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Obama’s India visit was countered with huge applause when the US Prez announced his intention to take ISRO and four of its subsidiaries and DRDO and its subsidiaries off its entities list. A significant removal from the entities list is Bharat Dynamics Ltd with its four subsidiaries, hinting at future Indo-US cooperation on missile defence, because BDL is part of India’s missile technology activities.

It was not his mere intention that got Indian companies out of the list also having the axis of evils i.e. nations which dared to challenge American dominance (Cuba, Iran, North Korea, Sudan and Syria). India is the new lucrative market for the American Defence Industries. How India is successful in disassociating itself from the bad boys is a different story but what got India into the list of bad boys is within the scope of our discussion. As it concerns technology transfer and its legal implications I thought a brief discussion about the U.S legal framework to deal with the transfer of defense technology and sensitive information to foreign entities and existing paranoia about American duty to check proliferation might provide us a different taste than our usual coverage on Telecom & IP.

I am sure few of us might remember the Movie Iron man based on a marvel Comics character. The movie didn’t do well and was action packed only. But it did provide us an idea about the defence industry at United States. The U.S where freedom of market from the state control is the principle belief of political economy, companies manufacturing defence equipments unlike India are privately owned. But it is not as free from the state control as it seems. We saw in the Iron Man Movie also that every equipments and all the facilities were under the supervision of military and department of defence. Now considering India, the fear of nuclear proliferation got multiplied after the “Budha smiled” at Pokhran when India conducted its first nuclear explosion during 1974. With the U.S sanctions to all of our strategic defence departments any form of new technology was denied to India with an objective to halt India’s aspiration to be a nuclear power state.

Within the framework concerning National Security and defence related trade activities in the United States two kinds of legislations deals with the export control in the U.S. The purpose of these legislations is to regulate the export of both defence-related and commercial products. The mechanisms under these laws are also akin to each other. International Traffic in Arms Regulations (ITAR) incorporates the United States Munitions List (USML) of restricted articles and services. All the manufacturers or exporters of articles or services mentioned in the USML are required to register with the U.S. State Department’s Directorate of Defense Trade Controls, for authorization in the defence trade. Export Administration Regulations (EAR) has created a list of the items which are “dual-use” and has commercial, military or proliferation applications, the list is called the Commerce Control List (CCL). The onus lies on the exporter to determine whether an export license is required, based on the good or services classification on the CCL, its destination country, the end-user, and its end-use. The list too broad regulating a broad array of commodities, software and technologies.

Another type of list which is published by the Bureau of Industry and Security ( a specialized wing within the Department of Commerce responsible for enforcing the Export Administration Regulation) called the Entity List. As per the purpose behind this list, the list contain 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, re-export and/or transfer (in-country) of specified items. These persons comprise the Entity List, which is found in Supplement No. 4 to Part 744 of the EAR. On an individual basis, the persons on the Entity List are subject to licensing requirements and policies supplemental to those found elsewhere in the EAR. Entity List was prepared in February 1997 to impose certain kind of restrictions and monitoring mechanisms on those entities who have engaged in activities that could result in an increased risk of the diversion of exported, re-exported and transferred (in-country) items to weapons of mass destruction (WMD) programs. After the Pokhran Blast certain restriction or license requirement was made compulsory for the U.S companies in case of exporting technology and other informations even for civilian use to the premier defence research organizations within India (from where there was a very high improbability of having any kind of proliferation) even name of these entities and organizations were included in the entity list.

The current restrictions also seem bit too stringent and harsh in cases of genuine and unintentional violations also. In the case of a professor at the University of Tennessee who invited a graduate student of Chinese nationality at the University to be associated with a research project on the flight control of Unmanned Aerial Vehicles. This research project was a part of the contract which the University was having with Air Force. The participation of a Chinese national graduate student in the research and the later visit to China by the professor was considered as a violation of ITAR. Both civil and criminal liabilities can be imposed on such violations.

Another drawback of having a sturdy regime is through its implications on the Business community. ITAR compliance is one of the most tedious jobs to do which requires both patience and precision. As the probability of violating the act unintentionally is on the higher end. The ITAR also considers the “place of birth” instead of the nationality at certain instances for foreign nationals dealing with the sensitive information. It probably must have been done to ensure that the sensitive information or technologies do not get into the hand of nationalities who are originally immigrants from those countries which are deemed to be threat by the Americans.

Indian outsourcing industry is also under the scanner of U.S DoS as the possibility of processing sensitive information by the third party is perceived as a matter of National Security by the U.S authorities. Major U.S varsities, IT companies and even some patent law firms often assign India based outsourcing companies to conduct novelty searches and to assist in drafting and prosecuting U.S. patent applications. The Indian Companies are suppose to apply foreign filing licenses granted by the USPTO. The USPTO under both EAR and ITAR has the jurisdiction to conduct security reviews and monitor their compliance under export control laws.

Despite such unpleasant restrictions and barriers imposed by the U.S authorities, the denial mode of U.S authorities has been a blessing in a disguise. Anil Kakodkar (former chairman of the Atomic Energy Commission of India) argues that ingenuity is by-product of sincerity and commitment and the passion to develop indigenous product has been the driving force evolved within the Indian Scientific community. If technology was readily available the same passion might not have nurtured within the Indian scientists. The case of developing our own Cryogenic Engine has been based on similar instances when Russia refused to transfer the technology with the ready made engines. Though the attempt by our Indian Scientist to develop our own Cryogenic engine failed earlier this year but successful attempts are going to achieve its objective in the near future. At this instance it is not within the scope of our discussion what would have happened and to ascertain cause of each action and developments. But it can be insisted that at this stage India is not in a position where visits from a U.S President is compared with the Christmas by the Indian establishment and the U.S President relatively as Santa with loads of gifts as packages of trade concessions.

Obama came here for his own countries sake and for his own sake. His visit will boost bilateral trade between both the countries and I am sure U.S under his leadership might expect to build relationships based on mutual respects and on equal footing instead of following the old Big Stick policy.