US embassy cable - 05NEWDELHI3603

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 003603 
 
SIPDIS 
 
PASS TO NRC 
 
E.O. 12958: DECL: 05/13/2015 
TAGS: PREL, ETTC, MNUC, IN, GOI, Export Control Initiatives 
SUBJECT: ASSESSING OF INDIA'S DRAFT EXPORT CONTROL 
LEGISLATION 
 
REF: A. NEW DELHI 3529 
     B. NEW DELHI 3392 
     C. NEW DELHI 3270 
 
Classified By: Charge Robert O. Blake, Jr., for Reasons 1.4 (B, D) 
 
1.  (SBU) Summary:  Our initial review of the "Weapons of 
Mass Destruction and their Delivery Systems (Prohibition of 
Unlawful Activities) Bill, 2005" (Bill No. 70), suggests the 
draft legislation is a comprehensive statute that meets NSSP 
Phase Two requirements that the GOI introduce stronger export 
control legislation.  Although we have to see how the 
legislation is implemented, the bill is ambitious and the 
speed with which it has sailed through the government is a 
major achievement for the GOI and a clear indicator of its 
commitment to nonproliferation and the US-India relationship. 
 The legislation was introduced in Parliament on May 10, and 
debate began on May 12.  The government is pushing hard for 
passage before Parliament adjourns on May 13.  A copy of the 
document has been transmitted to SA/INS.  End Summary. 
 
2.  (SBU) Following its rapid approval by the GOI Cabinet 
(Ref B), Embassy received an advance copy of the WMD bill on 
May 10.  An initial review of the text indicates that earlier 
reporting on the contents of the bill was fairly accurate 
(Ref C), and that the law is ambitious in its scope and 
contains stringent penalties for violation of its provisions. 
 (Note:  One difference in the draft bill from previous 
reporting is a reduction in the minimum fine for a violation 
from five lakh rupees (approx. $11,000) to three lakh rupees 
(approx. $7000).  End Note.) 
 
3.  (SBU) The scope and application of the bill is extensive, 
indicating that the GOI is determined to enshrine its 
self-described "pristine" nonproliferation record in law. 
The law also seems to seek to establish India as a 
self-declared "Nuclear Weapons State," abiding by its 
international commitments, i.e., UNSCR 1540, and the Chemical 
Weapons and Biological Weapons Conventions. 
 
4.  (C) The bill appears to meet the requirements outlined in 
Phase Two of the NSSP, namely, to introduce export control 
legislation that covers intangible technology transfers, 
brokering, transit, re-export, and catch-all controls.  A 
copy of the text of the bill has been transmitted to SA/INS. 
Its major elements are described below: 
 
Objectives: NWS and Nonproliferation 
------------------------------------ 
 
5. (U) Notably, the GOI declares itself a "Nuclear Weapons 
State" in the opening sentence of the Preamble and reiterates 
its commitment to nonproliferation:  "Whereas India is 
determined to safeguard its national security as a Nuclear 
Weapons State; and whereas India is committed not to transfer 
nuclear weapons or other nuclear explosive devices, or to 
transfer control over such weapons or explosive devices, and 
not in any way to assist, encourage, or induce any other 
country to manufacture nuclear weapons or other nuclear 
explosive devices..." 
 
Extent and Application of Law 
----------------------------- 
 
6.  (U) The bill claims broad jurisdiction over the area and 
entities subject to the law.  Clause 3 states the law applies 
to every person in India and its Exclusive Economic Zone (360 
km from its coast), as well as to "citizens of India outside 
India; companies or bodies corporate, registered or 
incorporated in Indian or having their associates, branches 
or subsidiaries, outside India; any ship, aircraft or other 
means of transport registered in India or outside India, 
wherever it may be; foreigners while in India; and persons in 
the service of the Government of India, within and beyond 
India." 
 
7.  (U) Clause 3 goes on to define the application of the law 
to "export, transfer, re-transfer, transit and transshipment 
of material, equipment or technology of any description as 
are identified, designated, categorized or considered 
necessary by the Central Government, as pertinent or relevant 
to India as a Nuclear Weapon State, or to the national 
security of India, or to the furtherance of its foreign 
policy or its international obligations under any bilateral, 
multilateral or international treaty, Covenant, Convention or 
arrangement relating to weapons of mass destruction or their 
means of delivery, to which India is a Party." 
 
