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PAVING WAY FOR DEFENCE EXPORT & INTERNATIONAL COLLABORATIONS

The updated munitions list is an India's efforts to harmonize it with international standard. The move will ease the process for Indian companies to gain the necessary approvals for exports and additionally would help India joining the multilateral export control regimes for international collaborations. 

The Special Chemicals, Organisms, Materials, Equipment, and Technologies (SCOMET) list, more commonly known as internationally recognized SCOMET list consists of items whose export is either prohibited or permitted under an explicit authorization. They can range from raw materials to components and complete systems. Dual use items are also considered contributors to the proliferation of Weapons of Mass Destruction and are subject to control to prevent the risks, that these items may pose danger for national and international security.

 

SCOMET List Categories

  • Category 0: Nuclear Material, Nuclear-related other Materials, Equipment and Technology
  • Category 1: Toxic Chemical Agent and Other Chemicals
  • Category 2: Micro-Organism, Toxins
  • Category 3: Material, Materials Processing Equipment, and Related Technologies
  • Category 4: Nuclear-Related Other Equipment, not controlled under category 0
  • Category 5: Aerospace Systems, Equipment including production and test equipment, related technology and specially designed components and accessories thereof
  • Category 6: Munitions List
  • Category 7: Electronics, Computers, and Information Technology Including Information Security
  • Category 8: Special Materials and Related Equipment, Material Processing, Electronics, Computers, Telecommunications, Information Security, Sensors and Lasers, Navigation and Avionics, Marine, Aerospace and Propulsion

            DGFT vide Notification No. 5/2015-2020 dated 24th April, 2017, has notified the Munitions List in Category 6 of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET). The export of Items specified in Category 6 of SCOMET list (Munitions List), (except those covered under Note 2 and 3 of Commodity Identification Note of the SCOMET list and items in Category 6A007 and 6A008 of SCOMET) is governed by the extant Standard Operating Procedure (SOP) issued by the Department of Defence Production in the Ministry of Defence (www.ddpmod.gov.in) vide No. 1(4)/2016-D(EPC) dated 15th May, 2017. Unless prohibited, export of Munitions List items is permitted against an authorisation issued by the Department of Defence Production. Detailed procedure is provided in SOP for export of Munitions List Items for different purposes such as actual export, export for testing and evaluation purposes, participation in tenders/ exhibitions, exploring business opportunities abroad and transfer of technology.

            The revised and updated, especially with the control lists of the Wassenaar Arrangement and the Australia Group, is a part of India's efforts to harmonise its list of controlled items with those of the four multilateral export control regimes: Missile Technology Control Regime (MTCR), Nuclear Suppliers Group (NSG), Wassenaar Arrangement (WA) and the Australia Group. India is already a member of the MTCR besides being an adherent to NSG Guidelines. The latest revised list reflects not only the updated list of controlled items of the first two regimes but also of the latter which India wishes to join as a member.

The Munition List

This updating of ”Munition List” is an effort to align it with the international norm that would define the way for India to join the international treaties, Wassenaar Arrangement and the Australia Group. The move would not only boost military trade but would make clearances easier for private companies pursuing export orders. The Category 6, which align the international Munitions list, as per the international norm is reproduced below:-

            Export of Munitions List's items are permitted under an export licence authorisation to be provided by the competent authorities. With certain exceptions, the export licensing authority for munitions items is the Department of Defence Production (DDP), which was also the licensing authority for the previous military stores items. The MoD has withdrawn the earlier Standard Operating Procedure (SOP) on export of Military stores notified in July 2015. Revised SOP for issue of authorization for export of items in Category 6 has been released by the MoD on 15 May, 2017 and is available at http://ddpmod.gov.in/sites/default/files/Revised%20SOP%20for%20issue%20of%20Authorization%20for%20export%20of%20Munitions%20List_0.pdf

Application for Authorisation

Export of Munitions List Items is permitted under a “Authorization” issued by the Department of Defence Production, Ministry of Defence as notified by DGFT vide Policy Circular No. 5/2015-2020 dated 24.05.2017, as reflected in the Export Policy in Table “A” S. No. 5(d) of Schedule 2 of ITC (HS) Classification of Export & Import items. ITC(HS) Code or better known as Indian Trade Classification (Harmonized System) Code was adopted in India for import-export purposes. Indian Custom uses an eight digit ITC (HS) Code to suit the national trade requirement.  The ITC (HS) Codes are available on the DGFT's website (www.dgft.gov.in).

