STA-1 status for India

Implications for the region

On July 30, the United States Department of Commerce granted the Strategic Trade Authorisation-1 (STA-1) status to India, making it the world’s 37th and Asia’s only third country – after Japan and South Korea – and the only South Asian country to get this status. The biggest gain for India in this is the relaxation in norms related to controls, and also a coveted ‘Major Defence Partner’ status. The notification to this effect gains more significance, especially, because the Trump Administration has made an exception for India, which is yet to become a member of the Nuclear Suppliers Group (NSG). Traditionally, the US has placed only those countries in the STA-1 list that are members of the four export control regimes: Missile Technology Control Regime (MTCR), Wassenaar Arrangement (WA), Australia Group (AG) and the NSG.

Forging Indo-US strategic relations ahead, the American leadership has granted India ‘Strategic Trade Authorization-1’ (STA-1) status with an objective to ease export controls over high-technology product sales which has so far been applicable only to its NATO allies. This status paves the way for high-technology product sales to New Delhi. The Bureau of Industry and Security issued the notification to amend Export Administration Regulations (EAR) to formally recognise and implement India’s membership in the Wassenaar Arrangement (Wassenaar or WA). Further, the BIS removed India from Country Group A:6 and placed it in Country Group A:5.

According to the notification, the US and India continue their commitment to work together to strengthen the global non-proliferation and export control framework and further transform bilateral export control cooperation to recognise the full potential of the global strategic partnership between the two countries.

This commitment has been realised in the two countries’ mutually agreed upon steps to expand cooperation in civil space, defence and other high-technology sectors and the complementary steps of the US to realign India in its export control regulations, and support India’s membership in the four multilateral export control regimes (Nuclear Suppliers Group, Missile Technology Control Regime, Wassenaar Arrangement and Australia Group).

Why This Status for India?

There are a number of reasons why the US has 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 arsenal.

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 $5.5 billion 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.

Read More: Understanding the US-India relationship

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 those of the United States.

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 thinks that it reserves the right to determine which technologies it requires on a case-to-case basis and it cannot accept obsolete technologies.

Rebuff to China?

The granting of STA-1 status to India reaffirms that the US sees India as an important partner in its strategy to contain Beijing. Making India equivalent to American allies for procurement of military weapons is being seen as a big rebuff to China for blocking India’s entry into the Nuclear Suppliers Group. In what has been described as a “strong political message to China and the world,” the American government both fast-tracked the STA process and made an exception by deeming India’s non-membership in the NSG a non-consideration. It is known that China has been stalling India’s admission to the NSG where decisions require unanimous consent. That could be the subject for the next “milestone” discussion between Prime Minister Modi and President Xi.

It is worth mentioning here that after an unsuccessful attempt at securing NSG membership in the last few months of the Obama Administration, India had asked US to reconsider its conditions.

Benefits for India

STA Tier 1 treatment, comparable with NATO allies, will expand the scope of exports subject to the EAR that can be made to India without individual licences. This regulatory change will enhance the bilateral defence trade relationship and result in a greater volume of US exports to India.

This will help India in getting critical and latest technology from the United States in the defence as well as certain other key areas.

It is also a boost for the foundational Communications, Compatibility and Security Agreement (COMCASA), which was signed on September 06, as per Hindustan Times.

Obligations and Challenges for India

Acquiring US high technology comes with its own set of obligations in terms of ensuring its security. These take the form of various undertakings often described as foundational agreements. The first of these was GSOMIA (General Security of Military Information Agreement) which India signed in 2002. The other three were related to logistics support, communications compatibility and security, and exchanges of geospatial information. The US proposed its standard logistics support agreement text in 2003 which was finally concluded in 2016, after it was made into an India-specific text. It facilitates logistics supplies during port visits and joint exercises, and does not contain any obligations for joint activity or any basing arrangements. Realising Indian reservations, the US was more flexible, and now the India-specific Communications Compatibility and Security Agreement (COMCASA) has been signed. It makes it possible to install high-end secure communication equipment on US platforms that India has been acquiring. With the possibility of acquiring armed Sea Guardian drones, COMCASA was necessary to ensure optimal use. The lessons learnt should help in expediting negotiations on the third.

Nevertheless, two difficult issues loom large and the 2+2 dialogue offers an opportunity for addressing these. The first is the Countering America’s Adversaries Through Sanctions Act (CAATSA) enacted last year which enables the US government to sanction countries that engage in ‘significant transactions’ with Russian military and intelligence entities. The proposed purchase of the S-400 missile defence system would attract CAATSA sanctions. A waiver provision has now been introduced to cover India, Indonesia and Vietnam. It requires certification by the US that the country concerned is gradually reducing its dependency on Russian equipment and cooperating with the US on critical security issues.

Impact on India’s Military Build-up

The Indian defence and civil industry, especially nuclear and space programmess are in a dire need of technological assistance. The STA-1 allows India for the license exception with regards to exports from the US. This type of US government authorisation allows a certain item to be exported under defined conditions without a transaction-specific licence. Thus, India gets easy access to the latest American defence technologies, with the reduction of the number of licenses needed for exports from the US.

