INDIA Law and Practice Contributed by: Alina Arora, Samarth Gupta and Parth Singh, Shardul Amarchand Mangaldas & Co
Enforcement is undertaken by the DGFT and customs authorities, with the DRI leading intelligence-based cases. A voluntary self-disclosure procedure for SCOMET contraventions (except those involving nuclear and chemical weapons schedule items) was introduced by the DGFT in January 2025, with disclosures assessed by the IMWG. Bona fide disclosures accompanied by remedial measures are generally treated as a mitigat - ing factor – although settlement is not a matter of right. 4. Compliance, Sanctions and Embargoes 4.1 Sanctions Legislation and Regulatory Framework India implements UNSC sanctions and does not have an autonomous sanctions statute comparable to the Office of Foreign Assets Control (OFAC), EU or UK regimes – ie, there is no general power to designate foreign persons, freeze their assets or prohibit deal - ings with them on foreign policy grounds, and India has no consolidated sanctions list. The relevant instru - ments are as follows. • The UNSC Act – UNSC measures are given domestic effect through orders issued under the UNSC Act. • The UAPA – this provides for designation of terror - ist individuals and organisations under domestic criminal law, as well as mandatory freezing of the assets of UN-listed persons. • The WMD Act – this imposes restrictions on prolif - eration financing and related dealings. • The FTDR Act and the FTP – these provide for trade prohibitions, including India’s first autono - mous country-specific trade measure (ie, the pro - hibition on direct and indirect import and transit of goods from Pakistan imposed on national security and public policy grounds). This is a trade control measure rather than a sanctions designation, to the extent that it restricts goods rather than per - sons and does not create any list, licence, or asset freeze.
• FEMA and the Reserve Bank of India (RBI) direc - tions – these provide for the regulation of foreign exchange payments. • The Prevention of Money-Laundering Act 2002 (PMLA) – this provides for reporting and enforce - ment through the Financial Intelligence Unit–India and the Directorate of Enforcement (ED). The MEA issues UN implementation orders; the MHA administers UAPA designations; the DGFT adminis - ters trade measures; the RBI supervises compliance by regulated financial entities; and customs authori - ties enforce at the border. Sanctions imposed by the USA, the EU and the UK have no legal force in India, which does not have a blocking statute. Exposure of Indian entities to such sanctions arises commercially – ie, through dollar clearing, correspondent banking and US-origin con - tent. 4.2 Arms Embargoes Arms embargoes imposed by the UNSC are given effect through orders under the UNSC Act and cor - responding prohibitions under the FTP, covering the supply, sale, transfer and transit of arms and related material to embargoed states and entities (eg, North Korea and the Islamic State of Iraq and the Levant (ISIL) and Al-Qaeda sanctions list). Exceptions are available only as provided in the rel - evant resolution. India does not impose unilateral arms embargoes by legal instrument. However, export authorisations are in practice denied for adversary states, and the OGEL excludes negative or sensitive countries. India continues defence trade with states In India, banks and other regulated financial entities are required to screen customers and transactions against UN sanctions lists and UAPA designations under RBI’s KYC directions and freeze assets on a match. Defence contractors are not subject to prescriptive screening requirement under Indian law. However, subject to Western but not UN sanctions. 4.3 Screening and Due Diligence Requirements
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