US gives India Strategic trade Authorisation – 1 Status

Why in News?

  • United States has designated India as Strategic Trade Authorization-1 (STA-1) country that will allow India to buy highly advanced and cutting-edge sensitive technologies from America.

What is Strategic Trade Authorisation (STA)?

  • STA allows for license exception with regards to exports from the US.
  • This type of US government authorisation allows a certain item to be exported under defined conditions without a transaction-specific license.
  • Currently there are 36 countries on STA-1 list.
  • India is only South Asian country to be on the list. Till recently, India was classified as an STA-2 country along with seven others.
  • Other Asian countries designated as STA-1 are Japan and South Korea.

Why is the STA-1 important for India?

  • STA-1 provides India with greater supply chain efficiency, both for defence, and for other high-tech products.
  • The status eases export controls for high technology product sales to India, granting it the same access as NATO allies — Australia, Japan and South Korea.
  • Under STA-1, India and US have reached understanding under which India will receive license-free access to a wide range of dual-use technologies in conjunction with the steps that India has committed to take to advance its export control objectives.
  • STA-1 treatment will expand the scope of technology exports subject to Export Administration Regulations (EAR) that can be made to India without individual licenses.
  • It will further enhance the bilateral defence trade relationship and result in a greater volume of US exports to India.
  • India’s inclusion is beneficial mostly for the purposes of increasing the speed of sale of high-tech defence and non-defence products that are otherwise subjected to strict controls and licensing.
  • Now, India can get easy access to latest defence technologies, with the reduction of the number of licenses needed for exports from the US.
  • According to analysts, it is also a boost for the foundational Communications, Compatibility and Security Agreement (COMCASA).

 What are the benefits that are seen for India & US?

  • This new designation reflects India’s membership in three of four multilateral export control regimes, as well as the development of its national export control system.
  • It will allow US companies to more efficiently export much wider range of products to Indian high technology and military customers.
  • It will benefit US manufacturers while continuing to protect its national security.
  • It will provide India greater supply chain efficiency, both for defence and for other high-tech products that will increase activity with US systems, interoperability of systems and will reduce time and resources needed to get licensing approved.
  • It will improve India’s partnership with the United States to improve its own export control regimes and has met most of the export control rules which the US thinks is useful.
  • It will also be a competitive advantage for US, in terms of supplying those kinds of products to India.

Way Forward:

  • India and the United States share an interest in countering China’s expanding economic and military weight and the United States has emerged as a top arms supplier to India, selling more than $15 billion of weapons over the past decade as New Delhi modernizes its Soviet-era military.
  • Looking at current exports from the US to India, 50% of those are eligible now under STA-1. This can free up $2.1 billion in trade, make US exporters more competitive in the global marketplace, help provide India more advanced US technology.
  • The move is a sign of trust not only in the relationship but also on India’s capabilities as an economic and a security partner.
  • This is because it also presupposes that India has the multilateral export control regime in place, which would allow the transfer of more sensitive defense technologies and dual use technologies to India and without the risk of any proliferation.
  • Currently, 36 countries, mostly all NATO nations, have this status, so it’s a very elevated status from an export control point of view.
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