According to the FBI, these items include special heat-resistant computer chips with applications in missile guided systems, capacitors, semi-conductors, rectifiers, resistors and microprocessors for use in aircraft navigation systems. The key charge: the items were exported between 2002 and 2006 in violation of licencing rules and the US Arms Export Control Act.

The two arrested are Parthasarathy Sudarshan, who founded Cirrus Electronics in Singapore in 1997 and was the CEO and Managing Director when he moved to the US in 2004 with a legal residence permit. And Mythili Gopal, a permanent US resident, who launched Cirrus (USA) around November 2003 at Simpsonville, South Carolina.

Two Indian government officials have also been mentioned as “co-conspirators” and one of them, the FBI claims, is an official posted at the Indian embassy in the United States. The other is said to be an official of the Aeronautical Development Establishment (ADE), an entity of the Defence Ministry, who allegedly travelled to the US for inspection of items being allegedly procured for Tejas.

While India is studying the details, top officials in South Block told The Indian Express that the items identified are “not exactly hi-tech” They also cited the fact that the US is involved in the Chandrayaan project of which VSSC is a key participant.

Given that there have been cases of blacklisting former Indian scientists, entities and private firms in the recent past, the hope is that this will not emerge as a major stumbling block.

However, this is a rare occasion when Indian government officials and entities have been directly identified as accused.

“Sudarshan, 46, and Gopal, 36, both of Simpsonville, South Carolina, were arrested on Friday, March 23, and had their initial appearances in the U.S. District Court in Greenville, South Carolina. The arrests were the result of a 15-count indictment that a grand jury in the District of Columbia had returned and that was unsealed on Friday. They will have their first court appearances in the District of Columbia probably sometime next week,” Channing Philips, spokesperson for the US Attorney for District of Columbia, told The Indian Express today.

In a grand jury, a typical US pre-trial procedure where the proceedings are secret, a jury decides if there is enough evidence for a trial. An indictment, as in this case, allows prosecutors to arrest and move for a trial.

Sources said Washington has sent details of the case to New Delhi through diplomatic channels and sought further assistance in helping bring the investigations to close.

According to the case made out by the FBI, Cirrus Electronics was a private entity acting on directions from Indian government entities VSSC, Bharat Dynamics Ltd (BDL) and ADE, to obtain dual-use items from US vendors and illegally export them to India via Singapore. So, Cirrus had registered offices at Simpsonville, South Carolina, in Singapore and in Bangalore.

The modus operandi, the FBI alleges, was to purchase items on behalf of Cirrus (US) from American vendors by concealing the original destination, then illegally exporting them to Cirrus Singapore without obtaining the necessary license and then re-exporting them to India.

VSSC is on the “entities list” of the US Department of Commerce. This is a kind of a restricted list and if a exporter has to sell such items to these listed entities, then it must obtain a license from the Department of Commerce.

The FBI charge is that the accused “knowingly combined, conspired, confederated, and agreed with each other” to violate these provisions by “exporting critical electronic components to Entity List organisations in India without first obtaining licenses from the Department of Commerce”.

Two other Cirrus officials, AKN Prasad, who opened the Bangalore office, and Sampath Sundar, Director of Operations in the Singapore office, have been named as the other accused.

In the indictment on the alleged illegal exports for parts to be used in the Tejas aircraft project, the FBI has referred to two “co-conspirators” without revealing their identity. One was a “Government of India official located in the District of Columbia (DC)” and the other was an “official at ADE”.

What was allegedly sold to

• VSSC: Static Random Access Memory (SRAM) computer chips manufactured by a Phoneix-based company “designed to withstand extreme changes in temperature and had applications in missile guided systems.”

• BDL: Capacitors, semi-conductors, rectifiers and resistors — items that are a must in a complicated electric circuit of kind needed for “missile guidance and firing systems”.

• ADE: i960 Intel Microprocessor from Massachusetts that the FBI claims has “applications in the navigation and weapons guidance systems of the Tejas Light Combat aircraft.”

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• Cirrus officials Parathasarathy Sudarshan, Mythili Gopal, AKN Prasad and Sampath Sundar.

• Two Indian government officials — names concealed — put down as “co-conspirators”. One was with Indian Embassy in US, another with ADE

How serious is the case

• Diplomatic challenge for both India and US as reputed Indian government entities have been named as beneficiaries and govt officials identified as conspirators.