The Montek Cables

Cable reference id: #06NEWDELHI1395
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
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Reference id aka Wikileaks id #54213 ?
Subject Ahluwalia: India Responsible Nuclear Power, Favors Civ-nuke Deal
Origin Embassy New Delhi (India)
Cable time Fri, 24 Feb 2006 14:13 UTC
Classification CONFIDENTIAL
Source http://wikileaks.org/cable/2006/02/06NEWDELHI1395.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
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C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001395

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/22/2015
TAGS: MNUC [Military Nuclear Applications], PREL [External Political Relations], ENRG [Energy and Power], EPET [Petroleum and Natural Gas], OVIP [Visits and Travel of Prominent Individuals and Leaders], IR [Iran], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: AHLUWALIA: INDIA RESPONSIBLE NUCLEAR POWER, FAVORS
CIV-NUKE DEAL

NEW DELHI 00001395 001.2 OF 002

Classified By: DCM Robert O. Blake for Reasons 1.4 (B, D)

¶1. (C) Summary: The civil-nuclear deal continues to be a
political "hot-button," but Deputy Chairman of the Planning
Commission Montek Singh Ahluwalia stated to Congressman
Joseph Crowley (D-NY) on February 20 that the UPA Government
supports the July 18 agreement and hopes a viable separation
plan can be finalized prior to the POTUS visit. The CEO
Forum has been a success, Ahluwalia noted, and hoped that
over the next year its suggestions would be implemented.
Ahluwalia also maintained that while FDI regulations need to
be relaxed, and likely will be over time, political realities
have retarded deregulation. Ahluwalia concluded that
Bangladesh, while doing many things right, is on a dangerous
path and fundamentalist activity in the country is troubling.
End Summary.

Hopes for the Civil Nuclear Deal
--------------------------------

¶2. (C) Ahluwalia asserted to Congressman Crowley that India
has never been a proliferator of nuclear technology and needs
nuclear energy to avoid being a "chimney belching out smoke"
while meeting its growing energy needs. Noting that he is
fully in favor of the civil-nuclear deal, Ahluwalia
acknowledged that he is not directly involved in the decision
making process and that it appears to him to be a very
sensitive political issue. He explained that, domestically,
US demands that certain reactors be listed as civilian could
be interpreted as GOI giving in to USG control over Indian
military options. Ahluwalia noted that, while the BJP has
expressed doubt about the nuclear plan, if the Government
approves an agreement, it will pass through parliament.

¶3. (C) "The debate within the GOI on the nuclear deal has
been more informed in the last three months than over the
last ten years" Ahluwalia commented, indicating there is a
serious effort underway to finalize it before the March 1
POTUS visit. He opined that he hoped U/S Burn's February 24
visit would pave the way to a civil-nuclear deliverable for
the President's trip.

¶4. (C) Congressman Crowley noted that, while the July 18
agreement was "received in a surprised way" in Congress, he
hoped to support it when the GOI and USG formulate a viable
separation plan. He also suggested that, just as the USG
should understand Indian domestic concerns, the GOI should
not underestimate the ability of U.S. domestic politics to
influence the vote in the US. Ahluwalia concluded that,
while the BJP will "make noises and claim they could have
done better," they will not oppose the deal.

CEO Forum Progressing Nicely
----------------------------

¶5. (C) "A lot is happening on the economic agenda,"
Ahluwalia remarked, however, the role of governments is "less
than before." He stated that the CEO Forum is especially
important because, while governments still control policy
issues, it is the private entities that drive economic
progress. He noted that he is pleased with the work done by
the CEO Forum, and looks forward to the release on March 2 of
the group's report. He theorized that "if your President and
the Prime Minister could meet a year after the release of the

NEW DELHI 00001395 002.2 OF 002

report and state that its recommendations were met, we could
point to real economic successes."

FDI: Still Work to be Done
--------------------------

¶6. (C) Ahluwalia acknowledged that politics have, so far,
thwarted efforts to increase FDI from 26% to 49%. Opposition
from the left and "irresponsible behavior by the BJP" have
limited progress in this area. He suggested that banking
regulations need to be relaxed, allowing foreign banks to
take over "sick" banks in India, and that more transparency
is needed. He indicated that such banking issues will likely
be discussed in the CEO Forum. Ahluwalia opined that by
2009, foreign banks will be able to own 79% of domestic banks.

Bangladesh: Trouble on the Horizon
----------------------------------

¶7. (C) Congressman Crowley, stating that he would visit
Dhaka next, noted that he plans to share USG concerns
regarding corruption and fundamentalism with the Government
of Bangladesh (GOB). Ahluwalia asserted that the rise of
fundamentalism in Bangladesh was troubling. Acknowledging
that Bangladesh has "done a number of things well that many
Islamic countries fail to do," such as providing education
for women, he noted that the GOI remains concerned over
recent events. Ahluwalia indicated that the GOB would be
receptive to pressure from abroad, because they rely heavily
on donor aid. Crowley agreed, stating that he will tell the
GOB that if they continue down the current path, they could
become "unaidable."

¶8. (U) Visit New Delhi's Classified Website:
(http://www.state.sgov.gov/p/sa/newdelhi/)
MULFORD

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Cable reference id: #09NEWDELHI2334
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #235500 ?
Subject Secretary Chu Focuses On Clean Energy And Climate Change In Visit To India
Origin Embassy New Delhi (India)
Cable time Thu, 19 Nov 2009 06:31 UTC
Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY
Source http://wikileaks.org/cable/2009/11/09NEWDELHI2334.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
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UNCLAS SECTION 01 OF 03 NEW DELHI 002334

SENSITIVE
SIPDIS

STATE FOR OES/PCI, OES/EGC, OES/STC, EEB/ESC, STAS, AND SCA/INS
STATE FOR SECC TODD STERN
DEPT OF ENERGY FOR O'CONNOR, SANDALOW, JELKIND, PYOSHIDA,
CGILLESPIE, MGINSBERG, CZAMUDA, TCUTLER
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
STATE PASS TO USTR MDELANEY/CLILIENFELD/AADLER
STATE PASS TO NSF FOR INTERNATIONAL PROGRAMS
TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT

E.O. 12958: N/A
TAGS: ENRG [Energy and Power], SENV [Environmental Affairs], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], PREL [External Political Relations], TSPL [Science and Technology Policy], KSCA [Science Counselors and Attachés], KGHG [Global Climate Change], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: Secretary Chu Focuses on Clean Energy and Climate Change in
Visit to India