Under the STA-1, the Indian civil and military industries have license-free access to a wide range of dual-use technologies. India’s Defence Research Development Organisation (DRDO) can import sensitive sophisticated military use technologies to improve its indigenous weapons. It is because, the STA-1 makes India eligible to items that are under the control for national security, chemical or biological weapons, nuclear non-proliferation, regional stability, and crime control. The categories include electronics, lasers, and sensors, information security, computers and electronics, navigation, telecommunications, aerospace, etc. The STA-1 status eases the transfer of the American nuclear technology and material to India. It expedites the American firm Westinghouse Electric Company work, which planned to build six AP 1,000 nuclear reactors in India under an agreement announced in June 2016. In addition, India’s nuclear weapons programme will equally be beneficiary of the STA-1. The Indians will improve their offensive and defensive missiles proficiency.

Implications for Pakistan

By granting India the STA-1 status, the United States has undermined regional stability and the global non-proliferation regime. The US tilt towards India for its geo-political goals, including containment of China, marked a paradigm shift in the American non-proliferation policy. It is a great concern for Pakistan’s strategic community that the US is easing export controls for high-tech product sales to India. It will also increase the risk of unauthorized or impermissible uses and safety and security of new imported technology.

Reacting to the announcement, Pakistan’s Foreign Ministry spokesperson said, “The move has serious implications. Pakistan calls on all states to carefully review their strategic export control policies that directly impinge on national security of Pakistan and undercut stated goals of preserving strategic stability in the region”.

Cautioning about the implications of STA-1 status, Dr Zafar Iqbal Cheema, President Strategic Vision Institute (SVI), opines, “It would accelerate sale of critical equipment that can be used for military purposes particularly Electromagnetic Aircraft Launch System, armed version of Guardian Drones, and NASAMS-II, which is a multi-tiered air defence network featuring 3D mobile surveillance radars and missile launchers.” He maintains that India would be able to “get communications and security equipment circumventing COMCASA – a legal framework for the transfer of communication security equipment from the US to India – over which India had reservations.”

While India and US had been cooperating in the domain in space for few decades now, STA-1 would further boost the high-tech space, military, strategic, and commercial trade transfers. It would de-stabilize the regional power balance and intensify arms race in the region.

What is STA status?

STA is the licence exemption that allows a set of items on the Commerce Control List to be exported from the US under defined conditions without a transaction-specific licence.

The STA exception is relevant to exports, re-exports and transfers for which a licence is required under the Export Administration Regulations – one of the two important US export control laws that affect the manufacturing, sales and distribution of technology.

Growing US-India Defence Cooperation

Two parallel tracks of dialogue began in the 1990s. The strategic dialogue covering nuclear issues shifted gears following the nuclear tests of 1998 and imposition of sanctions by the US. The over a dozen rounds of talks between Jaswant Singh and Strobe Talbott during 1998-2000 marked the most intense dialogue between the two countries. It helped change perceptions leading to the gradual lifting of sanctions. The next phase was the Next Steps in Strategic Partnership steered by the then National Security Advisers, Brajesh Mishra and Condoleezza Rice. The momentum received a new impulse, thanks to the warmth between Prime Minister Manmohan Singh and President George W. Bush, eventually leading to the conclusion of the India-US bilateral civil nuclear cooperation agreement in 2008.

The defence dialogue began in 1995 with the setting up of the Defence Policy Group at the level of the Defence Secretary and his Pentagon counterpart and three Steering Groups to develop exchanges between the Services. A decade later, this was formalised and enlarged into the India-US Defence Framework Agreement which was renewed for 10 years in 2015. Today, the US is the country with which India undertakes the largest number of military exercises which have gradually evolved in scale and complexity.

During the Cold War, more than three-fourths of India’s defence equipment was of Soviet origin. This gradually began to change, and in recent years, the US and Israel emerged as major suppliers. The Indian Air Force went in for C-130J Hercules and the C-17 Globemaster aircraft, along with Apache attack helicopters and Chinook heavy lift helicopters. The Indian Navy acquired a troop carrier ship and the P-8I long-range maritime reconnaissance aircraft. An agreement for 24 multi-role helicopters for the Indian Navy is expected soon. The Indian Army went in for the M-777 howitzers and artillery radars. From a total of less than $400 million of defence acquisitions during 1947-2005, the US has signed defence contracts of over $15 billion since.

During the Obama administration, Defence Secretary Ashton Carter became a strong votary of closer defence cooperation between the two countries. He thought that a defence supply relationship needed to be backed by technology sharing and joint development and came up with the Defence Technology and Trade Initiative (DTII). Pathfinder projects have been identified under this banner. To get around export control licensing and other bureaucratic hurdles, an India Rapid Reaction Cell in the Pentagon was set up. In 2016, India was designated as a ‘Major Defence Partner’ country. Another step forward in the middle of this year was the inclusion of India in the Strategic Trade Authorisation-1 (STA-1) category, putting it on a par with allies in terms of technology access. This should enable the DTII to graduate to more ambitious projects.