A version of this article also appeared in Regulation Asia.

India does not have an autonomous (or unilateral) sanctions program, despite being the world’s second most populous nation, the fifth largest economy and an annual exporter of almost $500B in goods and services. Nearly every other large country has an autonomous sanctions program – including China, which started issuing sanctions in 2019 – and so do all of India's immediate neighbors, including Bangladesh.

India’s reluctance toward sanctions as a tool of diplomacy traces to the nation’s history as a target of sanctions. Though New Delhi complies with United Nations (UN) sanctions, it has opposed unilateral sanctions as a form of economic protectionism. Security considerations also impact New Delhi’s willingness to sanction others, as is the case with India’s posture vis-à-vis Russia’s invasion of Ukraine.

Previously targeted with sanctions

India faced significant international trade restrictions after conducting nuclear tests in 1974 and 1998, but it also levied its own sanctions and trade restrictions against others. It sanctioned South Africa's apartheid regime and  blocked trade with Fiji from 1989 to 1999 over a deterioration of bilateral ties and the discrimination of Indians there. More recently, India revoked Pakistan’s Most Favored Nation (MFN) status in 2019 after a terrorist attack in Kashmir, and New Delhi has banned over 100 Chinese-developed apps since 2021, including TikTok and WeChat following border clashes.

Why is India reluctant to use unilateral sanctions today?

Many Indian officials do not view sanctions as an effective mode of changing state policy. Sanctions in the 20th century proved to be punitive and limited Indian attempts to liberalize the economy, but ultimately failed to deter nuclear weapons acquisition and testing. Ineffective sanctions allowed India to pursue nonaligned policy decades ago and contribute to the perceived uselessness of unilateral sanctions by New Delhi today.

Current watchlists primarily assist law enforcement

While India does not have sanctions that primarily target external actors, it does maintain multiple lists related to internal security and law enforcement. The list most closely resembling sanctions is the list of foreign and domestic organizations, individuals and entities suspected of terrorism or radicalization managed by the Ministry of Home Affairs. The list is not extensive and is not global in nature. Other watchlists from the National Investigation Agency and Central Bureau of Investigation also pertain to law enforcement while the Ministry of Corporate Affairs’ list concerns commercial wrongdoing.

India avoids sanctions against Russia

New Delhi has avoided adopting sanctions against Russia, in spite of pressure from G7 members. The Indian government avoids openly rebuking Moscow and continues to engage with Russia on strategic items. India’s government encourages domestic businesses to capitalize on discounted Russian oil purchases; for example, the government denounced criticism of oil purchases from Russia and the Indian Register of Shipping provides certifications to Russian state-owned tankers to ensure the supply of Russian oil to India. 

Long-standing strategic relations contribute to New Delhi’s position vis-a-vis the G7 and Russia, and the latter is a major arms supplier. Important, though controversial, purchases include the recent acquisition of an S-400 missile defense system.

India also says that its refusal to sanction Russia stems from concern for Russian citizens. India’s representative to the United Nations Security Council (UNSC) voiced concerns over sanctions over two weeks before Russia’s invasion of Ukraine. India’s attitudes toward isolating Russia thus come from New Delhi’s strategic interests with Moscow as well as its attitudes after a significant history as a recipient of sanctions.

Implications for business

While the Indian government declines to implement its own autonomous sanctions lists, foreign sanctions do impact Indian business. This will be increasingly true as the foreign governments step up enforcement of new Russia sanctions.

US sanctions on Iran, for example, have previously impacted Indian businesses. For example, the Treasury Department has designated Indian nationals and companies for trading with sanctioned Iranian entities. Approximately 50% of all US OFAC sanctions against Indian designees are secondary sanctions applied for facilitating transactions with other sanctioned entities, such as Iranian oil shipments.

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Methodology

The count of entries in India’s MHA list and the count of entries in China, Pakistan, Bhutan, Nepal and Bangladesh’s sanctions lists were calculated from Castellum.AI search. Data from other Indian watchlists was extracted from the websites of the government ministries responsible for their maintenance. 

Castellum.AI obtains global sanctions information from primary sources, and then proceeds to standardize, clean and enrich the data, extracting key information like IDs and addresses from text blobs. Castellum.AI enriches as many as fifteen separate items per entry. This analysis is based on the enriched primary source data that populates our database. The database consists of over 1,000 watchlists, covering over 200 countries and eight different categories (sanctions, export control, law enforcement most wanted, contract debarment, politically exposed persons, regulatory enforcement, delisted and elevated risk). Castellum.AI checks for watchlist updates every five minutes directly from issuing authorities.