¶1. (SBU) Summary: During November 13-14 meetings with Government of
India (GOI) officials, scientists, students, NGO and industry
representatives in New Delhi, Secretary of Energy Steven Chu
stressed the vast scope for bilateral cooperation, noting that the
world's current emphasis on clean energy was directly related to the
need for global cooperation to combat climate change. Secretary Chu
said that India and China are in the best position to build green
infrastructure right from the start -- with 80 percent of India's
building stock projected for 2030 yet to be built. GOI officials
concurred, but said India would be dependent on thermal power and
fossil fuels for years to come considering its need to electrify
rural areas and build infrastructure. GOI officials expect no
binding climate treaty to be negotiated at Copenhagen but are not
prepared to stipulate now something that may derogate the UNFCCC
framework. Nonetheless, Indian interlocutors consistently
emphasized that there was more in common between the Indian and U.S.
positions on climate change than reported in the press. They
offered positive preliminary assessments of the proposed bilateral
Clean Energy Research and Deployment Initiative (CERDI) and sought
enhanced cooperation across the board, particularly on solar,
cleaner coal technology, second-generation biofuels, energy
efficiency, and energy storage. GOI officials, scientists and
industry leaders stressed the importance of encouraging scientific
collaboration and creating an enabling policy environment that
harnessed private sector resources. End summary.

¶2. (SBU) DOE staff accompanying Secretary Chu on his visit were
Chief of Staff Rod O'Connor, A/S for Policy and International
Affairs David Sandalow, PDAS for Policy and International Affairs
Jonathan Elkind, Advanced Research Projects Agency-Energy Director
Arunava Majumdar, Director of Public Affairs Dan Leistikow, and
Special Assistant Amy Bodette. Ambassador Roemer joined Secretary
Chu for a November 13 ministerial dinner hosted by Deputy Chairman
of the Planning Commission (DCPC) Montek Singh Ahluwalia. Other
ministerial-level meetings included Climate Change Special Envoy
Shyam Saran, Minister of Power Sushil Kumar Shinde, Minister of
Environment and Forests Jairam Ramesh, Minister of New and Renewable
Energy Farooq Abdullah, and Minister of Science and Technology
Prithviraj Chavan. Additional sessions included meetings with the
Indian National Science Academy, the Indian Institute of Technology
New Delhi, the Energy Research Institute (TERI), and the
Confederation of Indian Industries. EEST MinCouns joined Secretary
Chu for all of his meetings, along with additional Embassy staff.

Copenhagen Dominates Agenda
---------------------------

¶3. (SBU) In their small-group meeting, DCPC Deputy Chair Ahluwalia,
Secretary Chu's counterpart in the Energy Dialogue, raised serious
concerns with current draft of the U.S.-India Clean Energy MOU to be
signed during the Prime Minister's visit to Washington, saying the
GOI is not prepared to come to agreement on "bits and pieces" of the
Copenhagen agreement two weeks before the summit, as that may be
seen as a derogation of the principles of the United Nations
Framework Convention on Climate Change (UNFCCC). He added that the
GOI "does not want to signal something" outside the UNFCCC, so the
bilateral actions in the MOU such as CERDI must be kept separate
from the multilateral negotiations. Secretary Chu stated that the
United States views climate change outcomes and clean energy
cooperation as being linked. A/S Sandalow stressed that lack of an
expression of mutual expectations for a successful Copenhagen
outcome could drive out the more positive messages of cooperation.

¶4. (SBU) Minister of Environment and Forests (MOEF) Jairam Ramesh
told Secretary Chu that despite expectations that there will be no
binding climate treaty negotiated at Copenhagen, there was a lot
more in common between the Indian and U.S. position on climate
change than is reported in the press. Bilateral cooperation on
clean energy and climate change should be separate from the
Copenhagen process in order to ensure such cooperation was not

NEW DELHI 00002334 002 OF 003

derailed. In his meeting, Special Envoy for Climate Change Shyam
Saran said the GOI recognized there would be no legally binding
agreement at Copenhagen because the United States is not ready to
make such a commitment. He added that India was doing its part,
noting the National Action Plan on Climate Change and the National
Solar Mission, which he said would be released "in a few days."

¶5. (SBU) Saran said India, as a developing country, would use the
remaining negotiating time at Copenhagen to push the envelope on
behalf of other developing countries. Saran said the GOI knew it
"would not get a penny" from Copenhagen nor would it get significant
technology transfer but it wanted to get as much of an agreement as
possible in order to help the least developed countries. Resisting
a U.S. "attempt to build a mezzanine" into the climate change
framework, Ramesh said India wanted to be treated as a major
developing country but not be named as such.

Regardless, GOI Wants Enhanced Energy Cooperation
--------------------------------------------- ----

¶5. (SBU) GOI energy ministries all expressed interest in
strengthening and expanding energy cooperation, particularly on
solar, cleaner coal technology, energy efficiency, and energy
storage. Minister of New and Renewable Energy (MNRE) Farooq
Abdullah said he hoped the National Solar Mission would provide
sufficient generation-based incentives to attract U.S. companies to
bid on large thermal solar projects with the expectation of a 15 to
20-year payback. Abdullah also expressed interest in extending wind
and hydroelectric power, specifically to the mountainous areas of
northern India. Other MNRE officials requested U.S. participation
in scaling up solar energy projects, zero energy buildings, and
research on storage batteries. Minister of Science and Technology
(MOST) Prithviraj Chavan expressed interest in finding opportunities
to collaborate in solar energy and biofuels. Other MOST and MOEF
officials focused on exploring joint ownership of intellectual
property rights, developing research ties on green buildings,
starting research initiatives modeled after the solar energy
research initiative with the EU, and harmonizing energy research
initiatives.

¶6. (SBU) Minister for Power Sushil Kumar Shinde said his Ministry
would like to focus on smart grids, cleaner coal technology and
energy efficiency. Secretary Chu emphasized the need for Carbon
Capture and Sequestration (CCS) and described new possibilities for
energy storage. While Minister Shinde's staff expressed skepticism
about CCS, they expressed interest in staying involved in FutureGen.
(Note: in a prior meeting with PDAS Elkind, MinPower staff had
explained that political sensitivity about CCS was due to India's
negative experience with gas storage due to the Bhopal disaster, as
well as the high costs. The very different toxicity levels of
carbon dioxide and methyl isocyanate were lost in the Indians'
commentary. End note.) They expressed tremendous excitement at the
concept of a liquid metal battery that could revolutionize energy
storage, a concept that is being investigated through DOE's Advanced
Research Projects Agency - Energy (ARPA-E). MOEF Minister Ramesh
said he would like to see cooperation on cleaner coal technology
reflected in the bilateral Clean Energy MOU and believed the GOI
would be amenable to a reference to CCS as long as cooperation on
Integrated Gasification Combined Cycle technology was also
mentioned.

