US embassy cable - 05NEWDELHI9260

UNCLAS SECTION 01 OF 05 NEW DELHI 009260 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR SA/RA, DDTC, ISN, AND PM - ERUSSEL AND MMARKOFF, 
DOC FOR BIS AND ITA, DOE FOR NNSA 
 
E.O. 12958: N/A 
TAGS: PREL, ETRD, ETTC, KNNP, KSTC, PARM, TSPA, MTCRE, IN 
SUBJECT: GOI UPDATES ON EXPORT CONTROLS DURING HTCG 
 
REF: A. NEW DELHI 5444 
     B. STATE 112244 
     C. NEW DELHI 6848 
 
1.  (SBU) Summary: MEA officials used the Strategic Trade 
session of the High Technology Cooperation Group meetings 
held in New Delhi December 1 to respond to USG questions 
about India's export controls, stating that the Indian regime 
"completely covers" MTCR and NSG requirements.  The GOI 
presenters gave an overview of steps the GOI has taken and 
continues to take to implement the May 2005 WMD Bill in 
letter and spirit, and to educate the Indian export community 
on the new legal requirements.  USG and GOI participants 
noted the need for greater GOI and industry understanding of 
the current control requirements for US exports to India and 
agreed to increase collaboration in outreach to government 
and industry groups.  The Indians signaled clearly that 
harmonization with Waassenar and the Australia Group are off 
the table for now, and that formal public adherence to the 
NSG and MTCR will have to move in tandem with steps by those 
regimes to accommodate India as a partner and not as a 
target.  USG representatives responded that increased GOI 
transparency on regime adherence would facilitate US efforts 
on civil nuclear cooperation in Congress and the NSG.  End 
Summary. 
 
WMD Export Controls 
------------------- 
 
2.  (SBU) Responding to lingering USG questions on details of 
India's new WMD Bill (Ref B), MEA Joint Secretary 
(Disarmament and International Security) Hamid Ali Rao told 
the USG participants led by DOC/BIS DAS for Export 
Administration Matt Borman that the revised SCOMET (Special 
Chemicals, Organisms, Materials, Equipment and Technologies) 
List published following the passage of the Bill "completely 
covers" all the items on the MTCR and NSG control lists.  Rao 
outlined GOI efforts to implement the May 2005 WMD Bill, 
including Directorate General of Foreign Trade (DGFT)-led 
regional and sectoral outreach sessions to explain the 
revised export controls to the Indian export community; and 
government checks including end-use verification, controls on 
re-exports, documentation, "visible" authority to intercept 
shipments, and "non-visible" screening of end-users.  The MEA 
now leads an interagency group charged with examining 
transactions and export license requests, and a Core Group 
has been created to train ports and customs inspectors on the 
new guidelines, he added.  Rao noted that a separate group is 
using intelligence inputs to target suspect transactions.  He 
also stated that the GOI looks forward to hosting an exchange 
of customs officials in early 2006, and would appreciate 
suggestions for dates from the USG. 
 
3.  (SBU) State/ISN officer Schultz noted that there were a 
number of MTCR-controlled items that we had not been able to 
identify on India's SCOMET list.  Handing over a list of 84 
items, Schultz requested that the GOI review this list and 
provide clarification to the US so that we might reach a 
common understanding of the correlation of India's SCOMET 
listing and that of the MTCR.  DOE officer  Welihozkiy 
similarly noted that a few questions remained in terms of 
harmonization of the control lists and guidelines with the 
NSG, and offered to provide later a nonpaper outlining those 
 
NEW DELHI 00009260  002 OF 005 
 
 
issues.  MEA Deputy Secretary (DISA) Naveen Srivastava 
reassured that harmonization with NSG and MTCR had been 
achieved, and that these perceived differences may be a 
matter of interpretation of some of the technical terms.  In 
an offline discussion, ISRO Assistant Secretary Rajeev Lochan 
volunteered to Schultz that SCOMET phrasing was very 
carefully chosen, and frequently was done to be more 
encompassing than that of the NSG and MTCR. 
 
