When Indian Prime Minister Narendra Modi hosts Russian President Vladimir Putin on Friday, one item on their agenda will be closely tracked in Washington: India’s planned purchase of Russia’s S-400 air-defense missile systems.

Washington is targeting Russia’s defense industry and those who do business with the country using a sanctions power mandated by Congress last year. Sanctioning New Delhi for its deal with Moscow, though, would disrupt U.S. efforts to cultivate India as a security partner—a key prong in its Indo-Pacific...