Intangible Technology Transfers 
------------------------------- 
 
8.  (U) The bill consistently references limits on any 
material, equipment, or technology that may be used in the 
design or manufacture of WMD.  The concept of "intangible 
technology transfer" is encompassed by the definition of 
"technology" in Clause 4 which includes "all items and 
services which are provided or used, or which are capable of 
being used, in the development, production or use of such 
(WMD) technology or goods." 
 
Brokering 
--------- 
 
9.  (U) Brokering is specifically cited in Clause 12:  "No 
person who is a resident in India shall, for consideration 
under the terms of an actual or implied contract, knowingly 
facilitate the execution of any transaction which is 
prohibited or regulated under this Act." 
 
Transit and Re-export 
--------------------- 
 
10.  (U) Various forms of transit and transfer are defined in 
Clause 4, as follows: 
 
-- "'Brought in transit' means to bring goods from any 
country into India by land, air or amphibious means of 
transportation, where the goods are to be taken out from 
India on the same conveyance on which they are brought into 
India without any landing in India." 
 
-- "'Retransfer' means transfer of any item notified under 
this Act from any country or entity to which it has been 
exported from India, to yet another country or entity." 
 
-- "'Transship' means to remove goods from the conveyance on 
which they were brought into India and to place the goods on 
the same or another conveyance for the purpose of taking them 
out of India, where these acts are carried out on a "through 
bill of lading,' 'through airway bill,' or 'through 
manifest.'" 
 
11.  (U) Clause 13 of the bill regulates transit and transfer 
activities: 
 
-- "(A) No item notified under this Act shall be exported, 
transferred, re-transferred, brought in transit, or 
transshipped except in accordance with the provision of this 
Act or any other relevant Act; 
 
-- (B) Any transfer of technology of an item, whose export is 
prohibited under this Act or any other relevant Act related 
to relevant activities shall be prohibited; 
 
-- (C) When any technology is notified under this Act or any 
other relevant Act, as being subject to transfer controls, 
the transfer of such technology shall be restricted to the 
extent notified thereunder; 
 
-- (D) The Central Government may notify any item as being 
subject to the provisions of this Act, whether or not it is 
covered under any other relevant Act, and when such item is 
exhibited, sold, supplied or transferred to any foreign 
entity or a foreigner who is resident, operating, visiting 
studying, or conducting research or business within the 
territorial limits of India, or in its airspace or Exclusive 
Economic Zone, it shall constitute an offense." 
 
Capturing the "Catch-All" Concept 
--------------------------------- 
 
12.  (U) Although the term "catch-all" is not specifically 
used in the text, the concept is captured in several 
references to GOI authority to designate items of concern, 
such as in Clause 11:  "No person shall export any material, 
equipment, or technology knowing that such material, 
equipment, or technology is intended to be used in the design 
or manufacture of a biological weapon, chemical weapon, 
nuclear weapon or other nuclear explosive device, or in their 
missile delivery systems."  The law also seeks to grapple 
explicitly with the cutting edge problem of proliferation 
involving non-state actors in Clause 9: "No person shall, 
directly or indirectly, transfer to a non-State actor or 
terrorist, any material, equipment and technology notified 
under this Act or any other Act related to relevant 
activity."  The bill goes on to specify punishment for any 
person caught aiding and abetting non-State actors, ranging 
from a jail term of five years to life imprisonment. 
 
Delegation of Powers 
-------------------- 
 
13.  (U) Clause 7 states, "The Central Government shall have 
the power to direct or assign to any authority, in such 
manner as it may deem appropriate, such powers as may be 
necessary to implement the provisions of this Act." 
 
Pending Questions 
----------------- 
 
14.  (SBU) Our initial reading of the bill raises several 
questions about the law and its implementation: 
 
-- Per Clause 7, will the GOI create a new entity to 
implement this law or would a current body (e.g., the 
Inter-Ministerial Working Group that currently reviews export 
licenses or the Director General of Foreign Trade) be given 
new authority to implement the bill's provisions? 
 
-- Will adequate resources be allocated for effective 
implementation and enforcement? 
 
-- Will the GOI issue a list of controlled items under this 
law, and if so, will that list be harmonized with existing 
international lists? 
 
-- Will the GOI begin to systematically monitor its ports to 
ensure compliance, i.e., without outside notification or 
intervention? 
 