4.  (SBU) Rao and J/S (Americas) S Jaishankar cautioned that 
discussion of Indian harmonization with Waassenar and 
Australia Group guidelines would be "premature" at this 
stage, adding that this issue had been discussed at higher 
levels of our governments.  USG representatives, noting that 
Waassenar and Australia Group harmonization would facilitate 
trade, urged the GOI to hold open this option.  State/ISN 
Schultz separately noted with Jaishankar the benefits that 
harmonization would have in preventing onward proliferation. 
Regarding adherence to the NSG and MTCR, Rao responded that 
while New Delhi is "committed to working towards adhering" to 
the regimes, it does not intend to submit formal statements 
of adherence until the regimes "adjust to India."  Recalling 
the GOI's objections to language referring to nuclear weapons 
states and non-nuclear weapons states in the new protocols to 
the Convention for the Suppression of Unlawful Acts against 
the Safety of Maritime Navigation (SUA Convention) (Ref C), 
Rao explained that because the NSG "targets India," New Delhi 
would defer any formal notification to the NSG chair until 
the NSG members altered their policies toward India. 
Nevertheless, he emphasized, as a matter of fact India has 
harmonized its control lists with both the NSG and MTCR 
guidelines through the new Bill and its attendant lists and 
guidelines.  Written adherence, he argued, was a "formality." 
 US Delegation members noted that adherence would be a 
demonstration of India's non-proliferation commitment, 
particularly to those whose cooperation would be essential to 
fulfilling the goals of the July 18 agreement on civil 
nuclear cooperation.  Pressed by PolCouns on the question of 
NSG adherence, J/S Jaishankar declared that "we are where we 
are ... pending the formal step of sending a piece of paper." 
 
Implementation of Regime Adherence: Harmonization of Control 
Lists and Guidelines 
--------------------------------------------- ---------- 
 
5.  (SBU) MEA's Naveen Srivastava explained that while the 
WMD Bill used the language "missiles designed" for delivery 
of WMD, the GOI SCOMET list and implementation guidelines 
(available on the DGFT web site at dgftcom.nic.in, under 
"SCOMET," "What's New") issued in July 2005 specifically 
control end uses in which there exists a possibility of 
diversion, or use in a "system capable of delivery" of WMD. 
This is the first time India has made public its 
implementation guidelines.  Srivastava noted that the SCOMET 
list controls all missiles, regardless of range or payload. 
He pointed out that all entities in India dealing with 
missiles are government-controlled, and therefore India's 
control over exports is even tighter than the MTCR guidelines 
would suggest.  The WMD Bill also covers systems such as 
microlights and hang gliders that could be used for terrorism 
purposes, but are not captured by the MTCR. 
 
6.  (SBU) Regarding the use of the words "safeguards as 
 
NEW DELHI 00009260  003 OF 005 
 
 
appropriate" in the SCOMET and guidelines, Rao clarified that 
the GOI interprets this in the same manner as the NSG 
language "full-scope safeguards."  The difference in language 
simply reflects the fact that India is not a party to the 
NPT, he explained.  Similarly, the GOI believes that other 
variations in language are "not technically relevant." 
However, Srivastava agreed to review and respond to the list 
of USG questions regarding variances of language between 
SCOMET and the MTCR guidelines.  Responding to a USG question 
on whether the SCOMET includes EDP (especially designed or 
prepared) language, Srivastava pointed to SCOMET item 0B001, 
which states "especially dewigned, prepared for, or adapted," 
the same language as the NSG guidelines. 
 
Catch-all, Industry Outreach, and Licensing Volume 
--------------------------------------------- ----- 
 
7.  (SBU) Srivastava further explained that the GOI has an 
internal watch list of end-users that it uses to implement 
catch-all provisions of the WMD bill.  The GOI is "fully 
conscious" of the need for outreach to industry and has 
conducted outreach activities to educate suppliers of the 
need to investigate potential end-users before exporting. 
These have been targeted, for instance, at manufacturers of 
glass-lined furnaces who are based in Gujarat.  DGFT has 
drawn up an outreach plan that targets both economic sectors 
and regions and will work with such industry organizations as 
the Confederation of Indian Industry (CII), the Federation of 
Indian Chambers of Commerce and Industry (FICCI), and the 
Indian Chemical Manufacturers Association to implement it. 
Asked about the number of licenses issued, Rao reported a 
range of 100-120 each year, mainly for "process equipment" 
like glass-lined reactors and graphite-based heat exchangers. 
 
EXBS Program 
------------ 
 
8.  (U) In response to SA/RA Director Schlosser's point that 
the EXBS program is a resource that can be drawn on to 
enhance the GOI's enforcement and industry outreach efforts, 
Rao stated that India is prepared to reschedule two EXBS 
exchanges, on customs enforcement and commodity 
classification, in early 2006. 
 
