New Delhi, August 17 When the Nuclear Suppliers’ Group (NSG) commences its two-day meeting in Vienna this Thursday to clear a special waiver for India and put the Indo-US nuclear deal in its last lap, the Manmohan Singh Government is expected to act on two key commitments in the draft NSG agreement — putting in place export control systems and lists to control the transfer of nuclear material, technology and equipment.

The Ministry of Commerce has finalised the requisite changes to the Foreign Trade (Development & Regulation) Act of 1992 (FTDR Act), which entail tightening norms on trade in items meant for dual use — both military and civilian purposes. The law, which governs India’s foreign trade, would also incorporate the provisions of ‘The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act 2005,’ including its penal clauses.

The list of special chemicals, organisms, materials, equipment and techno-logies (SCOMET) under the FTDR Act will be expanded to impose restrictions on trade in items including nuclear materials, toxic chemical agents and other chemicals, microorganisms, aerospace equipment and items used for information security.

Service providers who pass on certain secret and classified information regarding trade and use of such items will now be made liable under the FTDR Act too. India is already a signatory to the Chemicals Weapons Convention requiring notification of dual-use chemicals.

The proposed changes were already on the agenda of Singh’s cabinet last week, but with the Sixth Pay Commission award dominating discussions, the foreign trade law amendments had to be deferred and are likely to be cleared this week. While New Delhi would be keen to send out the right signal to the NSG representatives meeting in Vienna on August 21 and 22, the changes proposed to the foreign trade law are not just about the nuclear deal, but also include a slew of significant reforms.

In a bid to leave behind the country’s infamous ‘licence raj’ legacy in spirit as well as letter, the amendments to the FTDR Act would restrict the use of the word ‘licence’ to trade in ‘restricted items.’ In all other respects, the word ‘licence’ would be replaced with ‘authorisation,’ in line with the World Trade Organisation norms. WTO members have been raising the issue, asking if ‘licence Raj’ still persists in the country.

Also included is a proposal to give more teeth to customs authorities and the Directorate General of Foreign Trade (DGFT) to enforce the law more effectively. Violations under the law are punishable by a maximum penalty of five times the value of the exports, but currently, the DGFT is required to write to the state governments to collect such fines from the trader. This would be changed to allow penalties to be collected directly by the authorities and officials expect this to increase collections.

Another major change is the inclusion of the booming services sector which contributes a bulk of the gross domestic product (GDP) and contributes healthily to exports, under the ambit of the 1992 FTDR Act. The law currently only covers trade in goods, since it was drafted at a time when services exports, barring the software space, were hardly significant.

While services exporters avail the Government’s export sops, they are not required to get an Import Export Code (IEC). So while goods exporters who try to hoodwink the provisions of the foreign trade law could lose their IEC and licence, services exporters are not covered by these penal provisions.