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Rediff.com  » Business » US moves to facilitate high tech trade with India

US moves to facilitate high tech trade with India

January 25, 2011 20:22 IST

On the eve of US Commerce Secretary Gary Locke's trip to India next week as the head of a high-tech trade mission of 23 American companies, including Fortune 500 heavyweights and also several small and medium enterprises, the Department of Commerce has moved expeditiously to implement the export control initiatives to facilitate high tech trade with India.

On Monday, the DOC took the first steps to implement the export control policy initiatives announced by President Barack Obama and Indian Prime Minister Dr Manmohan Singh during Obama's visit to India in November, which included removing entities like the Indian Space Research Organization and the Defense Research and Development Organization and its subordinates from the DOC's Entities List.

Last week, senior Obama administration officials had told rediff.com  that  Locke had made clear that he wants all of the Indian entities on the Department of Commerce's Entities List, formally removed before he leads the trade delegation to India February 6-11 so that he has the leverage to cut some tangible deals.

Accordingly, Eric Hirschhorn, Under Secretary for Industry and Security, whose office is responsible  for the Entities List, had said that "these regulatory changes will begin the transformation of the bilateral export control policies to realize the full potential of the strategic partnership between our two countries."

On Monday, Locke said, "Today's action marks a significant milestone in reinforcing the US-India strategic partnership and moving forward with export control reforms that will facilitate high technology trade and cooperation."

The DOC's Bureau of Industry and Security, which Hirschhorn heads, published a Federal Register Notice which updated the Export Administration Regulations in several ways, vis-a-vis India.

They included:

Removing several Indian space- and defence-related companies from the Entity List. Removal from the Entity List eliminates a license requirement specific to the companies, and results in the removed companies being treated the same way as any other destination in India for export licensing purposes.

Removing India from several country groups in the Export Administration Regulations resulting in the removal of export license requirements that were tied to India's placement in those country groups.

Adding India to a country group in the EAR that consists of members of the Missile Technology Control Regime, to recognize and communicate India's adherence to the regime, the US-India strategic partnership, and India's global non-proliferation standing.

Hirschhorn said, "These changes reaffirm the US commitment to work with India on our mutual goal of strengthening the global non-proliferation framework."

The White House, with reference to this issue that had peeved India over the years, said during Obama's visit that "Commensurate with India's non-proliferation record and commitment to abide by multilateral export control standards, the US will remove all civil space and defense-related entities from the Department of Commerce 'Entity List.'

Locke, in an exclusive interview with India Abroad, the newspaper in the United States owned by rediff.com  earlier this month, had said that the promise by President Obama to lift the curbs on ISRO, DRDO and other Indian companies on the DOC's Entity List was one of the tangibles of the visit.

He said, "In terms of  benefits on India's side, obviously the agreement on export controls, which recognizes that India will soon hopefully join the various multilateral regimes that control exports and also will enable the sale of very high technology goods to India, as requested and desired by India," was where New Delhi was able to achieve many of their top priorities from this visit."

Locke said in the interview that this was "enormously significant because with these agreements reached on exports controls and the removal of some (Indian) organizations from the Entities List, it would make a tremendous impact and difference."

He explained, "The Entities List had made it much more difficult for these organizations to receive high-tech American goods and so the entire agreement will advance greater research and development within many of these organizations using very high, sophisticated technological goods from the United States, and of course, it will hasten the innovation industry within India."

In its posting in the Federal Register yesterday, the BIS said, "In this final rule, the Bureau of Industry and Security amends the Export Administration Regulations to implement several components of the bilateral understanding between the United States and India announced by President Obama and India's Prime Minister Singh on November 8, 2010."

"This is the first in a series of rules implementing the President's and the prime minister's commitment to work together to strengthen the global non-proliferation and export control framework and further transform our bilateral export control cooperation to realize the full potential of the strategic partnership between our two countries," it said.

The BIS said, "These reforms reflect India's non-proliferation record and commitment to abide by multilateral export control standards."

The entities to be removed are ISRO and its subordinates, Liquid Propulsion Systems Center, Solid Propellant Space Booster Plant, Sriharikota Space Centre, and Vikram Sarabhai Space Centre.

Also DRDO and its subordinates, Armament Research and Development Establishment, Defense Research and Development Lab, Missile Research Development Complex, and Solid State Physics Laboratory.

Also, on this initial list of entities removed is Bharat Dynamics Limited.

Earlier, one senior official in explaining the proposed license exception the Commerce Department published in December said that these "had two primary groups of countries and India was included in the group of countries to which Wassennar Basic List items could be exported without a license under certain conditions."

"The second group of countries was limited to countries that are members of the four multi-lateral export control regimes or NATO members that are members of at least three of the regimes," the official said, and pointed out that "India is not a member of all four regimes or a NATO member."

But the official reiterated that the Commerce Department "is, however, working quickly to publish a regulation that will remove Indian space and defense-related entities from the Entity List and enact other India-specific export control changes."

According to the official, this was a specific India track in order to expedite the removal of Indian entities so that "there can be a clean slate when the Secretary visits India with the high-tech business development mission."

The BIS, controls exports and re-exports of dual-use commodities, technology and software for reasons on national security, missile technology, nuclear non-proliferation, chemical and biological weapons non-proliferation, crime control, regional stability and foreign policy.

Aziz Haniffa in Washington DC