Sanctions 2026 Comparisons

India’s sanctions landscape has undergone significant transformation in the last 12 months. The most notable development is India’s first autonomous trade sanction on Pakistan, prohibiting all direct and indirect imports or transit of goods originating in or exported therefrom, with immediate effect, citing national security and public policy. This marks a decisive departure from India’s traditional posture of implementing only United Nations Security Council (UNSC) mandated sanctions and signals a willingness to deploy trade restrictions as an instrument of bilateral statecraft.

The Indian Government also implemented the UNSC resolution changes in the past year, including amendments relating to travel bans, asset freezes, arms embargoes and adding individuals and entities to sanctioned lists concerning Sudan, the Democratic Republic of Congo, Libya, Haiti, Iraq and Yemen through corresponding updates in the national legislation.

In March 2023, the Indian Government mandated registration for virtual digital asset (VDA) service providers, including overseas operators under the Prevention of Money Laundering Act, 2022 (PMLA). In the past year, the Financial Intelligence Unit – India (FIU-IND), the enforcement agency under PMLA, has increased vigilance by initiating enforcement action against non-compliant offshore VDA platforms, including issuing compliance notices to entities operating in India without registration.

Additionally, Indian businesses are facing increasing pressure from US secondary sanctions targeting countries purchasing Russian oil and gas. In October 2025, the US Treasury’s Office of Foreign Assets Control (OFAC) sanctioned 21 Indian entities (19 companies and 2 individuals) for links to the Russian Government. The European Union’s (EU) sanctions packages have also extended restrictive measures to select Indian companies with Russian ties in mid-2025 and, more recently, in June 2026.

The EU’s 18th and 21st sanctions packages directly designated Indian entities on the EU asset freeze list. Further, in October 2025, the United Kingdom designated Indian refiners/port operators tied to Russian supply chains as sanctioned entities. These designations have created new commercial and compliance challenges for Indian businesses that have historically operated outside the direct reach of foreign sanctions regimes. Overall, the sanctions domain has expanded materially in both scope and complexity over the past 12 months, placing sanctions compliance firmly at the centre of corporate governance and cross-border statecraft strategy.

Geopolitical dynamics have become a key determinant of corporate strategy, rather than a secondary consideration. Trade sanctions, in particular, have gained prominence in boardroom and governance conversations over the past 12 months. This is primarily due to increasing geopolitical uncertainties and evolving requirements to comply with international obligations and national security. The key trends we are witnessing have been outlined below.

• India’s first autonomous trade sanction in the form of an import ban from Pakistan, signalling a paradigm shift from exclusive reliance on UNSC-mandated measures, toward a more assertive domestic sanctions posture (mentioned in the above section too).
• Enhanced know-your-customer (KYC) standards through updated FIU-IND guidelines, imposing stringent customer due diligence requirements including sanction designation verifications, bank account verification and periodic KYC refresh cycles by financial institutions and multi-nationals indicate both recognition and a pro-active approach of the financial sector to stay compliant with sanctions laws.
• Growing alignment with international standards on export control and strategic trade, including closer co-ordination with multilateral export control regimes such as the Wassenaar Arrangement, the Nuclear Suppliers Group and the Missile Technology Control Regime through enforcement of national legislation.
• Emergence of a dual-track Indian trade policy, ie, execution of free trade arrangements across competing geopolitical blocs, coupled with non-enforcement of any autonomous sanctions such as by the US, EU, etc. The FTAs preserve broad national-security exceptions and strengthen rules of origin, customs-risk management and supply-chain cooperation.
• Increased exposure to US and EU secondary sanctions pressure, principally arising from continued Indo-Russia commercial relationships leading to the private sector adopting corporate governance and contracting measures to combat any adverse sanctions implications.

The following sectors are particularly affected by sanctions regulations in India.

Banking and Financial Services

Compliance obligations under Reserve Bank of India (RBI) directions, screening requirements against UNSC and domestic sanctions lists, enhanced monitoring obligations and the practical challenges of correspondent banking relationships with jurisdictions under sanctions. Additionally, the risk of secondary sanctions, particularly under the US framework pertaining to foreign financial institutions, has become a prominent concern for the banking and financial sector.

Chemicals

Export controls on precursor chemicals and dual-use intermediates, particularly those with potential application in chemical or biological weapons programmes.

Defence and Dual-Use Technology

Controls under the special chemicals organisms, materials, equipment and technologies (SCOMET) list and export licensing requirements, particularly considering India’s growing defence exports and technology transfer arrangements.