¶7. (SBU) Coal Ministry officials noted that coal would continue to
be the primary source of energy for India in the near future, as it
was for the United States. (Note: Both the United States and India
depend on coal for about 50 percent of their generation capacity.
End note.) They wanted to focus cooperation on better utilization
of fine coal, gasification, methane recovery, combustion efficiency,
and business-to-business ties to improve production efficiency.

Importance of Scientific Collaboration and Policy Environment
-------------------------------------- ----------------------

NEW DELHI 00002334 003 OF 003

¶8. SBU) At a roundtable at the Indian National Science Academy
(INSA), MOST Secretary Ramasami suggested that a platform be created
for scientists to discuss issues "scientist-to-scientist" and
provide politically-neutral advice to the government; he proposed
energy could be a focus area of this platform. Secretary Chu
agreed, noting that scientists should focus on open source
platforms, citing an open source Internet platform designed for
experts to share information about energy-efficient buildings. At a
TERI roundtable discussion hosted by Nobel-prize recipient RK
Pachauri with NGO leaders, Secretary Chu discussed innovative
programs on biomass gasification, rural solar-based lighting
projects, wind power, and biofuels initiatives. In his IIT address,
Secretary Chu encouraged India to take advantage of its unique
opportunity to leap-frog technology and challenged students to
contribute to future energy solutions.

¶9. (SBU) GOI officials recognized the importance of the policy
environment, in the solar sector and generally. Ahluwalia requested
U.S. private sector views on what India needs to do to create an
enabling environment for private sector investment, noting he would
like U.S. businesses to participate in "Ultra Mega Power Projects,"
especially in coal and petroleum projects. (Note: Ultra Mega Power
Projects refer to a GOI initiative to bridge the energy deficit
through separate projects of 4,000 MW or more to create 100,000 MW
of additional power by 2012. End note.)

¶10. (SBU) In a clean energy roundtable hosted by the Confederation
of Indian Industries, Secretary Chu engaged in an interactive
discussion with renewable and energy efficiency industry leaders.
He stressed the importance of government catalyzing research and new
policy directions -- and then getting out of the way and letting the
private sector take over.

¶11. (U) DOE PDAS Elkind cleared this cable.

¶12. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi.

ROEMER

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Cable reference id: #10NEWDELHI275
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #248236 ?

Subject Ministry Of Environment Says Not Yet To Gm Eggplant "in The Public And National Interest"

Origin Embassy New Delhi (India)

Cable time Thu, 11 Feb 2010 01:43 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2010/02/10NEWDELHI275.html

References 09CHENNAI343, 10CHENNAI30

Referenced by 10NEWDELHI276

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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UNCLAS SECTION 01 OF 04 NEW DELHI 000275

STATE FOR SCA/INSB, EEB/TPP/MTAA/ABT, C-CHUANG AND MPLOWDEN

USDOC FOR ITA/MAC DAS HVINEYARD

USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN

USDA PASS FAS/OSTA/EPORTER AND FAS/OCRA/FERUS/BEAN/RADLER

DEPT PASS TO USTR FOR SOUTH ASIA-MDELANEY/CLILIENFELD/AADLER

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - MNUGENT/WFOSTER

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

SENSITIVE

SIPDIS

E.O. 12958: N/A

TAGS: EAGR [Agriculture and Forestry], ECON [Economic Conditions], TBIO [Biological and Medical Science], EAID [Foreign Economic Assistance], ECIN [Economic Integration and Cooperation], EINV [Foreign Investments], SENV [Environmental Affairs], PGOV [Internal Governmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: MINISTRY OF ENVIRONMENT SAYS NOT YET TO GM EGGPLANT "IN

THE PUBLIC AND NATIONAL INTEREST"

REF: A. 09 CHENNAI 0343

B. 10 CHENNAI 0030

¶1. (U) Summary: On February 9, Minister of Environment and Forests

Jairam Ramesh announced his final decision regarding the commercial

approval of genetically modified (GM) eggplant, or Bt brinjal, in

India. With a long and emotional charged justification, the

Minister declared that a moratorium is needed on Bt brinjal in India

until the government regulatory system ensures safety on the human

side, mainly through long-term scientific studies. The decision is

a huge set-back for the development and marketing of GM food crops

in India, as well as in other developing countries. Minister Ramesh

hit two key themes in his decision: questioning the government's own

regulatory system and invoking the fear of Monsanto's domination of

Indian agriculture. Immediate reaction from both scientists and

industry to the Minister's decision indicates further commercial

release timelines of GM crops in India -- not just eggplant -- could

be set back by five to ten years. Ramesh's decision shows that the

politics of "GMOs" trump science and farmer interests. End

Summary.

Must Balance Science and Society...

----------------------------------

¶2. (U) India's Minister of Environment and Forests, Jairam Ramesh,

held numerous public consultations in both pro-and-con GM states

prior to taking a central government decision on whether or not to

allow the commercial release of a GM eggplant, known as Bt brinjal

to most Indians, in India. In October 2009, his own Ministry's

Genetic Engineering Approval Committee recommended that Bt brinjal

was safe for environmental release and recommended commercial

approval of the crop to the central government. The hue and cry of

opponents led Ramesh to take matters into his own hands and make his

own Ministerial assessment after conducting a series of public

consultations with the stakeholders. In his 19-page decision note,

Ramesh acknowledges that "strong views have been expressed on the Bt

brinjal both for and against." Ramesh goes on to state that over

8,000 people from different sections of society attended his seven

public meetings. Further, he quotes farmers and 'serious minded'

NGOs as well as numerous email exchanges with eminent scientists

around the world as justification for the moratorium on the

commercial release of Bt brinjal.

...with Center and State

----------------------

¶3. (U) In the Minister's report, he writes "All states which have

written to me expressed apprehension on Bt-brinjal and have called

for extreme caution." Ramesh consulted with Indian state leaders,

particularly the major eggplant producing states of West Bengal,

Orissa, Bihar, Maharashtra, Andhra Pradesh and Karnataka, in

addition to holding town hall meetings in Ahmedabad, Kolkata,

Bhubaneswar, Nagpur, Chandigarh, Bangalore and Hyderabad. Even

prior to the Ministry of Environment's Genetic Engineering Approval

Committee's (GEAC) October 2009 decision to approve Bt brinjal

(reftel A), the Communist Party of India had already announced it

was in favor of an outright ban on genetically modified (GM) foods

and crop development.

Why Bt Brinjal?