 
Issues to Facilitate Trade 
-------------------------- 
 
9.  (U) The delegations exchanged suggestions for 
facilitating trade, and agreed on a list of action items to 
direct future efforts.  Jaishankar requested that the USG 
review the 1984 Memorandum of Understanding on high tech 
trade import certificate requirements, and determine whether 
exports to India should continue to require a license for 
regional stability reasons or supporting documentation for 
government end-users.  DAS Borman noted that a regulation 
would be published in the coming days eliminating import 
certification for national security requirements for GOI end 
users.  Jaishankar also suggested more frequent provision of 
CCL licensing data related to end-use visits, so that the GOI 
could share "testimonials" of good experiences with potential 
end-users in India.  Many of the problems in high tech trade, 
he added, are due to misperceptions among potential buyers of 
 
NEW DELHI 00009260  004 OF 005 
 
 
the difficulties involved in purchasing from the United 
States.  Finally, Jaishankar requested that the USG speed up 
the removal of GOI entities from the Entities List, arguing 
that it would be difficult to convince the Indian space 
community of the value of increased cooperation with the US 
if Indian Space Research Organization subsidiaries remain on 
the Entities List. 
 
10.  (U) The participants also discussed the value of 
starting discussions of licensing early in a project's 
development, so that the American and Indian partners could 
prepare.  However, Directorate of Defense Trade Controls 
Policy Director Ann Ganzer pointed out that talks must 
include the US vendor, as ultimately it is the vendor's 
decision on how to apply for a license.  Borman and Ganzer 
agreed to provide a simplified summary of licensing options 
for use in helping Indian customers understand licensing 
requirements when planning procurements from the US. 
 
Cybersecurity: Waiting for Answers 
---------------------------------- 
 
11.  (U) National Security Council Secretariat Joint 
Secretary Arvind Gupta pointed out that the GOI is still 
 
SIPDIS 
awaiting answers from the US on proposals made at the last 
cybersecurity working group for a Joint Fund and Joint 
Research and Development Center.  He also reiterated India's 
desire for technical exchanges of experts in cybersecurity, 
to include new areas such as transportation and financial 
services. 
 
Action Items 
------------ 
 
12.  (U) Wrapping up the meeting, Jaishankar and Borman 
agreed to the following plan of action for progress: 
 
-- For Both Governments 
A. Review the 1984 Memorandum of Understanding to determine 
whether it should be abrogated. 
B. Discuss joint outreach to other GOI agencies to explain 
current US licensing requirements and policy. 
 
-- For the USG 
A. Notify the GOI that the regulation eliminating import 
certification for national security requirements for GOI end 
users has been published. 
B. Review whether India can be removed from the list of 
countries for which supporting documents are required for 
government-owned purchasers under EAR Section 748.9(2). 
C. Determine whether the Department of Commerce can provide 
licensing data more frequently to the GOI. 
D. Consider the GOI's request to remove Indian entities from 
the Entities List as new information arises. 
E. Provide a non-paper giving a simplified overview of the 
licensing options for Indian users. 
F. Give to the GOI the USG comparison of the revised SCOMET 
lists to the NSG and MTCR lists and guidelines.  (Note: MTCR 
paper was provided during the meeting.  End Note) 
G. Consider providing to the GOI data on CCL license 
applications that have been returned without action (RWA). 
 
-- For the GOI 
 
NEW DELHI 00009260  005 OF 005 
 
 
A. Review the USG analysis of the SCOMET lists and respond to 
perceived variances from the NSG and MTCR lists. 
 
13.  (U) Meeting Participants: 
 
GOI 
--- 
 
MEA J/S (Americas) S Jaishankar 
MEA J/S (Disarmament and International Security) Hamid Ali Rao 
Indian Embassy Washington DCM Raminder Jassal 
MEA Director (Americas) Gaitri Kumar 
ISRO Asst. Scientific Secretary Rajeev Lochan 
ISRO Dept. of Space Jacob Ninan 
Dept. Atomic Energy Head (ISD) K Raghuraman 
National Security Council Secretariat J/S Arvind Gupta 
National Security Council Secretariat Cdr. Mukesh Saini 
MEA D/S (Disarmament and International Security) Naveen 
Srivastava 
MEA D/S (Americas) Santosh Jha 
MEA U/S (Americas) Raj Srivastava 
MEA U/S (Americas) Viraj Singh 
MEA U/S (Disarmanent and International Security) Jayant 
Khobragade 
 
USG 
--- 
 
DOC/BIS DAS Matt Borman 
DOC/BIS Special Assistant Mark Webber 
SA/RA Director John Schlosser 
DOS/DTCP Director Ann Ganzer 
DOS/ISN Kathryn Schultz 
DOE/NNSA Anatoli Welihozkiy 
PolCouns Geoff Pyatt 
EconCouns Lee Brudvig 
Poloff Jai Nair, notetaker 
 
14.  (U) Visit New Delhi's Classified Website: 
(http://www.state.sgov.gov/p/sa/newdelhi/) 
MULFORD