E-Commerce and Fintech

VDA compliance obligations, cross-border payment monitoring and the challenges presented by decentralised finance platforms that may facilitate sanctions evasion.

Maritime and Shipping

Enforcement of the Pakistan trade ban, scrutiny of vessels carrying Russian oil and monitoring of ship-to-ship transfers in Indian waters.

Oil and Energy

Oil refining, import of Russian crude and international petroleum trade remain at the forefront of sanctions-related scrutiny. India is now the world’s largest buyer of Russian seaborne crude and Indian refiners face increasing pressure from both US and EU authorities regarding the origin and pricing of crude oil imports.

The primary regulators for sanctions activity in India are as follows.

• Ministry of External Affairs (MEA): Issues UNSCA Orders implementing UNSC resolutions. The MEA also serves as the nodal point for communication with UNSC sanctions committees.
• Ministry of Home Affairs (MHA): Administers counter-terrorism sanctions under the UAPA through the Counter Terrorism and Counter-Radicalisation (CTCR) Division. The National Investigation Agency (NIA) operates under the aegis of MHA and is responsible for the investigations and enforcement.
• Central Board of Indirect Taxes and Customs (CBIC): Enforces trade sanctions at the border through customs authorities and the Directorate of Revenue Intelligence (DRI).
• Directorate General of Foreign Trade (DGFT): Administers the export control regime and strategic trade controls. The DGFT maintains the SCOMET list and processes export authorisation applications.
• Reserve Bank of India (RBI): Serves as the principal financial regulator for sanctions compliance within the banking and financial system. The RBI issues Master Directions and circulars governing the obligations of banks and financial institutions.
• Financial Intelligence Unit – India (FIU-IND): Receives and processes suspicious transaction reports and disseminates intelligence to enforcement agencies. FIU-IND also supervises reporting entities for compliance with anti-money laundering and counter-terrorism financing obligations.

Reporting obligations in India are extensive and apply to a wide range of institutions and individuals. The principal obligations are outlined as under:

Financial Institutions

Banks, stock exchanges, depositories, intermediaries, insurance companies and other regulated entities must maintain updated lists of designated terrorists and organisations as notified under the UAPA and UNSCA Orders. These entities must screen customers and transactions against the consolidated list of designated persons and verify whether designated individuals or entities hold funds, assets or economic resources. Where a match is identified, it must be reported immediately to FIU-IND, the designated UAPA Nodal Officers and the relevant sectoral regulator (RBI, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, etc). If a match is confirmed, the entity must prevent further financial transactions and inform the central nodal officer. No prior court order is required for freezing.

Foreign Exchange and Cross-Border Reporting

The RBI mandates comprehensive monitoring of foreign exchange transactions, requiring authorised dealers to report cross-border remittances and capital movements under FEMA. All liberalised remittance scheme (LRS) transactions require purpose code declaration and are subject to monitoring for potential sanctions nexus. Customs and export violations prompt mandatory disclosures during investigations.

Other Reporting Requirements

• Registrars of immovable property must report holdings of designated individuals and entities to the relevant authorities.
• Designated non-financial businesses and professions (including real estate agents, dealers in precious metals and stones and certain professionals) must also comply with reporting obligations under the PMLA framework.
• VDA service providers registered under the PMLA must report suspicious transactions and maintain records of all transactions above prescribed thresholds.

The most significant court decisions and legal developments in the past three years have been outlined below.

Insolvency Proceedings by Sanctioned Indian Entity

In January–February 2026, an Indian chemicals trader (ICT) designated on the US OFAC SDN List initiated insolvency applications under the Insolvency and Bankruptcy Code 2016 (IBC) before regional benches of the National Company Law Tribunal (NCLT). These applications were directed against Indian subsidiaries and affiliates of US multinational coatings and chemicals companies (US Affiliates). The US Affiliates had withheld contractual payments to ICT following its SDN designation, apprehending that continued performance could expose their US parent entities, group companies and directors to secondary sanctions liability.

The NCLT declined to accept US sanctions exposure as a valid basis for non-performance. In arriving at this conclusion, the Tribunal placed determinative weight on the wholly domestic character of the underlying transactions: both contracting parties were Indian, the supply of goods occurred entirely within Indian territory, payment obligations were denominated in Indian Rupees and the governing law of the contracts was Indian law. On this basis, the NCLT held that the extraterritorial application of a foreign sanctions regime could not displace enforceable domestic contractual and insolvency obligations.

