US embassy cable - 04NEWDELHI8266

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 008266 
 
SIPDIS 
 
COMMERCE FOR MATT BORMAN 
 
E.O. 12958: DECL: 12/30/2014 
TAGS: ETTC, PREL, PGOV, IN, NSSP 
SUBJECT: GOI PUBLICLY ACKNOWLEDGES PROGRESS ON NSSP, 
REAFFIRMS NON-DIVERSION ASSURANCES 
 
 
Classified By: PolCouns Geoff Pyatt,  Reasons 1.4 (B,D). 
 
1.  (C) Summary: Foreign Minister Natwar Singh publicly 
acknowledged during a December 22 Parliamentary debate with 
former FM Yashwant Sinha that India had agreed to 
non-diversion and end-use verification of US high technology 
imports, even when they come from a third country.  This is a 
clear sign that the United Progressive Alliance (UPA) 
government is serious about the India/US strategic 
partnership and the export control understandings attached to 
the Next Steps in the Strategic Partnership (NSSP).  The 
exchange received almost no press coverage in India, 
illustrating that interest in the NSSP process is largely 
confined to Indian elites.  End Summary. 
 
2.  (U) On December 22, in the waning days of the Winter 
Session of Parliament, Foreign Minister Natwar Singh made a 
lengthy statement on India's foreign policy.  Singh noted 
that Indo/US relations "have expanded across the board," and 
in this context observed that "It was the UPA Government 
which concluded the long pending first phase of the NSSP." 
He detailed that "the agreement makes US Licensing Policy and 
procedures both transparent and predictable.  End-use 
verification is a consultative process to be undertaken by 
mutual consent.  This is an agreement between equals.  It is 
reflective of the strategic partnership that the two 
countries wish to promote.  It is the first in a series of 
steps to build mutual confidence and trust, leading to 
progressively higher levels of interaction in high technology 
areas."  Former Foreign Minister Yashwant Sinha jumped on 
this exchange regarding the NSSP to press the issue of third 
countries, leading FM Singh to acknowledge publicly for the 
first time that India was committed to end-use verification 
for American high technology items, whether imported directly 
from the US or from other countries. 
 
3.  (U) Sinha noted to FM Singh that, "I had raised a very 
specific issue about NSSP when I talked about end-use 
verification.  I am giving him an opportunity to contradict 
me that US origin items of dual use coming from third 
countries will not be subjected to end-use verification as US 
origin items coming directly from the US will.  This is not 
part of the agreement which had been reached in December, 
2003.  There was no agreement with regard to end-use 
verification." 
 
4.  (U) The Foreign Minister replied that, "Under the NSSP, 
the US-origin items, whether directly supplied to us from the 
US or from any other source, will always be the basis of 
negotiations.  It would not have been tenable to exclude 
US-origin goods or technology merely because they were 
obtained from non-US sources.  We ourselves would not accept 
such a distinction with respect to Indian-made technology or 
sensitive goods such as our software." 
 
5.  (C) MEA Joint Secretary (Americas) S. Jaishankar flagged 
this exchange in his meeting with PolCouns and Pol-MilOff on 
December 30.  Jaishankar noted that FM Singh's line on 
end-use verification of US origin items imported from third 
countries was essentially the same as the policy of the 
previous NDA government, e.g., protection of US dual-use 
items is an extension of protection that the GOI seeks for 
Indian produced dual-use items.  This argument, however, 
seemed to "thoroughly confound" Sinha and effectively ended 
further discussion of the matter.  Jaishankar went on to 
recall that during his visit to the US in November, Commerce 
U/S Juster had inquired what the GOI response would be should 
this issue of non-diversion for goods from third countries 
become a matter of public debate.  Noting that his is the 
first time this issue has been raised in a public forum, 
Jaishankar reiterated that the GOI stands by its private 
commitment to respect end-use restrictions even for US origin 
dual-use items from third countries.  "Our treatment of US 
items is the same as our treatment of Indian items," he 
concluded. 
 
Comment 
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6.  (C) FM Singh's statement was the first time that the GOI 
publicly revealed the concessions it had made regarding 
end-use verification under the NSSP, and indicates that the 
UPA government is serious in upholding its NSSP obligations 
and pushing the India/US relationship to a new level.  It 
came as no surprise that former FM Sinha, who was privy to 
earlier rounds of NSSP negotiations, sought to use the 
non-diversion agreement to charge the UPA government with 
caving in to US demands.  Singh's statement received almost 
no press coverage in India, as public interest in the NSSP is 
largely confined to Indian elites and technical specialists, 
many of whom are still trying to understand the commitments 
attached to the NSSP. 
MULFORD