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Obama Easing Export Controls on India

Eric Auner

The United States is pursuing several initiatives to loosen export controls and multilateral technology restrictions on India, U.S. officials announced during President Barack Obama’s Nov. 6-9 trip to India.

At a Nov. 8 joint press conference with Obama in New Delhi, Indian Prime Minister Manmohan Singh welcomed the shift in U.S. policy toward fewer restrictions on India, calling it a “manifestation of the growing trust and confidence” between the two countries. The United States and India have agreed to cooperate further in “space, civil nuclear, defense, and other high-end sectors,” he said.

The Obama administration also announced its support for a permanent Indian seat on the UN Security Council, a longtime foreign policy goal for India.

Greater Indian participation in multilateral export control regimes was a priority for both sides during the trip. The United States “intends to support India’s full membership” in four international regimes that control the spread of sensitive technology, according to a White House document summarizing the U.S.-Indian partnership on export controls and nonproliferation.

Most significant among these is the Nuclear Suppliers Group (NSG), which sets rules on the transfer of technologies that potentially could be used for a nuclear weapons program. In 2008, India obtained a waiver from the NSG that allowed it to conduct nuclear commerce with NSG members. India has not signed the nuclear Nonproliferation Treaty (NPT), and it does not place all of its nuclear facilities under International Atomic Energy Agency safeguards, requirements under the NSG’s nonbinding guidelines for nuclear commerce with the group’s members. (See ACT, October 2008.)

The other export control groups are the Missile Technology Control Regime, which sets export guidelines intended to restrict missile proliferation; the Australia Group, which aims to restrict the spread of chemical and biological weapons; and the Wassenaar Arrangement, which seeks to control the export of conventional weapons and dual-use goods. The groups have a range of criteria for membership. For example, the “Basic Documents” of the Wassenaar Arrangement require, among other things, that a state “adhere” to the NPT.

India’s nuclear-armed neighbor China is not a member of any of these groups except the NSG. Pakistan, India’s other nuclear-armed neighbor, is not a member of any.

The United States does not by itself have the authority to give India membership in any of these groups. All four make decisions about new members by consensus, and India and its supporters will have to convince current members that Indian laws and practices are consistent with each group’s guidelines.

Membership in these bodies would allow India to play a role in setting the trade rules for various sensitive technologies. Given that these bodies operate by consensus, India also would have the ability to block rule changes or the admission of additional members.

“Entity List” Trimmed

During the Nov. 8 joint press conference, Obama also announced his administration’s intention to remove a number of Indian organizations from the U.S. Department of Commerce’s Entity List. U.S. companies must obtain a special license to trade certain goods with organizations on the entity list. The final decision to remove an organization is made by the End-User Review Committee, which is composed of representatives from several government agencies.

Several organizations involved with India’s nuclear, space, and missile programs were placed on the entity list following India’s 1998 nuclear tests. Most have been removed from the list already, but several organizations remain.

The entities newly slated for removal are four subsidiaries of the Indian Space Research Organization, which is responsible for India’s civilian space program, including satellite launches; Bharat Dynamics Ltd., which is involved in the development and manufacture of India’s missile systems, including the Agni series of ballistic missiles; and four subsidiaries of the Defence Research and Development Organization, which is the main government agency responsible for developing weapons systems such as the Arjun main battle tank and is involved with India’s general military acquisitions process.

After the removal of these organizations from the entity list, trade with them in sensitive technologies will continue to be subject to normal U.S. export licensing procedures. Furthermore, three Indian Department of Atomic Energy (DAE) entities remain on the list, and there has been no announcement about removing them. These include the Bhabha Atomic Research Centre, one of India’s most important facilities for nuclear research and development. The DAE is primarily responsible for India’s nuclear energy industry and nuclear weapons arsenal.

In a Nov. 8 address to both houses of the Indian parliament, Obama said these changes would ensure that Indian companies seeking American technology “are treated the same as our very closest allies and partners.”

Increased Defense Cooperation

Obama and Singh released a joint Nov. 8 statement that discussed the “transformation” in bilateral defense cooperation and indicated “resolve” to promote “trade and cooperation in defense equipment and technology.” The Obama administration has promoted defense sales to India as a way to foster closer diplomatic ties between the two countries and create jobs in the United States.

An October Congressional Research Service (CRS) report on the U.S.-Indian relationship said India is “potentially spending $100 billion over the next decade” on its military. U.S. access to the Indian defense market has been complicated by U.S. export controls and an Indian requirement that a certain percentage of each defense purchase be physically manufactured in India.

India does want a closer defense relationship with the United States, but it has to make commercial sense for U.S. companies,” Sunil Dasgupta, co-author of a recent book on Indian military modernization, said in a Nov. 16 interview. In addition, Indian armed forces will need assurances that U.S. companies will be “reliable suppliers,” he said.

Several commercial deals between U.S. companies and the Indian government were discussed on the margins of Obama’s visit, according to a White House document explaining several recent U.S. sales to India in the context of efforts to increase U.S. exports. Boeing and the Indian air force “have reached preliminary agreement” on the sale of 10 C-17 Globemaster III military transport aircraft, a transaction valued at approximately $4.1 billion, the document said. If “training, equipment, spare parts, and other support” are included, the deal may be worth as much as $5.8 billion, according to the CRS report.

General Electric has been selected to supply 107 light combat aircraft engines, a sale valued at approximately $822 million, according to the White House document.

Lockheed Martin and Boeing are among the international arms manufacturers competing to sell 126 multirole aircraft to India worth approximately $11 billion, according to the CRS report. If either of the two U.S. companies won the competition, it would mark the first time India had chosen a U.S. firm to supply combat aircraft.

In a Nov. 5 speech in Washington, Sen. John McCain (R-Ariz.) said U.S.-Indian defense cooperation should go further. “[T]here is no reason why we cannot work to facilitate India’s development of advanced defense capabilities,” including nuclear submarines and missile defense architecture, he said.