US upgrades India's status as trading partner on par with its Nato allies

New Delhi: The US has upgraded India’s status to a trading partner equal to its trusted North Atlantic Treaty Organization (Nato) allies, opening the doors for India to import a range of state-of-the-art defence hardware and cutting edge technologies that it needs to propel its economic growth to the next level.

An announcement to this effect was made by US commerce secretary Wilbur Ross on Monday at the first Indo-Pacific Business Forum weeks ahead of the inaugural India-US “2+2” dialogue that will bring together Indian and US defence and foreign ministers in New Delhi on 6 September.

The move, which comes almost two years after India was designated a major defence partner of the US, will speed up the sale of high-tech defence and non-defence products that are otherwise subject to strict controls and licensing.

India is the only country in South Asia to be upgraded in this manner and is the third such country in Asia behind Japan and South Korea to be moved to the Strategic Trade Authorisation (STA)-1 category by the department of commerce, which includes US allies such as Britain, Australia, Canada, Poland and Norway.

Till recently, India was classified as an STA-2 country, which meant it had to seek clearances for various kinds of technology buys or imports.

The Indian foreign ministry welcomed the announcement.

“It is a logical culmination to India’s designation as a major defence partner of the US and a reaffirmation of India’s impeccable record as a responsible member of the concerned multilateral export control regimes,” Indian foreign ministry spokesman Raveesh Kumar said in New Delhi.

“This step will further facilitate India-US trade and technology collaboration in defence and high technology areas. We look forward to the US side operationalising the decision at an early date,” Kumar said.

The US has granted STA-1 status to only 36 countries, most of whom are Nato or key non-Nato allies. The STA-1 status expands the scope of exports. It will enable American companies to export more high-technology items under a streamlined licence exception that does not require individual licences, subject to the Export Administration Regulations (EAR). All licences needed for a project can be acquired with one go ahead from the US rather single licences for each significant technology sales.

“This (designation) was something that was in the works,” said Arun Singh, former Indian ambassador to the US. “It follows from the US designating India as a major defence partner. This is will help India access sophisticated US technology” in terms of defence hardware, Singh said.

“It shows that the push to accelerate strategic ties that started in the Obama presidency is being carried forward by the Trump administration and in that there is continuity despite some issues on the economic side,” he said.

“India has progressively strengthened its export controls. It is today a member of three of four export control regimes—the Missile Technology Control Regime, the Australia Group and the Wassenaar Arrangement and on the nuclear side in conformity with Nuclear Supplier Group (NSG) guidelines,” said Rakesh Sood, a former foreign ministry official dealing with nuclear and disarmament issues.

“With growing engagement through regular meetings of these groups, the comfort level of other countries about the robustness of Indian systems and practices has increased,” he said.

Ross said India had been granted “Strategic Trade Authorization status STA-1” which is a “very important status under our export control regime and acknowledges the US-India security and economic relationship.”

The move, which will reduce the number of licences needed for US exports to India, means India can get easy access to the latest defence technologies, according to the US department of commerce website.

Ross said the new status would provide India “greater supply chain efficiency, both for defence, and for other high-tech products,” the lack of which affected nearly $9.7 billion worth of goods India could have exported from the US over the last seven years.

In the past 15 years, the US has emerged as one of the major defence hardware suppliers to India with New Delhi buying almost $15 billion worth of armaments from the US.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.