Defence sector may gain little from Entity List removal

Defence sector may gain little from Entity List removal

Export licensing requirements apply to only a very small fraction

 During US President Barak Obama’s visit, the US administration announced taking the Bharat Dynamics Limited — India’s missile production unit — and four laboratories run by the Defence Research and Development Organisation (DRDO) off the Entity List maintained by the US department of commerce.

“Inclusion on this list generally triggers an export licence requirement for items that otherwise do not require an export license,” says a statement released by the White House on Monday. The US administration highlighted it as one of the high-points of the Obama visit.

However, Indian analysts beg to differ. “Very little–actually nothing–will change if these laboratories are removed from the Entity List. One has to wait for the US official notification. But not much is going to change,” a top source who has a thorough knowledge of the US export control regime told Deccan Herald.

The four DRDO laboratories   are Armament Research and Development Establishment Pune, Defence Research and Development Lab and Missile Research and Development Complex in Hyderabad and Solid State Physics Laboratory in the national capital. All of them research on missile development.

While the US would still review the “sensitive technologies” in the export market on a case-by-case basis, removal of DRDO laboratories from the Entity List may entail these laboratories to have a marginal easy access to some routine technologies. And, that will not benefit them much.

In fact, export licensing requirements apply to only a very small percentage of overall US-India trade and many items subject to export controls can be exported to India without a license or under a licence exception, says the Bureau of Industry and Security that maintains the Entity List.

Political reason

The announcement was made more out of a political reason as Washington is pitching New Delhi as its new strategic partner in Asia.

“Having too many institutes on the Entity List is contrary to India’s strategic positioning from the US perspective,” said an analyst.

“A major change can only happen until the rules and regulations are changed in toto like what happened with the United Kingdom, Germany and France,” he said. That may come from the realignment of the export licensing policy and cooperation in export control, which Obama and Prime Minister Manmohan Singh had announced.

Asked to comment, former DRDO chief V K Aatre welcomed the decision but declined to give specific examples on the areas where DRDO would gain. A DRDO official said the defence research agency could only air its views when it received an official statement from the US administration.

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