India, US hold 1st meeting of strategic rrade dialogue ahead of PM Modi's visit

World Materials 8 June 2023 19:30 (UTC +04:00)
India, US hold 1st meeting of strategic rrade dialogue ahead of PM Modi's visit

BAKU, Azerbaijan, June 8. Two weeks before Prime Minister Narendra Modi’s State visit, India and the US held the first Strategic Trade Dialogue with a focused agenda of reviewing existing US export control regulations that affect the development of strategic trade in emerging and critical technologies in Washington DC on Tuesday.

Foreign secretary Vinay Mohan Kwatra led the Indian delegation while State department’s undersecretary for political affairs Victoria Nuland and Commerce department’s undersecretary for industry and security Alan Estevez led the US side during the talks. The new dialogue mechanism was launched during commerce secretary Gina Raimondo’s visit to New Delhi in March and represents a key institutional innovation to unlock the potential of high-tech trade between the two countries envisaged as a part of the initiative on critical and emerging technologies (ICET).

In a statement after the talks, the Indian side said that the dialogue “focused on ways in which both governments can facilitate the development and trade of technologies in critical domains such as semiconductors, space, telecom, quantum, AI, defence, biotech and others”.

Giving a flavour of the talks and outcomes, the statement said that India and the US reviewed the relevant bilateral export control regulations “with the objective of building and diversifying resilient supply chains for these strategic technologies”. They reviewed ongoing cooperation in multilateral export control regimes and agreed to share best practices. They agreed to hold workshops to enhance awareness about export control regimes among industry, academia and other stakeholders. And they acknowledged the that the dialogue will be instrumental in “enabling co-production, co-development and enhanced industrial collaborations in critical technologies”.

To monitor progress in “deepening cooperation in the bilateral high-tech trade and technology partnership”, India and the US have agreed to set up a working group and continue the dialogue.

After the meeting, Nuland thanked Kwatra for a “very productive” dialogue. “Together we will grow our economies and create jobs through increased bilateral trade and better high-tech collaboration.” The dialogue comes in the wake of US secretary of defense Lloyd Austin’s visit to New Delhi this week, where both sides concluded a defence industrial road map which too will require flexibility by the US on export control issues.

The presence of both the State and Commerce departments in the dialogue represents the complexity of the process in the US where different arms of the administration have jurisdiction over different export control regimes. While the International Traffic in Arms Regulations (ITAR), administered by State department, controls export and import of defence related articles, services and technologies, the Defense Federal Acquisition Regulation Supplements (DFARS), administered by department of defense (DoD), provide a standard set of processes for government acquisitions. In addition, the bureau of industry and security in commerce department maintains and strengthens “export controls and treaty compliance systems”. And then, there are export control mechanisms that are controlled by the US Congress. Flexibility both in the executive and then legislative branches will be essential to fulfil the promises of ICET.

Explaining the significance of the dialogue, Kriti Upadhyaya, founding director of the INDUS Tech Council and vice-president of C2Ci Americas, said that focused on easing regulatory restrictions, the strategic trade dialogue was likely to have grappled with issues such as ITAR and DFARS. “An ITAR license is generally required for the transfer of sensitive technologies from the US. Indian firms will benefit from India-specific exemptions, and a more transparent and time-bound ITAR licensing process. Similarly, presently, Indian firms cannot supply to the US DoD under most regular circumstances as India is not a DFARS-qualifying country.”

She added that a reciprocal defence procurement agreement, which Austin mentioned during his India visit, will potentially be needed to make India a DFARS qualifying country. “Easing export control and other regulations can make the pathway for co-development and co-production much smoother and open the US defense market to Indian firms,” said Upadhyaya.

Atul Keshap, president of the United States-India Business Council, said that the amount of energy and political capital being dedicated by both sides to address export controls and tech releasability issues ahead of the state visit sent a signal of confidence to key business sectors and civil society. “This thrust around tech-transfer within our high trust ecosystem demonstrates that our two governments can work effectively through complex areas of negotiation when they focus their energies and establish mechanisms like ICET to accelerate interagency coordination with full political backing from leaders.”