On 12 June 2026, the Gauhati High Court examined a bank’s refusal to process certain foreign exchange transactions arising out of merchant trade transactions where the vessels used for transportation of goods were owned by an Iranian company designated under OFAC sanctions list. The Court observed that mere existence of a foreign sanctions regime does not, by itself, render such sanctions enforceable as part of municipal law in India. However, the bank’s refusal was accepted on the grounds that:

• the contractual documentation incorporated sanctions-compliance requirements; and
• the incorrect disclosures by the entity violated Indian laws including FEMA, RBI and anti-money laundering norms.

The Court also observed that sanctions-related concerns may have significant commercial and operational consequences for banks and financial institutions facilitating international payments and part of correspondent banking networks.

On 6 August 2024, the Delhi High Court quashed the DGFT’s order invoking catch-all export control provisions on the export of parts of aircraft. The court observed that the Defence Research and Development Organisation (DRDO) inspection had confirmed the civil application of the relevant parts of an aircraft, type certificates and end-user certificates had been provided. That rationality must guide the implementation of export controls to balance economic interests with national security concerns. It establishes that the DGFT cannot invoke catch-all powers arbitrarily where competent technical authorities have certified the civil nature of goods and appropriate end-use documentation has been furnished. The decision is significant for exporters of dual-use goods and technologies seeking clarity on the boundaries of regulatory discretion.

The decision of the Hon’ble Delhi High Court is awaited in the matter concerning an energy sector entity (CS(COMM) 1006/2025) wherein the court is to decide the issue of whether a foreign jurisdiction’s (EU) sanctions can override the contractual obligations of an Indian entity operating under a contract governed by Indian law. This decision is expected to provide much-needed guidance on the extent to which extraterritorial sanctions can be given effect within the Indian legal system.

The procedure for challenging a sanctions designation depends on whether the designation arises under the UNSC Act or the UAPA, as set out below:

Delisting Under the UNSC Act

• The Indian authorities implement UNSC designations without independent judicial review. Accordingly, delisting may be requested through the following international channels:
• the focal point process established under UNSC Resolution 1730 (2006) and the relevant sanctions committee’s guidelines, whereby a petitioner may submit a delisting request directly to the focal point; or
• through the country of citizenship or residence of the designated person, which may raise the matter with the relevant UNSC sanctions committee on the person’s behalf.

Delisting the ISIL (Da’esh) and Al-Qaida sanctions list

By way of application to the UN Office of the Ombudsperson, which conducts an independent review and makes a recommendation to the sanctions committee.

Delisting Under the UAPA

The UAPA provides separate procedures for different designations, as outlined below.

• Unlawful associations – An application may be made to the MHA for cancellation of the notification declaring the association unlawful. The matter is then referred to the Unlawful Activities (Prevention) Tribunal (a body chaired by a High Court judge) for adjudication.
• Terrorists and terrorist organisations – An application for delisting is made to the MHA. If rejected, the applicant may apply to a review committee established under the chairmanship of a retired or sitting constitutional court judge, which reviews the evidence and makes a binding recommendation.

The remedies available through a successful delisting challenge include the following.

UNSC Act

Removal from the UNSC sanctions list (through the UNSC mechanisms), with consequent updating of domestic UNSCA Orders to reflect the removal. All restrictive measures (asset freeze, travel ban, arms embargo) cease upon delisting.

UAPA

Cancellation of the unlawful association notification; removal from the terrorist or terrorist organisation schedules; unfreezing of previously frozen assets; removal of travel and financial restrictions; and restoration of the entity’s legal capacity to operate.

The time required to obtain delisting varies significantly depending on the mechanism employed and the complexity of the underlying case.

UNSC Focal Point or Ombudsperson Process

There is no fixed timeline. It depends on the case’s complexity, the responsiveness of member states and the caseload of the relevant sanctions committee or Ombudsperson.

UAPA Unlawful Association Notifications

These notifications are valid for five years from the date of issuance. The Tribunal can take up to six months to adjudicate whether there is sufficient cause to declare the association unlawful, from the date the MHA issues the notification. The federal government may, on its own motion or application by the designated persons, delist an association.

UAPA Terrorist Delisting

No statutory timeline is prescribed for the review committee’s deliberation.

FTP prescribes prohibitions and restrictions on the import and export of specified services with designated countries, entities or individuals. The principal restrictions on services trade are as follows.