----------------

¶4. (U) The product in question is a GM eggplant developed by the

Maharashtra Hybrid Seed Company (an Indian seed company known as

Mahyco, which is 26 percent owned by Monsanto), Tamil Nadu

Agriculture University (TNAU), and the University of Agriculture

Sciences (UAS) Dharwad, using a trait from the Bacillus

thuringiensis (Bt) bacterium (cry1Ac, a genetic event, which was

developed by Monsanto) that makes the eggplant resistant to the

fruit and shoot borer, a common insect pest. USAID, through its

Agricultural Biotechnology Support Project II (ABSP II) led by

Cornell University, which works in partnership with the Government

of India's Department of Biotechnology (DBT), the Indian Institute

of Vegetable Research, TNAU, and UAS, Dharwad, has been supporting

the work on Bt brinjal for six years.

¶5. (U) Eggplant is an important common man's vegetable in India,

grown in about 566,000 hectares with annual production of around 9.6

NEW DELHI 00000275 002 OF 004

million tons. It accounts for 8.3 percent of the production and 7.6

percent of the area under vegetable crops, and is grown by an

estimated 1.4 million small and marginal farmers. Despite being the

poor man's crop, eggplant is popularly called the 'King of

Vegetables' and featured in the dishes of many households in India.

The crop is grown all across India with the major producing states

being West Bengal, Orissa, Bihar and Gujarat.

¶6. (U) Eggplant cultivation is extremely input-intensive

(insecticides), as the crop is very prone to insect pests,

particularly the fruit and shoot borer. Fruit damage as high as 95

percent and losses up to 70 percent have been reported by Indian

farmers. Consequently, farmers resort to frequent insecticide

applications and biological control measures, resulting in high

costs of cultivation, negative effects on the environment and

serious risk to consumer health and safety. Efforts to develop

pest-resistant conventional plants through traditional breeding have

met with almost no success. Approval of Bt eggplant for commercial

cultivation would have improved Indian farmer incomes, lowered

pesticide use and reduced significant crop losses, thus helping to

address in part India's food security concerns.

Ramesh Questions the

Regulatory System

---------------------

¶7. (U) Minister Ramesh expressed concerns regarding the doubts

raised related to the integrity of the GEAC process, specifically,

the adequacy of the testing procedures for assessing human and

environmental safety, along with the reliability of the tests

carried out by the developers of the Bt brinjal themselves. The

Minister suggested that the existing Indian regulatory system for GM

crops and food was not able to conduct its own tests on new

products. Thus, new approvals should wait until the government

itself has the capacity to test. Citing the science provided (i.e.

the 'new' genetic event Cry1Ac) as being sourced from the

multi-national Monsanto, Ramesh's decision stated: "Very serious

fears have been raised in many quarters on the possibility of

Monsanto controlling our food chain." The Minister then continues,

stating "I have no bias whatsoever" and cites Monsanto's substantial

investments in India. In the end, the Minister highlights the

perceived lack of local, indigenous competition to Monsanto as a

primary concern.

¶8. (U) While Ramesh drew a clear distinction between his decision to

place a moratorium on the release of Bt eggplant and other ongoing

GM crop research, some scientists claim this landmark decision will

be all encompassing. Ramesh noted that even most experts wanted

more studies on the long-term effects of genetically modified food

crops.

U.S. Scientists Cited

----------------------

¶9. (SBU) Minister Ramesh extensively highlighted concerns raised

about Bt brinjal by international scientists, especially those from

the U.S. Of the eight scientists quoted directly in his brief,

Ramesh highlighted 'write-in' advice from four U.S. institutions:

Ohio State University, the U.S. Union of Concerned Scientists, the

University of Minnesota and the Salk Institute of Biological

Studies. Ramesh did not appear to use EU studies as the basis for

his decision.

India's Father of the Green

Revolution Weighs In

----------------------------

¶10. (SBU) Dr. M.S. Swaminathan, winner of the World Food Prize and

considered to be India's equivalent to Dr. Norman Borlaug, urged

Minister Ramesh to show caution and take two critical steps: 1)

conserve India's genetic heritage in brinjal and 2) assess the

chronic effects of consumption of Bt brinjal. Dr. Swaminathan's

appeal to the Minister compared the need for long-term studies on

the consumption of Bt brinjal to the studies carried out on the

impact of tobacco smoking relative to the incidence of lung cancer

in humans. (Note: The MS Swaminathan Research Foundation has an

ongoing biotech research program studying abiotic stress tolerance

NEW DELHI 00000275 003 OF 004

in rice. Limited field trials of transgenic rice varieties

containing 'salinity' tolerant mangrove genes have been undertaken.

Some related patents have been filed; however, there have been

limited efforts for its regulatory and commercial approval. While

Dr. Swaminathan has been historically in favor of agricultural

biotechnology, he recently expressed strong reservations against

research and development on labor displacing biotech events, such as

herbicide tolerance in crops. He has also voiced concerns of

multi-national firms taking over the seed industry in India. End

Note.)

Ag Minister Speaks Up;

Then Goes Silent

-----------------------

¶11. (U) Minister Ramesh's initial decision to review the GEAC

recommendation through public consultations was questioned by

several of his ministerial colleagues. Minister of Agriculture

Sharad Pawar said that Bt brinjal has been found safe for human

consumption and environmental release by the GEAC after a thorough

scientific review and testing and hence, should be approved. The

State Minister of Agriculture K.V. Thomas publicly refuted

allegations against the safety of Bt brinjal alleging it to be an

'anti-MNC' propaganda campaign. The Minister of Science and

Technology Prithviraj Chavan, who oversees the Department of

Biotechnology (DBT), also said that Bt brinjal has been adequately

tested and found safe by the GEAC. Lately, there have been no

public statements from Minister Pawar or his colleagues, possibly

due to strong media hype generated by anti-GM groups at the various

public consultations and opposing voices from several state

governments.

¶12. (U) Since Minister Ramesh's announcement, there has been no

official comment from the Minister of Agriculture or the Minister of

Science and Technology. Nevertheless, a senior official from the

Indian Council of Agriculture Research vocally opposed Minister

Ramesh's decision during a television debate on February 9, alleging

that the decision was not based on sound science, but on public

opinion.

Ahluwalia: Minister Ramesh Failed

to Make the "Elementary Arguments"

----------------------------------

¶13. (SBU) Science and Technology Advisor Dr. Nina Fedoroff met with

Montek Ahluwalia, Deputy Chairman of the Planning Commission,

immediately prior to Minister Ramesh's announcement on February 9.

Referring to Minister Ramesh's town hall meetings, Ahluwalia said

that a democracy like India needed to hold consultations with the

public on such an important issue, but he was concerned that the

debate had been rather one-sided. He noted that many of the

non-government organizations (NGOs) in India protesting Bt brinjal

were in fact closely associated with and funded by European NGOs.

