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US grants of STA-1 status to India, eases export controls for high-tech product sales

Currently there are 36 countries on STA-1 list. India is the only South Asian country to be on the list.

Edited by: India TV Business Desk, New Delhi [ Published on: July 31, 2018 8:43 IST ]

US grants of STA-1 status to India

The United States on Monday designating India as a Strategic Trade Authorization-1 (STA-1) country and eased the export controls for high-technology product sales to it. With this, India has become the only South Asian nation to be on the list.

The US in 2016 had recognised India as a "Major Defence Partner", a designation that allows India to buy more advanced and sensitive technologies from America at par with that of the US' closest allies and partners and ensures enduring cooperation into the future.

"We have granted to India Strategic Trade Authorization STA-1,” US Commerce Secretary Wilbur Ross announced on Monday, adding that this is "a very important change" in India’s status in the export control regime.

Responding to a question at the first Indo-Pacific Business Forum organised by the US Chambers of Commerce, Ross said the STA-1 designation "acknowledges" the India-US security and economic relationship.

The designation authorises the export, re-export and transfer (in-country) of specified items on the Commerce Control List (CCL) to destinations posing a low risk of unauthorised or impermissible uses.

Currently there are 36 countries on STA-1 list. India is the only South Asian country to be on the list. Other Asian countries designated as STA-1 are Japan and South Korea. Till recently India was designated as STA-2 countries along with seven others.

Ross said that India has partnered with the US to improve its own export control regimes and has met most of the export control rules which the US thinks are useful.

STA-1 status, Ross said, provides India with greater supply chain conditions for defence and other high-tech products. It increases the integrity with the US systems and reduces time and resources needed to get licenses approved, the Commerce Secretary said.

According to the Department of Commerce, items that are eligible for export to STA1 destinations or nationals include items that are subject to control for: national security (NS), chemical or biological weapons (CB), nuclear nonproliferation (NP), regional stability (RS), crime control (CC) and significant items (SI).

Experts believe that looking at current exports from the US to India, 50 per cent of those eligible does not require a license under STA-1.

This can free USD 2.1 billion in trade, make US exporters more competitive in the global marketplace, help provide India more advanced US technology.

"This is a significant step. This is an important thing that I'm glad has happened,” Ben Schwartz of US India Business Council said after the announcement by Ross. The move would help in the integration of the defence industry, he added.

Over the past few years, Schwartz said India has basically build robust export control procedures that the US government is competent in terms of their security and the fact that when things are exported there they'll remain controlled and not be diverted to alternative users.

“One of the ideas was granting India this STA-1 status because it would cut in half the number of licenses that are required under the current number of exports that are coming from US to India,” he said.

That represents based on last year's statistics, about USD 2.1 billion in trade according to the Commerce Department's data.

"That's a huge percentage of the overall trade occurring that will not require a license,” Schwartz said.

“This also comes following India's admittance into pretty much all the major non-proliferation regimes, the only one being NSG. I think everyone recognises that India has made a good faith effort to join the NSG and that it is not the Indian government that controls the outcome,” he said.

“This will make things easier for the trade relationship between the two countries. It'll make it easier for an India to receive more sensitive technologies. It'll make it more competitive for American companies and it'll facilitate joint partnerships, coproduction and co-development between US and Indian companies,” Schwartz said in response to a question.

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