15.  (SBU) Dr. G. Balachandran, an independent consultant who 
has done extensive research on Indian, US, and international 
export control regimes, assessed the draft legislation in a 
discussion with PolMilOff on May 11.  He noted that the broad 
jurisdiction of the law closely follows similar provisions in 
US export control law, e.g., applicable to all US citizens, 
regardless of their location.  He raised similar questions as 
above about how the bill would be implemented, and especially 
about the need for the GOI to revise its control lists. 
According to Dr. Balachandran, the GOI is currently drafting 
a new control list which should be released "soon."  He did 
not know whether the new list would be harmonized with 
current international lists or whether it would simply be an 
annex to India's existing control list, SCOMET.  Dr. 
Balachandran believed that there is broad support for the 
draft bill and did not foresee problems with passing it, even 
in the short time left of the current session of Parliament. 
 
Race Against the Clock 
---------------------- 
 
16.  (U) The bill was introduced in the Lok Sabha (Lower 
House) late in the day on May 10 and in the Rajya Sabha 
(Upper House) on May 12.  Both houses may either discuss and 
vote on the bill or send it to their respective Standing 
Committee for hearings (where some bills languish).  The Lok 
Sabha debate began on May 12.  If both houses pass the bill 
with a two-thirds majority, it will become law.  If either 
house sends the bill to its respective Standing Committee, 
the bill will not re-surface until the "Monsoon session" of 
Parliament in July. 
 
17.  (U) If Parliament does not vote on the bill, the Prime 
Minister may intervene and sign the bill into law temporarily 
as an Ordinance (as happened for the Patent Act, and the 
Prevention of Terrorism Act).  Passing a bill by Ordinance is 
only a temporary measure, however, because the law expires 
six weeks after the next session of Parliament.  Further, 
signing a bill into law as an Ordinance would have to be done 
before the bill is sent to the Standing Committee. 
 
18.  (U) The May 12 "Indian Express" reports that an 
agreement was reached among Left parties and the Ministers of 
External Affairs, Defense, and Parliamentary Affairs, among 
others, to push the bill through both houses of Parliament 
before adjournment.  According to the May 10 "Indian 
Express," before the bill was introduced, the UPA sought a 
waiver to prevent the bill from being referred to the 
standing committees to ensure a vote before Parliament 
adjourns. 
 
Opposition Recognizes Spin-off Benefits 
--------------------------------------- 
 
19.  (U) An editorial in the pro-BJP "Pioneer" on May 12 
highlights reasons for passage of this bill (albeit, with the 
participation of Opposition parties that are currently 
boycotting Parliament).  First, to prove -- namely, to the US 
-- that New Delhi is a mature nuclear power with an 
established command-and-control structure to safeguard 
against black-marketing of sensitive technology.  Second, to 
overcome the "technical obstacles" enshrined in the Nuclear 
Suppliers Group (NSG) guidelines that limit India's access to 
civil nuclear technology and reactors.  According to the 
"Pioneer," the law would  facilitate Russia's potentially 
very lucrative involvement in the Kundakulam reactor project 
for which India has sought four additional reactors: 
"Indeed, if Moscow does not allow itself to be distracted by 
Washington, it could initiate a hugely upgraded nuclear 
cooperation program with New Delhi designed to meet India's 
energy concerns through civilian nuclear power."  Finally, 
passage of the law, coupled with India's adherence to other 
control regimes, would augment India's bid for permanent 
Security Council membership, according to the editorial. 
 
Comment 
------- 
 
20.  (C) Embassy believes the draft legislation meets -- 
perhaps even exceeds -- NSSP Phase Two requirements that the 
GOI strengthen its export control law.  The speed with which 
it sailed through the normally cumbersome inter-agency 
process indicates high-level support and, if passed by 
Parliament, would demonstrate broad political consensus for 
New Delhi's nonproliferation objectives.  The devil, of 
course, will be in the details of implementing this ambitious 
legislation and, ultimately, allocating adequate resources. 
21.  (C) Save for a handful of articles in the Indian press, 
the rapid movement of this bill seems to have eluded most 
Indian media, as well as our interlocutors on various issues 
affected by export controls.  Emboffs' contacts at the 
Ministry of Commerce and the Department of Energy (Ref A) had 
not seen the proposed bill before it was introduced in 
Parliament.  Presumably, the process for establishing the 
regulations to implement the law will involve more labored 
consultations. 
 
22.  (C) In any case, this is a major step found on an issue 
that has been pending in our bilateral relationship since the 
1990s.  As we noted in Ref B, this would not have happened 
without a significant investment of political capital by the 
Prime Minister and his senior advisors.  In this sense, this 
law is one more bellwether of the considerable importance 
that NPA government has assigned to its relationship with 
Washington. 
BLAKE