India is 3rd Asian country to get US STA-1 status

By NT Bureau Published on Aug 04, 2018 02:17 PM IST

New Delhi: India has become the third Asian country after Japan and South Korea to get the Strategic Trade Authorization-1 (STA-1) status after the US issued a federal notification to this effect on Friday paving way for high-technology, dual-use (defence and civil space) product sales to New Delhi.

India is the 37th country to be designated the STA-1 status by the United States.

What this means

For India’s government, scientific community, and the defence and high-technology industry, the move from STA-2 to STA-1 is a leap.

After almost two-years of negotiations, the US has eased controls on high-technology dual-use exports to India, granting an exemption under the STA-1 list.

Central Government considers the STA-1 list as the "holy grail" of the Indo-US defence partnership. Membership of this elite club of US allies is expected to lead to greater high-technology trade and commerce.

According to US estimates, India’s not being part of STA-1 has resulted in a 'lost opportunity' worth $10 billion over the last seven years since 2011.

Boost for defence and civil tech

For the Indian high-tech industry, being part of STA-1 could open up doors for sales and manufacturing in India. Industry can set up manufacturing bases in India without worrying whether the licence will come through.

Even third countries seeking to set up high-technology manufacturing units that require import of dual-use equipment from the US, will not have to go through the process of obtaining a licence.

Ahead of the 2+2 dialogue between the Indian and US Foreign and Defence Ministers on 6 September, this is a major takeaway, as India inches closer to realising the potential of being a Major Defence Partner of the US.

Ministry of External Affairs spokesperson Raveesh Kumar has described the decision to put India in STA-1 a logical culmination of its 2016 designation as Major Defence Partner, and a "reaffirmation" of its "impeccable record" as a responsible member of multilateral export control regimes.

In the longer arc of India-US relations, another step has been taken to overcome the "hesitations of history", and to forge closer defence and commerce partnerships, notwithstanding the political change in Washington DC.

A message to China

This exception for New Delhi is intended to send a strong political message to China and the world, taking into account that America's closest ally Israel is yet to be given this status, primarily because it is not a member of these multilateral export control regimes.

Mainly because of the political opposition from China, India's membership application has been pending before NSG, which takes the decision by consensus.

By placing India in the STA-1 list, the United States has acknowledged that for all practical purposes India adheres to the export control regimes of the NSG.

"This action befits India's status as a Major Defence Partner and recognises the country's membership in three of the four export control regimes - the MTCR, WA and AG," the federal notification said.

 Promotion to STA-1
In 2011, as part of the export control reforms initiative, the US government came up with the concept of Strategic Trade Authorisation (STA) - a move towards a licence-free or license exemption regime. Two lists were created - STA-1 and STA-2, and countries that were not part of either list had to apply for a licence for every item on the Commerce Control List (of dual-use items). STA-1 and STA-2 established a hierarchy among those the US was willing to certify as "good countries" that would not contribute towards weapons proliferation in the world.

The STA-1 list has 36 countries - including US's NATO allies and bilateral treaty allies like Japan, South Korea, and Australia whose non-proliferation controls the US considers to be the best in the world.

America’s most trusted allies, have licence-free access to almost 90% of dual-use technology, and are eligible to import items that are controlled for reasons of national security, chemical or biological weapons, etc., irrespective of whether the technology or item impacts regional stability or American national security.

Countries in the STA-2 list enjoy some form of licensing exemption, but cannot access dual-use items/technology that may impact regional stability, or contribute to nuclear non-proliferation, etc. Before being elevated to STA-1 this week, India was in this list, along with seven other countries - Albania, Hong Kong, Israel, Malta, Singapore, South Africa, and Taiwan.