India has the option to take up the matter of sanctions on 24 companies by the US with the World Trade Organisation (WTO) or International Court of Justice (ICJ) but is is more likely to engage in direct diplomacy with Washington to address its concerns, according to a report. Th country may seek exemptions for specific sectors or companies in these bilateral talks.
“While unilateral sanctions imposed by the US are controversial under international law, the practical reality is that countries like India must navigate these sanctions carefully to protect their business interests,” the report by Global Trade Research Initiative (GTRI) said.
India can engage diplomatically with the US and other international bodies to seek remedies, but the broader trend of extraterritorial sanctions poses a challenge to international trade law and the principle of state sovereignty, it said.
On October 30, the US State Department and the Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on nearly 400 entities and individuals, including 19 Indian companies and two individuals, for supporting Russia’s military activities in Ukraine. Then on November 1, the US Department of Commerce (DOC) added five Indian companies to its Entity List for acquiring and redirecting US-made goods to Russia’s defence sector.
The companies that are on DOC list are Shreya Life Sciences, Soni Electronics, Solex Electronics, Asha Electronics and S M Electronics.
The official stance of India on the sanctions was that affected entities did not violate Indian laws and that it would work with domestic agencies to ensure businesses comply with export control guidelines and non-proliferation commitments.
“To prevent future sanctions, India may plan to tighten export controls, offer clearer business guidelines, and ensure strict compliance. The recent US sanctions highlight the importance for Indian businesses to follow both local and international trade regulations, especially when dealing with sensitive or dual-use goods. Companies must stay vigilant to avoid inadvertently supporting sanctioned entities or countries,” the GTRI said..
It’s crucial for businesses to have strong compliance programs and regularly check export control lists like India’s SCOMET list and US BIS regulations. Failing to comply can lead to serious consequences, including trade restrictions, frozen assets, and lost market access.
Indian companies should also monitor their supply chains, particularly in high-risk areas. Regularly reviewing the SCOMET list helps identify products that may face export restrictions. Non-compliance could isolate businesses commercially, as US sanctions not only block transactions with US companies but can also discourage global partners that have ties to the US.
SCOMET is an acronym for Special Chemicals, Organisms, Materials, Equipment and Technologies. This list contains goods which are considered as dual-use items.
As India focuses on becoming a net exporter, particularly in defence exports, it is imperative that the businesses focus on knowledge, training and compliance. Costs of non-compliance are way too high for businesses to ignore compliance, GTRI added.
From: financialexpress
Financial News
