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Creating awareness on Export Control Framework Related to Technology Transfer including Intangible Technology Transfer
Creating awareness on Export Control Framework Related to Technology Transfer including Intangible Technology Transfer

April 22, 2021

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Many countries impose export control measures to restrict the export of dual-use items, software and technology. The dual use nature of technology is what gives rise to the need for controlling it. ‘Dual use’ refers to the ability of technology to be used for both military and civilian purposes. Due to concerns around national security and arms proliferation, the export of such technology and software is regulated under export control laws. For the export of such technology and software from India, an export licence from the government is required by the exporter. If you are a company that exports Indian-origin dual-use technology or items that incorporate such technology, for example, encryption technology, then the export control laws in India are relevant for you. Depending on the type of technology being exported, you may be under an obligation to require an export licence from the government of India.

Transfer of technology includes intangible technology. Intangible technology transfer (ITT) refers to the export of technology from one country to another via non-physical (intangible) means. Even when transfer happens from one local entity to a foreign entity locally domiciled, it is considered as export. For example, if a foreign Company A situated in India gets access to controlled technology owned by Indian Company B.  ITT includes the ‘know-how’ needed to effectively use an item. ITT can occur in many ways, such as, exposure to technical data as part of research and development activities; transfer of technical data such as blueprints/formulae/diagrams; visual inspection of hardware and software; meetings/discussion/presentations/trainings/working knowledge etc. This ITT is export controlled if the technology being transferred is export controlled. Technology as per Indian export control rules is defined as information that is capable of being used in the development, production or use of any goods or software; and the development or carrying out of an industrial or commercial activity or provision of a service. When such technology is required for the development, production or use of controlled items, it becomes a controlled technology. For example: technology used in the development of an unmanned aircraft (drone). The technology remains under control even when applicable to any uncontrolled item. For example, an IoT device such as a smart bulb which contains encryption technology to securely store data. This smart bulb does not itself perform any encryption functionality and therefore may be an uncontrolled item. However, the encryption technology for data confidentiality that it incorporates, remains under control.

What is export controlled and therefore requires an export licence is referenced in the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) List. The SCOMET List enumerates dual-use items which are regulated in India as well as exceptions for basic scientific research and items which are in the public domain. An exporter does not require a licence for dual-use items which are not regulated under SCOMET unless the exporter knows or has reasons to believe that such item will be used for military end-use (also known as ‘catch-all provision’).

 

Last year, NASSCOM and DSCI had organised a webinar on Export Control Framework Related to Intangible Technology Transfer (ITT), aiming to create awareness about export compliance obligations. Now, NASSCOM is preparing a document to bring awareness among companies and start-ups on export control framework related to Intangible Technology Transfer (ITT). This document will aim to present a ready-reference to the industry on aspects which require clarifications with regard to export controls on ITT. The document will cover topics like:

  • Examples of when a licence may or may not be required (for example, transfer of technology that is in public domain does not require a license)
  • Examples of what is or is not covered under ITT within Category 8A5 Part II of the SCOMET List (for example, delivering an online presentation from India to a university in the US about technology that performs cryptographic function, is included in the scope of category 8A502)
  • Any other clarifications relating to export control regime as it applies to technology transfer including ITT (for example, applicability of SCOMET to cloud-based storefronts).

For us to make this document more valuable, we are engaging with the industry to understand their concerns regarding SCOMET licensing for technology transfers including ITT. For this purpose, I request you to share your queries relating to export control regime as applicable to ITT exports, that we should cover in this document. Kindly write to garima@nasscom.in


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Garima Prakash
Manager, Public Policy and Government Affairs

Reach out to me for all things policy about e-commerce, international trade, export controls, start-ups and fintech

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