He also remarked on the absence of any scientific voices in the

"public debate." Ahluwalia indicated that Minister Ramesh, among

other GOI officials, had failed to make the "elementary arguments"

about why GM products are safe, and commented that it was not clear

if Indian opposition resulted more from process issues and paperwork

delays or ideological feelings. Ahluwalia added that he considered

the town hall meetings to be okay as a process, but in the end, he

felt it would be a major setback if Minister Ramesh were to allow

what was essentially a one-sided debate to cause a decision against

commercialization of Bt brinjal.

Where Next with Bt Brinjal?

---------------------------

¶14. (SBU) Minister Ramesh set no timeline for lifting the moratorium

on Bt brinjal release. Instead, he stated that the 'ban' should

remain until independent scientific studies establish, to the

satisfaction of both the public and professionals, the safety of the

product from the point of view of its long-term impact on human

health and the environment, including the genetic diversity of

existing varieties of Indian brinjal.

¶15. (SBU) Senior scientists participating on February 10 in a small

DBT-sponsored symposium on agricultural and biotechnology were

NEW DELHI 00000275 004.2 OF 004

stunned and very emotional over the announcement. There were

rumblings of appealing to the Prime Minister or the Planning

Commission for a revised ruling, and threats to go public on what

they considered to be an issue of popular politics unfairly trumping

science. (Note: it is unclear if this is bravado caused by the

initial shock of the announcement, or if there is real momentum to

take action. End Note.) Further, public sector scientists from

across the government spectrum of institutes are aware that they

'failed' in the eyes of the common man to translate the benefits of

this new technology ahead of the Bt brinjal debate.

Many Steps Back

---------------

¶16. (SBU) Comment: Overall, the pervasive feeling is that a great

deal of time and money was lost, public opinion has soured and

Indian scientists are discouraged. While the Minister of

Agriculture and Minister of Science and Technology may not oppose

the decision publicly, some observers believe that there may be an

intense power struggle between the four ministries most involved in

agriculture biotechnology - Agriculture, Environment and Forests,

Health and Science. On a potentially positive note, Minister

Ramesh's focus on the lack of an independent authority may

eventually pave the way for early establishment of the long-proposed

independent regulatory authority - a Biotech Regulatory Authority of

India. Nevertheless, the approval of Bt brinjal is pushed back by

at least two to three years, and overall public sentiment is now set

against GM foods. Industry and government scientists fear the Ramesh

decision may also have a significant impact on approval timelines

(perhaps a five to ten year delay) of GM crops which are currently

in the pipeline for approval, such as Bt rice, Bt maize, GM tomato,

etc.

¶17. (SBU) The decision on the commercial release of Bt brinjal may

potentially have a regional impact as trials are also at advanced

stages in Bangladesh and the Philippines. Vijay Raghavan, South

Asia Regional In-charge of the USAID-funded ABSP-II, who is working

to develop Bt brinjal in three different countries, said that

Bangladesh and the Philippines have been looking to India as a

leader as they do not have the capacity for full-line evaluation of

B t brinjal. Thus, India's decision may have a significant regional

impact regarding all GM crops. End comment.

ROEMER

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Cable reference id: #09STATE95493

“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #225053 ?

Subject (s/nf) India: New Government Economic Leaders (c-sa9-01390)

Origin Secretary of State (United States)

Cable time Mon, 14 Sep 2009 21:26 UTC

Classification SECRET//NOFORN

Source http://wikileaks.org/cable/2009/09/09STATE95493.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 18 Mar 2011 01:31: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Re-published, unredacted, however non-text content differs

Thu, 8 Sep 2011 13:29: Original unredacted version published, with HTML goodies

VZCZCXRO5353

RR RUEHBI RUEHCI

DE RUEHC #5493 2572144

ZNY SSSSS ZZH

R 142126Z SEP 09

FM SECSTATE WASHDC

TO RUEHNE/AMEMBASSY NEW DELHI 6726

INFO RUEHCG/AMCONSUL CHENNAI 9744

RUEHCI/AMCONSUL KOLKATA 3390

RUEHBI/AMCONSUL MUMBAI 2761

Hide header

S E C R E T STATE 095493

NOFORN

SIPDIS

E.O. 12958: DECL: 09/14/2034

TAGS: PINR [Intelligence], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: (S/NF) INDIA: NEW GOVERNMENT ECONOMIC LEADERS

(C-SA9-01390)

Classified By: MICHAEL P. OWENS, ACTING DIR, INR/OPS. REASON: 1.4(C).

¶1. (S/NF) WASHINGTON ANALYSTS ARE CLOSELY MONITORING THE

NEWLY APPOINTED ECONOMIC LEADERS IN THE UNITED PROGRESSIVE

ALLIANCE (UPA) COALITION GOVERNMENT. WE ARE INTERESTED IN

THEIR VIEWS REGARDING FUTURE ECONOMIC POLICY, OPPORTUNITIES

FOR BILATERAL ECONOMIC COOPERATION, AND THEIR ABILITY TO WORK

TOGETHER AS A COHESIVE TEAM. AS TIME AND RESOURCES PERMIT, WE

WOULD HIGHLY VALUE ANY INFORMATION ON THE FOLLOWING TOPICS

AND QUESTIONS, AND PLAN TO INCORPORATE POST REPORTING INTO

FINISHED ANALYSIS FOR POLICYMAKERS. THANK YOU.

A. (U) PRANAB MUKHERJEE, MINISTER OF FINANCE

B. (S/NF) WHAT ARE MUKHERJEE'S PRIMARY ECONOMIC CONCERNS

AND HIS VIEWS ON PRIME MINISTER SINGH'S ECONOMIC REFORM

AGENDA? HOW QUICKLY DOES HE PLAN TO PURSUE THESE REFORMS?

WHAT IS HIS ABILITY TO ENACT REFORMS?

C. (S/NF) WHAT ARE MUKHERJEE'S VIEWS OF THE US BILATERAL

ECONOMIC RELATIONSHIP AND WHERE DOES HE SEE THE RELATIONSHIP

HEADED? WHAT AREAS OF COOPERATION IS HE EAGER TO ADVANCE? HOW

DOES HE SEE THE US-CHINA ECONOMIC RELATIONSHIP IN COMPARISON

TO THE US-INDIA RELATIONSHIP?

D. (S/NF) WHY WAS MUKHERJEE CHOSEN FOR THE FINANCE

PORTFOLIO OVER MONTEK SINGH AHLUWALIA? HOW DO MUKHERJEE AND

AHLUWALIA GET ALONG?

E. (S/NF) TO WHICH INDUSTRIAL OR BUSINESS GROUPS IS

MUKHERJEE BEHOLDEN? WHOM WILL HE SEEK TO HELP THROUGH HIS

POLICIES? WHAT ARE MUKHERJEE'S PRIORITIES IN THE UPCOMING

BUDGET PRESENTATION?

