INDIA Law and Practice Contributed by: Alina Arora, Samarth Gupta and Parth Singh, Shardul Amarchand Mangaldas & Co
3.8 Intra-Company and Intra-Group Transfers Transfer of a controlled item, software or technology to a group company outside India constitutes an export requiring authorisation, irrespective of the mode of transfer (including electronic transmission and cloud access). Two general authorisations are available, as follows. • For dual-use items, the GAICT permits repeated transfers of specified dual-use items, software and technology (under Category 8 of SCOMET list) to a foreign parent, subsidiary or affiliate in notified countries on the basis of a one-time approval by the DGFT (assessed by the IMWG). The GAICT is valid for three years, subject to an ICP, quarterly reporting and record-keeping. • For munitions items, the OGEL covers intra-com - pany transfers of technology on the same one-time basis. A transfer within India, including to a foreign-owned Indian subsidiary, is not an export. Access by foreign nationals to licensed defence facilities is separately controlled (see 5.2 Security Vetting and Clearance Requirements ). 3.9 Enforcement, Penalties and Voluntary Disclosure Contraventions of export control requirements attract the following consequences primarily under the FTDR Act and the Customs Act: • penalty of up to five times the value of the goods, services or technology involved, subject to a mini - mum of INR10,000 (USD105); • confiscation of the goods in question; • cancellation, suspension or refusal of licences, the importer-exporter code, and other instruments conferring benefits; • imprisonment under the FTDR Act, which applies the imprisonment terms prescribed under the WMD Act (extending to life imprisonment for the gravest contraventions) for contraventions involving speci - fied goods and technology; and • penalties and imprisonment under the Customs Act.
The FTDR Act also confers a catch-all power cover - ing items not listed in SCOMET, where the exporter is aware of or has reason to suspect a weapons-relat - ed end use – in which case, authorisation must be sought. The human rights record or regional stability of the destination are not express criteria under the FTP and such considerations, if at all, form part of foreign policy assessment. 3.6 End-User Controls and Post-Shipment Verification An EUC is required with every transaction-specific application. Issued by the foreign end user, the EUC: • identifies the end user; • specifies the end use and contractual value; and • contains undertakings against diversion and against re-transfer/re-export without prior consent of the GoI. The licensing authority may impose post-shipment conditions, including verification and end-use moni - toring, as well as post shipment audit and reporting. Post-shipment verification is undertaken in select cases. Exporters are required to maintain records of controlled exports for five years and, in the case of munitions exports, to additionally file the reports required under the DDP’s procedures. 3.7 Brokering and Intermediary Activities Although not expressly stated in export regulation laws, brokering of munitions and dual-use items is – in the authors’ view – not permissible under Indian law. The view rests on three elements, which are: • Section 14A of the FTDR Act, which applies the WMD Act to brokering in specified goods, services and technologies; • Section 12 of the WMD Act, which prohibits Indian citizens from facilitating transactions prohibited or regulated under the WMD Act; and • the MoD’s stated position that brokering of muni - tions list items is prohibited under the WMD Act and the FTDR Act. India does not have a separate brokering registration regime. No authorisation for brokering is available.
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