In an effort aimed at expanding high technology trade and forging closer strategic relations with India, on January 25, 2011, the US Department of Commerce’s Bureau of Industry and Security (BIS) issued a final rule amending the Export Administration Regulations (EAR), which removed nine Indian defence and space companies from the Entity List (EL). Those removed from the EL include Bharat Dynamics Limited (BDL), four subordinates of India’s Defence Research and Development Organization (DRDO) and four subordinates of the Indian Space Research Organization (ISRO).1 The removal of these nine Indian companies from the EL eliminates the existing license requirements in the EL and results in the removed companies being treated the same way as any other destination in India for export licensing purposes. Export restrictions on these companies have been in place since India tested nuclear weapons in 1998.
The amendment also removed India from several country groups such as D: 2 (nuclear proliferation), D: 3 (chemical and biological weapons proliferation) and D: 4 (missile technology controls) in the EAR, resulting in the removal of export licence requirements that were tied to India’s placement in these groups. Countries that figure in EAR include China, Pakistan, Russia, and in some instances, even Israel. The amendment further adds India to the country group A: 2 in the EAR, which consists of members of the Missile Technology Control Regime, thus recognizing and communicating India’s adherence to the regime, the India-US strategic partnership, and India’s global non-proliferation credentials. In addition, it also supports India’s efforts to join four multilateral export-control regimes, i.e. Nuclear Suppliers Group (NSG), Missile Technology Control Regime (MTCR), Australia Group (AG), and Wassenaar Arrangement (WA), which require the US to revise its own export restrictions.
The US decision meets a long pending Indian demand and will move forward technological cooperation and strategic relations between the two countries as India regards technology transfer as the “acid test” of the US commitment and the “touchstone” for forging a long and stable strategic relationship. The US Department of Commerce described this as the ‘first steps’ to implement the export control policy initiatives announced by President Barack Obama and Prime Minister Manmohan Singh in their November 2010 joint statement issued in New Delhi, when they announced plans to expand cooperation in civil space, defence and other high technology sectors. The US Commerce Secretary Gary Locke said that this “action marks a significant milestone in reinforcing the India-US strategic partnership and moving forward with export control reforms that will facilitate high technology trade and cooperation.”2
For a long time, however, India-US cooperation in the field of dual-use technology had suffered due to different issues including the issue of maintaining exclusive control over the specific areas in which particular dual-use technologies was to be used. This, in spite of the fact that US technological cooperation with India began in December 1950, when the two countries signed a bilateral agreement for Technical Cooperation in New Delhi. This agreement had its background in Harry Truman’s ‘Point Four Programme’, a policy of technical assistance and economic aid to underdeveloped countries which he outlined in his Inaugural Address on January 20, 1949. US assistance to India’s civilian nuclear (Tarapur, 1963) and space (Thumba) programmes was notable in the early stages. However, after India conducted a peaceful nuclear test in 1974 and later began its Integrated Missile Development Programme in the early-1980s, US cooperation in these areas ceased. India became a target of sanctions under both US non-proliferation policies (the Glenn-Symington Amendments to the foreign Assistance Act of 1961 and the Nuclear Non-proliferation Act of 1978) as well as under those of other Western nuclear suppliers through the creation of the NSG and their decision to insist on “full-scope” safeguards before technology transfers. As a result, the procedures for issuance of export licenses to India on technologies which can be used both for military and civilian purposes was tightened through stringent laws especially in the case of so-called “sensitive” technologies.
Though India-US technological cooperation resumed after a Memorandum of Understanding (MoU) for technology transfers was signed in 1984 and especially after the end of the Cold War, the problems and doubts still remained as to the reliability of the United States as a supply partner and its reluctance to release dual-use technology. While the Clinton administration in its second term was about to further broaden its ties with India, the Indian nuclear tests of May 1998 dashed any prospects for an upsurge in the security relationship. In fact, all areas of the relationship, including technology cooperation, suffered important setbacks. However, the ‘strategic dialogue’ led by then Deputy Secretary of State Strobe Talbott and External Affairs Minister Jaswant Singh built confidence and trust and created the ground for Clinton’s March 2000 visit to India. The signing of the “Vision Statement” during this visit provided a framework for closer cooperation in the future and a guideline for subsequent governments in both countries.
However, it was only after George Bush came to power that bilateral defence and technological cooperation started to move forward steadily. Since then, the two countries have undertaken a number of initiatives for high technology cooperation guided by changes in the geo-strategic realm. These initiatives include: the India-US High Technology Cooperation Group (HTCG) established in 2002 for facilitating and promoting high-technology trade; the Statement of Principles (SOP) for High Technology Cooperation signed in 2003 for increasing the role of the private sector and eliminating barriers to trade; the establishment of the Next Steps in Strategic Partnership (NSSP) in 2004 to expand cooperation in civilian nuclear activities, civilian space programmes, high technology trade and also to expand their dialogue on missile defence; the New Framework for Defence Cooperation singed in June 2005 to increase opportunities for technology transfers and co-production; and finally the 18 July 2005 joint statement on civil nuclear cooperation which recognised India as “a responsible state with advanced nuclear technology”. For his part, President Obama has called for increased high technology cooperation with India and regards India as an indispensable partner for the United States in the 21st century.
The stated objectives of recent efforts of the Obama administration in reforming the EAR are to realign US export policy towards India to reflect India’s status as a strategic partner, effectively treating India like other close US allies and partners, and to expand India-US cooperation in civil space, defence and high technology sectors. This effort is a part of Obama’s National Export Initiative and fulfilling the commitment to double US exports within five years. Thus, the Obama administration’s removal of Indian companies from the EL, its support for India’s membership in the four international export control regimes and for India’s permanent membership in the UN Security Council have positively impacted bilateral relations and will create possible opportunities for greater technological cooperation. This will further consolidate the growing India-US strategic relationship in the decades ahead.