why did the US enact a law like CAATSA?

• The US flagged issues of Russia’s alleged interference in the 2016 Presidential elections, and its role in the Syrian war as some of the reasons for punishing engagement with it.
• EU countries that had even more significant ties with Russia for oil and gas supply before the Ukraine-Russia conflict in 2022, had also criticised CAATSA.

Countries facing sanctions

• The US has placed sanctions on China and Turkey for purchase of the S-400.
• The sanctions included denial of export licences, ban on foreign exchange transactions, blocking of all property and interests in property within the US jurisdiction and a visa ban.

Reasons behind exemption to India

• CAATSA impacts Indo-US ties, and dents the image of the US as a reliable partner at a time when it is projecting India as a key player in its Indo-Pacific strategy.
• US administration for countries like India has favoured relief, citing the “strategic opportunity” that India presents, and also the opportunity “to trade in arms with India”.
• Indeed, the US defence industry sees India as a major market, over the last decade, deals with India have grown from near zero to $15 billion.
• Both in term of the number and value of contracts, the US is way ahead of other major suppliers.
• The CAATSA exemption also underlines the growing defence and security cooperation that has seen India sign a logistics pact with the US.
• Also US designated India as a Major Defence Partner, and both countries coming together on Indo-Pacific strategy, the newly resurrected Quad.
• It also marks an acceptance by the US of the point of principle that as a sovereign country, India cannot be dictated on its strategic interests by a third country.

Benefits to US by this waiver

• This connection is centred on an eventual ‘payback’ to the US for lifting the spectre of CAATSA, looming over New Delhi since 2018.
• India is procuring some 140-odd F/A-18s for both the Indian Navy and the Indian Air Force for around $30-35 billion.
• Prospective F/A-18 sales would significantly boost the US economy, buffeted by unemployment and inflation running at 8.6%, its highest since 1981.
• The waiver amendment also urged the US to do more to support India’s decision to reduce its reliance on Russian-made weapons.

Why did India sign the S-400 deal?

• Security paradigm: S-400 is very important for India’s national security considerations due to the threats from China, Pakistan and now Afghanistan.
• Air defence capability: The system will also offset the air defence capability gaps due to the IAF’s dwindling fighter squadron strength.
• Russian legacy: Integrating the S-400 will be much easier as India has a large number of legacy Russian air defence systems.
• Strategic autonomy: For both political as well as operational reasons, the deal is at a point of no return.

Way forward

• The revision in bilateral ties is consistent with the prevailing strategic tone of bilateral ties.
• Through associations like Quad and, more recently, I2U2, strategic linkages have also been strengthened.
• India’s strategic interests require a shift away from Russians who are increasingly leaning over China.
• Following its invasion of Ukraine, Russia’s reliance on China has grown dramatically, and this position is considered unlikely to change in the near future.