F. (S/NF) WHAT POLICIES ARE MUKHERJEE AND OTHER LEADERS

CONSIDERING TO ADDRESS THE GLOBAL FINANCIAL CRISIS?

G. (S/NF) WHAT DOES PRIME MINISTER SINGH THINK ABOUT

MUKHERJEE,S NEW ROLE AS FINANCE MINISTER?

H. (S/NF) WHAT IS MUKHERJEE'S RELATIONSHIP WITH THE

GOVERNOR OF THE RESERVE BANK OF INDIA, D.V. SUBBARAO? HOW

DOES SUBBARAO VIEW THE REMOVAL OF CHIDAMBARAM FROM THE

MINISTER OF FINANCE SLOT? WHAT IMPACT HAS HIS REMOVAL HAD ON

RELATIONS BETWEEN THE FINANCE MINISTRY AND THE RBI?

I. (U) ANAND SHARMA, MINISTER OF COMMERCE AND INDUSTRY

J. (S/NF) WHAT POLICIES DOES SHARMA PLAN TO PURSUE? HOW

DOES HE VIEW INDIA'S TRADE POLICIES? WHAT ARE HIS VIEWS ON

PRIME MINISTER SINGH'S PLANS FOR GRADUAL ECONOMIC REFORM?

WHAT DOES HE PERCEIVE AS INDIA'S PRIMARY TRADE OBSTACLES?

K. (S/NF) WHAT ARE SHARMA'S VIEWS ON THE WORLD TRADE

ORGANIZATION (WTO)? HOW WILL HE APPROACH INITIAL MEETINGS

WITH HIS COUNTERPARTS? WHAT DOES HE THINK OF PREVIOUS

MINISTER OF COMMERCE KAMAL NATH'S ACTIONS OVER THE PAST FIVE

YEARS? HOW CLOSE WILL SHARMA REMAIN TO THE NAMA-11? IS HE

WILLING TO BEGIN DISCUSSIONS WITH THE US TO ADVANCE WTO

NEGOTIATIONS?

L. (S/NF) HOW DOES SHARMA VIEW US-INDIA ECONOMIC RELATIONS?

M. (S/NF) HOW DOES SHARMA VIEW INDIA'S CURRENT FOREIGN

DIRECT INVESTMENT (FDI) GUIDELINES? WHICH SECTORS DOES HE

PLAN TO OPEN FURTHER? WHY IS HE RELUCTANT TO OPEN MULTI-BRAND

RETAIL? WHAT ARE HIS VIEWS ON THE SPECIAL ECONOMIC ZONES?

N. (S/NF) WHY WAS SHARMA CHOSEN FOR THE JOB? WHAT ARE HIS

LARGER AMBITIONS? WHY WAS NATH MOVED TO THE ROAD TRANSPORT

AND HIGHWAYS PORTFOLIO? WHAT ARE NATH'S VIEWS ON THE CHANGE?

O. (S/NF) DOES SHARMA GET ALONG WITH MUKHERJEE AND PRIME

MINISTER SINGH?

P. (U) DEPUTY CHAIR, PLANNING COMMISSION MONTEK SINGH

AHLUWALIA

Q. (S/NF) WHAT IS SHARMA'S RELATIONSHIP WITH AHLUWALIA? HOW

DOES AHLUWALIA FEEL ABOUT REMAINING IN THIS POSITION? WHICH,

IF ANY, PARTICULAR AGENDA ITEMS WILL HE BE PUSHING? DOES HE

GET ON WELL WITH THE PRIME MINISTER?

¶2. (U) PLEASE CITE C-SA9-01390 IN THE SUBJECT LINE OF

REPORTING IN RESPONSE TO THE ABOVE QUESTIONS.

CLINTON

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Cable reference id: #09NEWDELHI1902

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #224723 ?

Subject Dustr Marantis Visit To Re-energize Trade Policy Forum Government Meetings

Origin Embassy New Delhi (India)

Cable time Fri, 11 Sep 2009 14:03 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/09/09NEWDELHI1902.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

VZCZCXRO3473

OO RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW

DE RUEHNE #1902/01 2541403

ZNR UUUUU ZZH

O 111403Z SEP 09

FM AMEMBASSY NEW DELHI

TO RUEHC/SECSTATE WASHDC 7980

INFO RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE

RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

RHEHNSC/NSC WASHDC

RUCPDOC/DEPT OF COMMERCE WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RUEHRC/DEPT OF AGRICULTURE WASHDC

RUEHGV/USMISSION GENEVA 8550

RUEHBJ/AMEMBASSY BEIJING 7948

Hide header

UNCLAS SECTION 01 OF 04 NEW DELHI 001902

SENSITIVE

SIPDIS

STATE FOR SCA/INSB AND EEB

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD

DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER

DEPT PASS TO SBA FOR INTERNATIONAL

USDA PASS FAS/OCRA/RADLER/BEAN/FERUS

E.O. 12958: N/A

TAGS: ETRD [Foreign Trade], EINV [Foreign Investments], EAGR [Agriculture and Forestry], EFIN [Financial and Monetary Affairs], CVIS [Visas], KGHG [Global Climate Change], ECPS [Communications and Postal Systems], PREL [External Political Relations], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: DUSTR Marantis Visit to Re-energize Trade Policy Forum

Government Meetings

(U) THIS REPORT IS SENSITIVE BUT UNCLASSIFIED. FOR U.S. GOVERNMENT

USE ONLY; NOT FOR INTERNET DISTRIBUTION.

¶1. (SBU) Summary: Deputy U.S. Trade Representative (DUSTR)

Demetrios Marantis visited New Delhi August 11-13 to meet with GOI

officials and private sector representatives to prepare for USTR

Ambassador Kirk's participation in a bilaterl Trade Policy Forum

(TPF) ministerial in Delhi later this fall (subsequently confirmed

for October 26). GOI officials stressed the need to focus on a few

issues per sub-group where both sides could press for resolution

before the next TPF, the need to select participants in and

establish an agenda for the CEO Forum, and India's goals for the

September 3-4 Doha mini-ministerial. They also called for the

avoidance of protectionism in the United States and stressed the

benefits of economic cooperation with India, made a pitch for

India's continued benefits under the U.S. Generalized System of

Preferences (GSP) program, and raised many long-standing issues,

including H1-B visas and social security totalization. Marantis'

visit coincided with visits to Mumbai and Delhi of a Senate Foreign

Relations Committee staffdel focused on India's use of GSP

(septels), with which he met informally, and the first round of

Bilateral Investment Treaty (BIT) talks in Delhi, for which he

delivered concluding remarks (septel). End Summary.

