BIS Final Rule Revises Export/Reexport Controls/Policy for India

The Bureau of Industry and Security has issued a final rule, effective January 25, 2011, which amends the Export Administration Regulations (EAR) to implement several components of the November 2010 bilateral understanding between the U.S. and India on export control reform, including removing India’s defense and space-related entities from the Entity List, removing India from three country groups and adding it to one country group in the EAR.

Public comments on this regulation are welcome on a continuing basis.

(On November 8, 2010, President Obama and Prime Minister Singh announced that they had resolved to expand and strengthen the India-U.S. global strategic partnership. The U.S. agreed to implement an export control reform program with respect to India. This is the first in a series of rules on U.S.-India's export control reform. See ITT's Online Archives or 11/08/10 news, 10111017, for BP summary.)

Removes 9 Defense/Space-Related Entities from Entity List

In the final rule, BIS amends the EAR by removing nine Indian defense and space-related entities from the Entity List. Removal eliminates the existing license requirements in the Entity List¹ for exports, reexports, and transfers (in-country) to these entities. The following nine Indian entities are removed:

1. Bharat Dynamics Limited (BDL) All subordinates of India’s Defense Research and Development Organization (DRDO) identified on the Entity List immediately prior to the effective date of this rule, namely:
2. Armament Research and Development Establishment (ARDE);
3. Defense Research and Development Lab (DRDL);
4. Missile Research and Development Complex; and
5. Solid State Physics Laboratory. All Indian Space Research Organization (ISRO) subordinate entities identified on the Entity List immediately prior to the effective date of this rule, namely:
6. Liquid Propulsion Systems Center;
7. Solid Propellant Space Booster Plant (SPROB);
8. Sriharikota Space Center (SHAR); and
9. Vikram Sarabhai Space Center (VSSC).

(The removal of these entities from the Entity List does not relieve persons of other obligations in part 744 of the EAR or under other applicable parts of the EAR, such as their obligation to apply for export, reexport, or transfer (in-country) licenses required by other provisions of the EAR, etc.)

India Removed from Three Country Groups with End-User Restrictions

The final rule also removes India from the following three Country Groups which list countries with certain end-use restrictions under the EAR:

• Nuclear nonproliferation (D:2). The removal of India from Country Group D:2² eliminates a license requirement for India under section 744.6 of the EAR for certain U.S. person activities that involve any D:2 country. India, however, remains subject to the "catch-all" controls of the EAR.³ India's removal from this group will not change licensing policy toward India for items controlled for nuclear proliferation reasons and a license will still be required for the export of such items to all destinations in India.
• Chemical & biological (D:3). The removal of India from Country Group D:3 means that section 742.2(a)(3) of the EAR will not impose a license requirement for exports or reexports to India of medical products, identified in Export Control Classification Number (ECCN) 1C991.d,. End users in India will be eligible to receive certain items controlled for chemical and biological weapons reasons under special comprehensive licenses (SCLs).⁴ Consistent with this removal, this rule removes licensing requirements for certain items controlled for chemical and biological weapons proliferation reasons for export or reexport by India, by removing the "X" in "CB Column3" for India in the Commerce Country Chart in part 738 of the EAR.
• Missile technology (D:4). Removal of India from Country Group D:4 eliminates the requirement for export, reexport, and transfers (in-country) licenses for India under section 744.3(a)(1 and (a)(3) (Restrictions on Certain Rocket Systems and Unmanned Air Vehicles End-Uses). The removal also eliminates a license requirement for India for certain U.S. person activities that involve a D:4 country. A license will still be required for any item, if, at the time of the export, reexport, or transfer (in-country), the person knows that the item will be used in India in the design, development, production, or use of rocket systems or unmanned air vehicles, regardless of range capabilities, for the delivery of chemical, biological, or nuclear weapons.
• Realigns U.S. export policy. The final rule states that removal of India from Country Groups D:2, D:3, and D:3, realigns U.S. export licensing policy towards India and expands the License Exceptions available for exports and reexports to India. This rule makes available exports and reexports to India of unaccompanied baggage under License Exception Baggage (BAG) section 740.14(d) of the EAR and makes India an eligible destination for reexports under License Exception Additional Permissive Reexports (APR) set forth in section 740.16(a) of the EAR.

India Added as Adherent to the Missile Technology Control Regime

This rule also adds India to Country Group A:2, grouping India as an adherent to the Missile Technology Control Regime (MTCR), with countries that are members of that regime. A license is still required for export and reexport of items controlled for missile technology reasons to all destinations except Canada.

¹The EAR contains the Entity List (Supplement No. 4 to Part 744 of the EAR), a list of names of certain foreign persons (including businesses, research institutions, government and private organizations, individuals, and other types of legal persons) that are subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items. The persons on the Entity List are subject to licensing requirements and policies supplemental to those found elsewhere in the EAR on an individual basis.

²Prior to publication of this rule, section 724.3(a)(2) of the EAR expressly exempted India from the license requirement for Country Group D:2 countries. This rule's removal of India from Country Group D:2 makes this express exemption unnecessary, and is therefore removed.

³Under section 744.2 of the EAR (Restrictions on Certain Nuclear End-Uses) a person may not export, reexport, or transfer (in-country) any item subject to the EAR to India without a license if, at the time of export, reexport, or transfer (in-country), the person knows that the item will be used, directly or indirectly, in activities described in 744.2(a)(1), (a)(2) and (a)(3), in certain nuclear explosive activities, unsafeguarded nuclear activities, or certain safeguarded and unsafeguarded nuclear activities.

⁴Items controlled for chemical and biological weapons reasons are ineligible for export or reexport under a SCL to D:3 destinations.