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EU prepares sanctions on Chinese and Indian companies over Russia links

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Brussels is proposing to impose sanctions on three Chinese companies and one Indian business as part of its latest measures to damage Russia’s war machine.

If member states approve the plan, it would be the first time businesses in mainland China and India have been hit by EU sanctions.

The companies, along with one in Hong Kong, are among 21 newly listed entities in a European Commission document seen by the Financial Times. They cannot be named for legal reasons. The news was first reported by Bloomberg.

When the commission proposed targeting mainland Chinese companies last year, it backed down under pressure from EU governments, which must unanimously agree the measures.

EU officials at the time said Beijing had offered reassurances that it was not supporting Russian military operations. 

Under the proposed measures, European companies would be banned from dealing with the companies listed, as Brussels steps up efforts to avoid any circumvention of its restrictions, especially the supply of electronic components that could be repurposed for use in weapons systems. 

“It is also appropriate to include on that list certain other entities in third countries that indirectly support Russia’s military and industrial complex . . . by trading in such components”, along with more Russian companies, the document says. 

The proposal would also ban the export to Russia of components used to make drones.

The sanctions package, expected to be approved ahead of the second anniversary of Russia’s full-scale invasion of Ukraine on February 24, will be the 13th the EU has passed. The list of companies under sanctions will hit 643 if it is approved.

The new names also include businesses in Sri Lanka, Turkey, Thailand, Serbia and Kazakhstan.

Sanctions on an Indian company would be especially sensitive as the country is a US ally and is negotiating a trade deal with the EU. New Delhi has hit back at criticism that it legally buys cheap sanctioned Russian oil and sends products refined from it to the EU.

Despite the extensive western sanctions on Russia, the country is still managing to produce drones, missiles, tanks and other weapons. As the US Congress stalls over a package of military support for Ukraine, officials have warned of a “gap in the hose” of supply to Kyiv, which could allow Russia to make further military gains. 

The commission has ignored requests from some member states and the EU aluminium industry to further restrict supplies of the metal from Russia, given that it is a crucial component in aircraft and other advanced products.

Diplomats expect more than 200 individuals to be placed under sanctions in future drafts of the proposal, they told the FT.

The commission declined to comment. The Chinese and Indian embassies in Brussels have been approached for comment.

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