US changes export laws to boost India defence trade

This means that only under the rarest circumstances will India be denied licences: Source

Recognising India’s status as a major defence partner, the US has made changes in its export control laws that would benefit India by easing transfer of technologies and arms to it.

The new rule "creates a presumption of approval" for Indian companies seeking to import commerce department-controlled military items, except for goods related to weapons of mass destruction.

This means that only under the rarest circumstances will India be denied licences, a source familiar with the changes said.

"I am pleased to see India's status as a major defence partner — a designation that we have strongly supported — translated into regulatory reform," said Mukesh Aghi, president of US-India Business Council (USIBC).

The new rule also changes the law so that companies will not need a licence after becoming a validated end-user (VEU).

Over 810 licences representing some $5 billion in trade in the last half decade have been granted for goods covered under this new rule. Most of these licences focus on aerospace systems and ground vehicles. Additionally, under the new regulation, Indian companies will not be required by US law to seek approval for re-export of platforms that contain less than 25 per cent US content.

"This is a very favourable policy for Indian companies.

The rule will make business substantially easier for Indian companies in the defence sector, especially those partnering with American companies. This gives Indian companies and US companies operating in India the ability to be reactive in real time to meet their supply chain needs," Schwartz said.