• Prohibition on any financial services or transactions with designated persons organisations or nations as required under applicable UNSC resolutions, implemented by way of UNSCA Order.
• Restrictions on the provision of services to countries and entities subject to UNSC sanctions, including arms-related services, technical assistance, brokering services and training related to prohibited activities.
• Prohibition on making available any funds, financial assets or economic resources to or for the benefit of persons and organisations designated under UNSCA Orders or the UAPA.
• Services (technology) covered under the SCOMET list or under catch-all control provision, also having military end use, without authorisation from the DGFT.

India maintains significant prohibitions and restrictions on the import and export of goods. The principal measures include:

• complete prohibition on direct or indirect import or transit of all goods originating in or exported from Pakistan under FTP;
• prohibition on trade in items, materials, equipment, goods and technologies with designated persons organisations and nations as notified under UNSCA Orders and FTP;
• arms embargoes on countries subject to UNSC sanctions (as applicable under the relevant UNSC resolutions);
• SCOMET list items (covering special chemicals organisms, materials, equipment) without specific export authorisation requirements administered by the DGFT; and
• catch-all controls on items with military end-use or weapons of mass destruction applications, empowering the DGFT to require an export licence even where items are not specifically listed on the SCOMET list, where the exporter has reason to believe the items may have use in a military or WMD application.

Indian courts have had limited occasions to consider sanctions as a ground for excusing contractual obligations. The legal framework is governed by Section 56 of the Indian Contract Act, 1872 (doctrine of frustration). Key judicial precedents have been outlined below.

• The Calcutta High Court vide its order dated 27 September 2016 (2016 SCC OnLine Cal 5067) rejected the force majeure defence based on US sanctions imposed on Iranian trade/ financial transaction for non-performance of a contract of supply of Sulphur from Iran to India, between an Indian phosphate manufacturer and a USAR-based trading company. The Court held that the sanctions did not make performance impossible. The sanctions applied only to US persons and not to other parties from trading with Iran. The Court noted that difficulty in procurement and commercial arrangements is insufficient to establish force majeure.
• The National Company Law Tribunal (NCLT) vide its order dated 26 March 2026 (CP(IB)N. 35/AHM/2026) rejected a sanctions-based frustration/impossibility defence to a payment obligation between two Indian parties in INR. The NCLT did not accept US-Iran sanctions (framed as a reason for impossibility) as a valid excuse for non-performance in this case. Its reasoning rested        on three grounds:
1. unilateral foreign sanctions lack legal force in India absent domestic recognition;
2. the specific “US person” nexus alleged was factually not established; and
3. Section 56 frustration requires impossibility/unlawfulness under the contract’s own governing (Indian) law, which was not shown.

Sanctions imposed by a foreign jurisdiction (such as the US or EU) that do not directly apply to Indian parties are unlikely to constitute a force majeure event in its natural meaning and scope, unless the party can demonstrate that compliance was impossible or such event is explicitly included as a contract suspension/ termination event in the contractual documentation between the parties.

Indian courts are yet to decide on enforcement of a judgement, whether domestic or foreign, against a sanctioned or designated entity. Any such judicial enforcement would, however, be expected to be examined in light of applicable Indian law, India’s international obligations and constitutional safeguards, including principles of due process and protection of fundamental rights.

Designation decisions in India are made by the following bodies, each operating within its statutory mandate.

MEA

Adopts UNSC-derived designations through UNSCA Orders issued under the UNSC Act. The MEA translates UNSC sanctions committee listings into binding domestic orders and is responsible for timely implementation of new designations, amendments and delistings.

MHA (Counterterrorism and Counter-Radicalisation Division)

Designates individuals and entities as terrorists or terrorist organisations under Schedules to the UAPA and declares associations as unlawful.

DGFT

Implements trade embargoes on countries organisations and individuals under the Foreign Trade Policy, including the administration of the SCOMET control list and the issuance of trade prohibition notifications.

India’s sanctions framework does not contain an explicit statutory “ownership and control” test equivalent to the US 50% rule or the ownership and control provisions found in EU and UK regulations. However, the extant Indian sanctions framework addresses this issue through the following mechanisms:

• UNSCA Orders apply to funds, financial assets or economic resources owned or controlled by designated persons or held on behalf of such persons, mirroring the UNSC resolutions;
• the UAPA prohibits dealing with funds and assets of unlawful associations and terrorists, including assets held by persons on their behalf or for their benefit;
• the RBI mandates financial institutions to identify and freeze accounts that resemble or are connected to designated individuals or entities; and
• entities are expected to conduct due diligence on a risk-based approach to determine whether they may be dealing with persons who are owned or controlled by designated persons.