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US aims to boost trade with India

A proposed $1.8 billion sale of U.S.-origin air defense systems is expected to open a pathway to increased exports to the South Asian economy.

While the U.S. continues pursuing a free trade agreement with India, stronger political and economic relations between the two countries have been demonstrated through the recently proposed export of U.S.-made air defense weapons systems to the Indian military.

In a recent letter to Congress, the U.S. Department of Defense valued the proposed weapons sale to India at $1.867 billion.

“This proposed sale will support the foreign policy and national security of the United States by helping to strengthen the U.S.-Indian strategic relationship and improve the security of a major defensive partner, which continues to be an important force for political stability, peace and economic progress in the Indo-Pacific and South Asia region,” the Defense Department said in a Federal Register notice published today.

“This will contribute to India’s military goal to update its capability while further enhancing greater interoperability between India, the U.S. and other allies,” the department added.

The Defense Department said the two primary U.S. beneficiaries of the weapons sale will be Raytheon Corp. (NYSE: RTN) and Kongsberg Defense and Aerospace.

Source: USA Trade Online, U.S. Census Bureau

U.S. corporate compliance officers will still need to carefully monitor technology exports to India to ensure compliance with export control regulations, but the Defense Department announcement demonstrates a lessening of trade restrictions on India.

The U.S. government increased export controls on India, particularly related to nuclear weapons development, in the early 2000s after the country and its nuclear-armed neighbor Pakistan threatened to go to war.

India has since joined various international export control conventions and the U.S. no longer lists India as a country of concern for national security and proliferation.

Last week, President Trump met with India’s Prime Minister Narendra Modi in New Delhi to pursue, among other things, a future bilateral trade agreement.

Chris Gillis

Located in the Washington, D.C. area, Chris Gillis primarily reports on regulatory and legislative topics that impact cross-border trade. He joined American Shipper in 1994, shortly after graduating from Mount St. Mary’s College in Emmitsburg, Md., with a degree in international business and economics.