India Eases Export Rules for Dual-Use Technology to 41 Countries

Posted by Written by Archana Rao Reading Time: 3 minutes

India has relaxed its export rules for specific dual-use software and technology items, a move which will allow Indian companies to send these items to its subsidiary units in 41 countries.

On September 7, 2024, India’s Directorate General of Foreign Trade (DGFT) issued a public notice, announcing new rules easing the export of 36 items, including software and technology, from Indian parent companies to their foreign subsidiaries in 41 countries.

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The DGFT has also updated the Handbook of Procedures 2023 to reflect these changes effective immediately.

These exports fall under a dual-use policy for products that have both industrial and military applications, known as SCOMET (Special Chemicals, Organisms, Materials, Equipment, and Technologies).

Approved countries: The approved dual-use items can only be exported to specific countries, namely, Argentina, Australia, Austria, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Malta, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Republic of Korea, Romania, Russia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, United States.

The DGFT, in the latest order, has specified that exceptions for other countries may be allowed on a case-by-case basis.

New dual-use technology items added to GAICT export list

According to the media reports, countries benefiting from this policy include Russia, the UK, and the US. The DGFT announced that the Global Authorization for Intra-Company Transfer (GAICT) now covers additional items under the liberalized policy to facilitate the intra-company transfer of SCOMET goods.

The Global Authorisation for Intra-Company Transfers (GAICT) scheme, offered by India’s DGFT, provides companies with a global export license, allowing them to export a range of items to their affiliated companies in different countries. This license offers practical benefits to exporters; however, in order to qualify, companies must establish a robust Internal Compliance Program (ICP) to demonstrate their commitment to responsible export control practices.

GAICT streamlines the process for compliant companies by reducing the need for separate export approvals for each transaction within affiliated businesses.

The expanded list under GAICT now includes various technologies and materials, such as source codes for hybrid systems, tech for gas turbine engines, and materials designed to absorb electromagnetic radiation.

It also includes items such as the counter Improvised Explosive Device (IED) equipment, towed acoustic hydrophone arrays, materials for absorbing electromagnetic radiation, intrinsically conductive polymers, and certain laminates.

What comes under the SCOMET list?

The SCOMET list is notified under Appendix 3 to Schedule 2 (Export Policy) of the Indian Trade Clarification (ITC). The items listed on the SCOMET list are organized in the following categories:

SCOMET Items Categories

Category 0: Nuclear materials, nuclear-related other materials, equipment and technology

  1. 0A Prescribed Substance 
  2. 0A1 Source Material 
  3. 0A2 Special Fissionable Material 
  4. 0A3 Other Materials
  5. 0B Prescribed Equipment
  6. 0C Technology

Category 1: Toxic chemical agents and other chemicals

  1. 1A Prohibited chemicals
  2. 1B Chemicals permitted only to States party to the Chemical Weapons Convention
  3. 1C Chemicals permitted also to States not party to the Chemical Weapons Convention
  4. 1D Other Chemicals

Category 2: Micro-organisms, toxins

  1. 2A Bacteria
  2. 2B Fungi
  3. 2C Parasites
  4. 2D Viruses
  5. 2E [Reserved]
  6. 2F Toxins
  7. 2G Plant pathogens
  8. 2H Genetic Elements and Genetically modified Organisms

Category 3: Materials, Materials Processing Equipment and related technologies

  1. 3A Materials
  2. 3A1 Special materials
  3. 3A2 Structural materials
  4. 3A3 Rocket propellants and constituent chemicals
  5. 3A4 High explosives
  6. 3A5 Stealth materials
  7. 3B Materials processing and production equipment, related technology and specially designed components and accessories therefor.
  8. 3C [Reserved]
  9. 3D Chemical and biomaterial manufacturing and handling equipment and facilities

Category 4: Nuclear-related other equipment and technology, not controlled under Category 0

  1. 4A Equipment, assemblies, components including test and production equipment
  2. 4B Equipment, assemblies, components including test and measurement equipment usable in development of nuclear explosive devices
  3. 4C Technology

Category 5: Aerospace systems, equipment, including production and test equipment, related technology and specially designed components and accessories therefore.

  1. 5A Rocket systems
  2. 5A1 Systems
  3. 5A2 Production and test equipment
  4. 5A3 Technology
  5. 5B Unmanned aerial vehicles
  6. 5C Avionics and navigation systems
  7. 5D Manned-aircraft, aero-engines, related equipment and components
  8. 5E Micro-light aircraft and powered ‘hang-gliders’

Category 6: Munitions List

Category 72

  1. 7A [Reserved]
  2. 7B [Reserved]
  3. 7C [Reserved]
  4. 7D [Reserved]
  5. 7E [Reserved]

Category 8: Special Materials and Related Equipment, Material Processing, Electronics, Computers, Telecommunications, Information Security, Sensors and Lasers, Navigation and Avionics, Marine, Aerospace and Propulsion

Source: Appendix 3, List of SCOMET Items, DGFT, GoI

Export of SCOMET items is either prohibited for export, or restricted (thus requiring prior export authorisation), or exempted from such authorisation (subject to issue of a general authorisation) for export to certain destinations with certain post-reporting and recordkeeping requirements etc.

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