            Applications are to be made in original in prescribed format available at http://ddpmod.gov.in and submitted to DDP on line. The description of the item intended for export should also be provided. Applications should be accompanied by an End User Certificate (EUC), in original, as per format available at the website mentioned above. The EUC is to be signed/stamped by government of end user/ultimate end user country/State or the designated officer of the company, which is as the case may be.

            All documents submitted while making an application, correspondence with the buyer/consignee/end user or MoD, relevant contract documents, relevant book of accounts, relevant financial records, shipping documents including shipping bills, bill of entry and bill of lading etc.

            On receipt of on-line application along with requisite documents, in MOD, D (EPC) Section shall scrutinize the application to check whether the application is in-order i.e., the item(s)/category (ies) are clearly mentioned. The scanned copies shall be communicated to the Applicant. If the Section finds the application to be in order, then it shall be forwarded to the stakeholders for obtaining their comments on the application. The normal time taken for this preliminary examination by D (EPC) Section would be 02 working days.

            The Department of Defence Production shall consider the application for export of technology/software as mention under Munitions List Items under Category 6A021 & 6A022 for design, development, manufacturing, testing evaluation, maintenance services, upgrade, repair & overhaul of the Munitions List Items notified under category 6 by Individuals, Organization/ Institutions etc.

            An application for Authorization will be approved/rejected normally by the Department within 04 weeks for Appendix-II items from the date of receipt of the complete on-line application along with uploaded copy of EUC/requisite documents. For export of items other than Appendix II of SOP, the time period is two weeks (another two weeks if consultation with any of the stakeholders required. However, Authorization will be issued only after receiving the original EUC.

            There is no fee for obtaining Authorization for export of Munitions List Items. Importer-Exporter Code (IEC) is mandatory for export of Munitions List Items. Without IEC, company can not be registered with the DDP.

            For items in category 6A007 (Chemicals or Biological Toxic Agents) and Category 6A008 (Energetic Materials and related substances), DGFT will be the licensing authority apart from certain exemptions mentioned under Commodity by Identification Note (CIN).

            The purpose of obtaining End User Certificate is to establish the complete chain of transmission of exported product unit it reaches the ultimate end user with a view to ensure that the item exported has been used for the specific purpose for which Authorization was requested and that the item has not been diverted, sold or transferred to any third party whatsoever. The revised SOP divides the whole procedure into six parts as tabulated below along with brief details on End Use certificate requirement and Stake holders to be consulted for Munitions List Items.

Export Purpose EUC Requirement and Need for Consultation

The revised SOP also stipulates the standard conditions pertaining to multi-agency stakeholder consultation and end-use certification for the grant of export authorisation. The consultation of stakeholders - representatives from the Ministry of External Affairs (MEA), the concerned armed force, Defence Research and Development Organisation, Planning and International Cooperation (PIC) Wing of the MoD and other concerned agencies  is mandatory for all items figuring in Parts A and F, whereas consultation with the MEA is mandatory only for items whose export destination is a country that figures in the MEA's 'negative list'.

            The move also confirms India's global commitment to non-proliferation. The Exporter is required to maintain records (manual or electronics form) for a period of five years from the date of export. This prohibits anybody from exporting any material, equipment or technology knowing that such export could be used for weapons of mass destruction or their delivery systems.

India's Advantage

This amendment will ease the process for Indian companies to gain the necessary approvals for exports and be an enabling measure for India to achieve its ambitious targets for defence export. The defence ministry relaxed earlier export control laws that required multiple end user certificates by Indian companies wishing to export components and parts of larger systems. The two things combined, experts said, will go a long way in boosting foreign trade for India's private companies. These can be exported after clearance, is likely to boost military trade and make clearances easier for private companies pursuing export orders.

            India is likely to join International Arms Trade Agreement (IATA), as it has updated its guidelines of dual use items having both military and civil applications. The updated list includes 16 broad categories SCOMET List) of products that can be exported after clearance, is likely to boost military trade and make clearances easier for private companies pursuing export orders. After the Missile Technology Control Regiment, India is looking to join the Wassenaar arrangement to give exports a boost. This will pave the way for India to join the international treaties, Wassenaar Arrangement and the Australia Group and will ease the process for Indian companies to gain the necessary approvals for exports and be an enabling measure for India to achieve its ambitious targets for defence exports.

            By bringing India to a common platform matching international standard, Indian government has begun to take marked steps. The changes could have significant implications for companies that trade in dual-use and munitions goods and technologies from India, benefiting Indian companies in return. The effort has also paved the way for India to have a greater access to high-technology products and services, by entering the main multilateral export control regimes and focusing on strengthening bilateral relationships.

 

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