¶2. (SBU) During his visit, DUSTR Marantis met with Deputy Chairman

of the Planning Commission Montek Ahluwalia; Ministry of External

Affairs Secretary Nirupina Rao; Minister of Commerce and Industry

Anand Sharma and Commerce Secretary Rahul Khullar; and Ministry of

Micro, Small and Medium Enterprises Secretary Dinesh Rai. Private

sector meetings will be reported septel. DUSTR Marantis was

accompanied to all meetings by USTR South Asia Director Adina Adler

and Econoff. Econ M/C and Deputy M/C, accompanied to several

meetings, and FCS SCO accompanied to the meeting with Secretary

Khullar.

Re-energizing the Trade Policy Forum

------------------------------------

¶3. (SBU) In a meeting with Commerce Secretary Rahul Khullar, joined

by the Joint Secretaries for Americas, WTO, Services, Agriculture

and NAMA, DUSTR Marantis explained Ambassador Kirk and Minister

Sharma's common desire (as discussed during Sharma's visit to

Washington in June) for the TPF to both be a mechanism for resolving

thorny issues and collaborating in new areas. Khullar also referred

to a letter which had been sent by AUSTR Mike Delaney to Joint

Secretary Anil Mukim suggesting some possible modifications.

Khullar was enthusiastic about convening a TPF ministerial and

wanted to focus the agenda on a few achievable issues per focus

group rather than just a long laundry list of intractable ones. He

looked forward to receiving more details on USTR proposals to

strengthen the effectiveness of the TPF and the Private Sector

Advisory Group (PSAG), and agreed to intervene with the Ministry of

Agriculture to reengage in the Agriculture Focus Group and ensure an

appropriate GOI counterpart to USDA U/S James Miller. (Note: Mukim

confirmed in an August 28 meeting with visiting Commerce DAS Holly

Vineyard that Additional Secretary Shri Pati would lead the group on

the Indian side. End note.)

¶4. (SBU) GOI feedback on specific USTR proposals:

--Combine the Services and Investment Focus Groups: Khullar said he

preferred to get the investment group active first and look at

merging the groups later. While the U.S. lead would be the same for

both (AUSTR for Services and Investment Christine Bliss), India's

side would not (J/S Bharti Sihag for Services, and a Department of

Industrial Policy & Promotion or Finance Ministry J/S for

Investment), creating an internal turf battle. Regarding U.S.-India

collaboration on specific service sector market access issues, J/S

Sihag said real progress on most sectors, such as retail, would be

difficult since it would require legislation. She believed

education and health services to be outside her scope, but she

committed to discussing these issues with AUSTR Bliss.

--Create Additional Focus Groups: DUSTR Marantis proposed

additional Focus Groups, such as on small and medium enterprise

(SME) development and environment/clean energy. Khullar said adding

NEW DELHI 00001902 002 OF 004

more groups simply would add confusion, as work would cross over

into other line departments. For example, environmental issues

would be covered by India's Ministry of New and Renewable Energy and

Ministry of Power. Khullar also wanted to avoid the TPF being

caught up in controversy over cap and trade. Regarding possible SME

work, Khullar requested USTR send him a proposal.

--Revamp the Private Sector Advisory Group (PSAG): DUSTR Marantis

said USTR was looking at reformulating the U.S. side, including

adding West Coast representatives to make the PSAG more

geographically-balanced, and would soon share details with the GOI.

He also proposed creating a formal link between the PSAG and CEO

Forum to improve follow-through. Khullar said it would be an

"institutional nightmareQ if the PSAG were formally linked to the

CEO Forum; neither could be subordinate to the other and the CEO

forum was a "hoity-toityQ gathering whereas the TPF was much more

practical. However, he agreed that both PSAGs could exchange the

studies they had concluded but not yet shared, and then he would

consider discussing the linkage idea with Deputy Chairman Ahluwalia

-- or we could unilaterally create an informal link. (Note: In a

separate meeting, Alhuwalia, noting that his wife, a think tank

chair, was a member of the Indian PSAG, told DUSTR Marantis he was

not sure the CEOs would be comfortable with any link to the "think

tank natureQ of the PSAG. DUSTR told Ahluwalia that the U.S.-EU

transatlantic business dialogue could be a model. MEA J/S Gaitri

Kumar supported the idea that the PSAG and TPF could help to push

forward the work of the CEO Forum throughout the year, but Ahluwalia

remained skeptical, saying the CEO Forum was more of a photo op.

End Note.)

--Creating an Annual Work Plan: DUSTR Marantis proposed that the

United States and India agree to sign a "Bilateral Cooperation

Agreement,Q essentially a non-binding, "aspirationalQ work plan that

would set specific goals with timelines for the TPF. Mukim and

Khullar welcomed the idea and asked USTR for a proposed outline of

such an agreement, noting that they would be able to finalize terms

of reference for such an agreement through an internal process

called a "Joint Consultative Mechanism.

Cooperating on Trade Bilaterally and Multilaterally

--------------------------------------------- ------

¶5. (SBU) Commerce Minister Sharma explained that the intention of

the September 3-4 Doha mini-ministerial was to generate a "rainbow

coalitionQ of countries whose positive message would carry forward

to the G-20 summit in Pittsburg. He said he hoped USTR Kirk would

visit India both for the mini-ministerial and the TPF. DUSTR

Marantis noted that at times, our bilateral trade relationship had

been so dominated by Doha that it often overshadowed the dynamic

bilateral collaboration between the U.S. and Indian private sectors.

Sharma said he did not subscribe to the negative perceptions

regarding Doha, adding that it was natural that two large

democracies would have differences of opinion; otherwise there would

be no need to talk. He opined that the Doha mandate for development

was the core goal. DUSTR stressed that multilateral and bilateral

tracks were both important. Sharma said now was the time to reach

out and not look inward; protectionism would deepen the recession

and delay the recovery.

¶6. (SBU) Minister Sharma also raised the importance of H1-B visas

and India's GSP exports, commenting that China would move in if

India lost GSP. DUSTR Marantis explained that the Congressional

review of U.S. trade preference programs was likely to spill over

into 2010 since difficult questions would be raised on eligibility

requirements such as rules of origin and taking into consideration a

country's level of development. He acknowledged that India's

situation was complex because it had both highly developed and less

developed sectors. Sharma asked for U.S. sensitivity of sectors

like gems and jewelry that were labor intensive and employed

low-skilled workers. Sharma noted he would be in Washington in

October and might try to meet with some members of Congress on the

GSP program during his visit. (Note: we later confirmed with his

staff that Sharma plans to attend the October 13-14 Coalition of

Service Industries Global Services Summit in Washington, DC. End

note.)

