Index

India/Pakistan Sanctions Clarification
(Bharat Electronics Limited, including the Components Division in Bangalore)

The Bureau of Export Administration (BXA) is clarifying the restrictions on exports and reexports to Bharat Electronics Limited (BEL) in India, which appears on the "Entity List" (Supplement 4 of Part 744 of the Export Administration Regulations). BXA has determined that all operations and units of BEL located in Bangalore, Ghaziabad, and Hyderabad are considered to be part of BEL and, as such, licenses are required for the export and reexport of U.S. items to all such BEL operations and units in those locations. For example, these operations include, but are not limited to, Components, New Projects, and Sound and Vision Broadcasting.

BXA is currently developing additional guidance to assist the exporting community in determining whether their customer is considered to be part of an entity included on the Entity List. To better focus restrictions on trade with India, the Administration decided to confine the sanctions to the listed entities at locations that were of concern, and permit trade with related entities so long as they are not involved in the missile or weapons activities of the listed entity. Section 744.1 of the Export Administration regulations (EAR) states: "with respect to subordinates of listed entities in India and Pakistan, only those specifically listed in Supplement No. 4 to Part 744, Entity List, are subject to the restrictions and policies set forth in this section."

"Important as it is, this is one of the most difficult distinctions for both exporters and BXA to make, as a practical matter," said Roger Majak, Assistant Secretary for Export Administration. "The autonomy of related entities, as measured by such things as budget, location, decision making authority, and joint activities with the listed entity, needs to be taken into consideration in determining whether related entities are exempt from sanctions."

The Export Administration Regulations provide that the BXA may inform exporters, individually or through amendment to the EAR, that a license is required for exports or reexports to certain end-users or entities. The EAR contains a list of such entities, known as the Entity List. Publishing this list puts exporters on notice that any products sold to these end-users may present concerns and will require a license from BXA. Related but unlisted entities subordinate to a listed entity are generally not considered to be listed entities. Although such related entities are not considered "listed," their relationship to the listed entity heightens the risk of diversion to the listed entity. Therefore, exporters have the responsibility to determine the nature and activities of their potential customers using BXA's "know your customer" and Red Flag guidance. Exporters are also reminded that it is a violation of the EAR to proceed with a transaction with knowledge that a violation will occur or has occurred.

Some exporters have previously been advised individually that BEL’s Components unit in Bangalore is a BEL "subordinate" and therefore exempt from sanctions. Based upon further review, BXA is modifying that interpretation.