The U.S. has warned that the deal, signed during a summit between Prime Minister Narendra Modi and Russian President Vladimir Putin in New Delhi, could attract sanctions.

The 24-hour visit of Russian President Vladimir Putin to India once again reaffirmed Moscow’s place as India’s biggest and most important defence partner. On Friday, the two countries signed a $5.43 bn deal for five S-400 missile systems on the sidelines of the summit meeting between Prime Minister Narendra Modi and Mr. Putin in addition to concluding eight other agreements.

“The sides welcomed the conclusion of the contract for the supply of the S-400 Long Range Surface to Air Missile System to India,” the joint statement issued after the talks said.

The eight agreements span diverse areas ranging from space and nuclear cooperation to railways and agriculture. The two countries have also set a target of $30 billion bilateral trade by 2025.

“Our relations go beyond military hardware and military exchanges. We paid attention to humanitarian response mechanisms,” Mr. Putin said addressing the press.

He also extended an invite to Mr. Modi to Vladivostok for a business summit in September 2019.

S-400 deal

While India has a long history of signing big ticket defence deals with Russia, this deal comes at a time of increased friction between the U.S. and Russia and New Delhi’s own deepening defence cooperation with Washington.

“The S-400 deal was signed today at 1100 hrs by the Joint Secretary Land Systems from India and the Director General, Rosoboronexport of Russia,” a top government source said.

Deliveries will begin in 24 months, which is end 2020.

The U.S. has warned the deal could attract sanctions under the Countering America's Adversaries Through Sanctions Act (CAATSA) law that restricts defence purchases from Russia, Iran and North Korea.

U.S. officials have stated that under CAATSA, it is payments and not signing of deals that triggers the sanctions. But as per procedure, when a deal is signed payment to the tune 10-15% of the contract value is made.

“In this deal, 15% advance payment would be done,” an official has confirmed adding that payments would be through rupee-rubble exchange. This means today’s deal would automatically trigger sanctions.

This deal is being seen as a reiteration of India’s “strategic autonomy” in its foreign policy and can have serious implications on India’s relationship with the US.

US non-committal on waiver

Responding to the S-400 deal, the U.S. embassy remained non-committal is India would get a waiver. A U.S. embassy spokesperson said in a statement that the intent of CAATSA is to impose costs on Russia for its “malign behaviour” and it is “not intended to impose damage to the military capabilities of our allies or partners.”

“The waiver authority is not for a blanket waiver. It is transaction-specific. There are strict criteria for considering a waiver. Waivers of CAATSA section 231 will be considered on a transaction-by-transaction basis. We cannot prejudge any sanctions decisions,” the spokesperson added.