India has become the third Asian country after Japan and South Korea and 37th in the world to get the Strategic Trade Authorisation-1 (STA-1) status when the US issued a federal notification on 4 August to this effect. This clears the way for high technology product sales to New Delhi, particularly in civil space and defence sectors.
The STA-1 is particularly significant as the Trump Administration made an exception for India, which is yet to become a member of the Nuclear Suppliers Group (NSG) because of China’s veto.
Traditionally, the US has placed only those countries in the STA-1 list that are members of the four export control regimes, notably the Missile Technology Control Regime (MTCR), Wassenaar Arrangement (WA), Australia Group (AG) and NSG. India is a member of only three of the four multilateral export regimes.
This exception has been made only for New Delhi and is intended to send a strong political signal to China and the rest of the world, taking into account the fact that America’s closest ally, Israel, is yet to be given this status, primarily because it is not a member of these four multilateral export control regimes.
The United States eased export controls for high technology product sales to India, granting it the same access as NATO allies. US Commerce Secretary Wilbur Ross said on July 30 that the move to grant STA-1 status to India reflects its efforts to improve its own export-control regime, its adherence to multilateral export rules, and its growing status as a US defence partner.
“STA1 provides India greater supply chain efficiency, both for defence, and for other high-tech products,” he said. Goods worth $ 9.7 billion that India could have imported from the US over the past seven years were affected as a result of the lack of this elevated status.
India on its part wants to develop security ties with America to facilitate the process of becoming the dominant regional and global power in the foreseeable future. Shared perception about ‘terrorism’ has further cemented their relations. New Delhi has endorsed US stance on “War on Terrorism” with the hope to turn US interests to its advantage by labeling the “freedom struggle” in Kashmir as Pakistan-sponsored insurgency.
Reflections of converging interests include: US-India Next Steps in Strategic Partnership (NSSP) initiative, the signing of the 123 Nuclear Agreement, missile defence, and a ten-year defence framework agreement that calls for expanding bilateral security cooperation. However, India will have to ensure that the purchase of defence equipment from the US also includes technology transfer and the sensitive equipment.
The External Affairs Ministry has said that it welcomes the US decision. “It is a logical culmination to India’s designation as a Major Defense Partner of US and a reaffirmation of India’s impeccable record as a responsible member of the concerned multilateral export control regimes,” is the ministry’s response.
India’s inclusion is beneficial chiefly for increasing the speed of the sale of high-tech defence and non-defence products that are otherwise subjected to strict controls and licensing.
This move means that India can get easy access to latest defence technologies, with the reduction of the number of licences needed for exports from the US. It will also boost the foundational Communications, Compatibility and Security Agreement (COMCASA).
There are a number of reasons why the US accorded STA-1 status to India. First, India and the United States share an interest in countering China’s expanding economic and military weightage. The US has emerged as a top arms supplier to India, selling weapons worth more than $15 billion over the past decade as New Delhi modernises its Soviet-era military.
Second, the US wants India to completely stop buying its defence equipment and weapons from Russia for obvious reasons. India has moved towards acquiring five advance S-400 Triumf Air Defence Missile Systems from Russia worth Rs 39,000 crore despite the looming threat of US sanctions.
Once India inducts S-400 systems, the vital installations like nuclear power plants and nuclear arsenal will be well protected and taken care of. These long-range missile systems will tighten its air defence mechanism, particularly all along the nearly 4,000-km-long Sino-India border.
India and Russia have worked on a roadmap to get around the financial sanctions flowing out of the recent US law called Countering America’s Adversaries Through Sanctions Act (CAATSA) that seeks to deter countries from buying Russian weapons.
The US Congress on 23 July took the call on granting India a waiver after intense lobbying because putting India under sanctions would weaken the Indo-Pacific strategy of the US to counter China’s proactive influence in the region.
Conversely, the US has serious concerns over India’s plans to buy the S-400 air defence system from Russia, as it will inhibit the military ability of the two nations to operate together, according to the chairman of the powerful US House Armed Services Committee. A matter of concern to the US is that the purchase of the S-400 from Russia would also make it difficult for the US to share sensitive technology.
Notably, US weaponry has been costlier than similar weapons sourced from other countries except where large economies of scale have been available to US manufacturers. Political and diplomatic strings have also traditionally accompanied the US arms sales and many of the recipients have been required to align their policies with that of the US.
The US resorts to punitive measures like economic sanctions as a foreign policy tool and this in turn usually leads to cessation of spares support for US military equipment already delivered and also on-site inspections of sold US weapons, make buyers jittery and nervous. India had experienced this situation in past transactions.
While it is widely acknowledged that US defence technology is the most advanced, it is also accepted that as often as not, purchasing US defence equipment comes with high restrictions.
The US only shares most of its high-end defence technology with very few allied nations, for example, the UK, which gets open access to US defence technology. However, even the UK faced restrictions as is evident from the F-35 programme when sharing of the F-35 software source code with the UK became a contentious issue.
The US-India proximity after the grant of STA-1 status will be assessed on the basis of which US technologies are to be transferred to India. India insists on the latest defence technology transfer to the country, as it reserves the right to determine which technologies it requires on a case-to-case basis and it cannot accept obsolete technologies.
The STA-1 is a timely announcement as it comes ahead of the 2+2 dialogue scheduled to be held on September 6 when the US Secretary of State, Mike Pompeo, and Defence Secretary James Mattis are due to visit India and meet with their counterparts.
The question of purchase of defence equipment from countries other than US should be raised at the 2+2 meeting, most particularly the purchase of Russian S-400 missiles despite waiver of sanctions by the US.
The issue of transfer of technology including the sensitive products during the purchase of defence equipment should also be taken up at the summit.
The writer is retired senior professor of International Trade. He may be reached at [email protected]