Foreign Secretary -- Trade and Investment Important

NEW DELHI 00001902 003 OF 004

--------------------------------------------- ------

¶7. (SBU) Foreign Secretary Nirupama Rao and Joint Secretary Gaitri

Kumar told DUSTR Marantis, along with DCM and Econ M/C, that trade

and economics are the central pillar of our partnership. Rao said

we should be ambitious about the relationship and use the CEO Forum

as a catalyst. India had submitted a list of CEO names for approval

after instituting a process less ad hoc than in the past. DUSTR

Marantis said he would like to establish a link between the PSAG and

CEO Forum that would inform the CEO Forum of TPF activities. Both

agreed that conclusion of a BIT would bring our economies closer

together. DUSTR Marantis also expressed appreciation for the

Ministry's role in securing the Technology Safeguards Agreement and

looked forward to getting work started on a Commercial Space Launch

Agreement (CSLA).

¶8. (SBU) Rao commented that U.S.-India bilateral trade was $70

billion in 2008, including trade in services. (Note: this is

according to Indian data; U.S. 2008 services data is not yet

available.) Drawing on her recent posting as Indian Ambassador to

China, Rao said India-China two-way trade was $51.8 billion last

year, but trade figures had dropped due to the global recession,

which had badly affected China. India has a trade deficit with

China, exporting primarily commodities to China while importing

major hardware. Rao commented that the anti-dumping cases and

countervailing duties that India has levied against China have

raised the decibel level in bilateral discussions; a joint economic

group at the Secretary-level meets only every three years. Turning

to a perennial trade topic, Rao stressed that on social security

totalization, "we need to sort that out.Q DUSTR Marantis explained

candidly that the U.S. and Indian systems are not compatible, which

makes a totalization agreement impossible under U.S. law. He agreed

to continue to consider options.

Plannng Commission on CEO Forum and Totalization

--------------------------------------------- ----

¶9. (SBU) DUSTR outlined his visit to India for Deputy Chairman of

the Planning Commission Montek Singh Ahluwalia, who was joined by

MEA Joint Secretary Gaitri Kumar. Ahluwalia recommended DUSTR

Marantis visit a farm in India, as the unique characteristics of

India's agricultural sector are a big part of India's position in

the Doha round. Ahluwalia asked about the BIT negotiations, the

first round of which Ambassador Marantis reported had been concluded

earlier that day. Ahluwalia also raised social security

totalization (comment: at J/S Kumar's prodding), asking if the

United States would consider an arrangement similar to that which it

has with Israel. DUSTR Marantis explained that there are no groups

in the United States exempt from the tax and the USG was trying to

think creatively about how to work with India on this issue.

Perhaps, once India implements its new system of pension reform,

there would be a greater possibility, he added. Regarding the CEO

Forum, Ahluwalia said it would be important for the CEOs to craft an

agenda well ahead of the PM's November visit to the United States.

In response to questions about the process to select U.S.

participants, Adler explained the Federal Register process (Note:

published on September 10. End note) and DUSTR Marantis agreed to

convey to Washington agencies the desire to constitute an agenda

soon. Kumar said it would help for the two leaders to sanction a

list of concrete deliverables on which both sides could focus.

SME Cooperation Promising

-------------------------

¶10. (SBU) Secretary Dinesh Rai and Joint Secretary Pravir Kumar of

Ministry of Micro, Small, and Medium Enterprises Ministry described

their role creating an enabling environment for SME growth,

including skills development and banking links. They explained that

GSP had helped artisans, and they requested it not be withdrawn.

DUSTR Marantis explained the status of the program and the review

process. Rai referred to a letter of intent that his ministry had

signed with the U.S. Small Business Administration (SBA) in January

2007 for one year of cooperation and said he would like to extend

that agreement and broaden cooperation with the SBA. DUSTR Marantis

said his staff would consult with SBA and get back to Rai. H.P.

Kumar of the National Small Industries Corporation (NSIC), a

NEW DELHI 00001902 004 OF 004

government enterprise, noted NSIC had 250,000 SMEs as members, which

it showcased on its portal (www.nsicindia.com). He said NSIC would

like to arrange meetings with U.S. companies. Secretary Rai

indicated the National Commission for Enterprises in the Unorganized

Sector, which had a five-year mandate to study and make

recommendations for economic development in the informal sector, had

completed its work and published a report recommending creation of a

fund for which the Finance Ministry had provided INR 4,000 crore

(about $8 billion).

¶11. (U) USTR's Adina Adler cleared this cable.

¶12. (U) Visit New Delhi's Classified Website:

http://www.state.sgov/p/sa/newdelhi.

ROEMER

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Cable reference id: #09NEWDELHI1812

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #223008 ?

Subject Scenesetter For Deputy Secretary Lew's Visit To India

Origin Embassy New Delhi (India)

Cable time Mon, 31 Aug 2009 14:53 UTC

Classification SECRET//NOFORN

Source http://wikileaks.org/cable/2009/08/09NEWDELHI1812.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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RUEHLO/AMEMBASSY LONDON 6746

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Hide header

S E C R E T SECTION 01 OF 07 NEW DELHI 001812

NOFORN

SIPDIS

E.O. 12958: DECL: 08/31/2019

TAGS: OVIP [Visits and Travel of Prominent Individuals and Leaders] (LEW), PREL [External Political Relations], EAGR [Agriculture and Forestry], EAID [Foreign Economic Assistance], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: SCENESETTER FOR DEPUTY SECRETARY LEW'S VISIT TO

INDIA

REF: SECTO 00008

Classified By: Ambassador Timothy J. Roemer for Reasons 1.4 (B,D)

¶1. (SBU) Mission India warmly welcomes you to New Delhi.

This is an opportune moment as we seek a truly global

partnership with India and build upon the Secretary's highly

successful July visit (Ref). Secretary Clinton and her

counterpart, External Affairs Minister S.M. Krishna, formally

launched the U.S.-India Strategic Dialogue, which broadens

and deepens our partnership in addressing key global

challenges. The Dialogue has a five pillar foundation:

Strategic Cooperation; Energy and Climate Change; Education

and Development; Economics, Trade, and Agriculture; and

Science, Technology, Health, and Innovation. Our success in

accelerating the Strategic Dialogue in the run up to Prime

Minister Singh's November official state visit will depend on

working closely with our Indian counterparts as we focus on

the most productive areas for cooperation. We would also

like to highlight where the Mission could use greater

resources to implement effectively this top foreign policy

priority for the Obama Administration.

Forward-Looking and Ready for the World Stage

----------

¶2. (C) The strong performance by the Congress Party and its

United Progressive Alliance (UPA) allies in India's national

elections in April provided the Congress Party with a mandate

to govern, after years of battling communists and regional

coalition "partners" over both domestic and foreign policy

issues, including a closer relationship with the United

States. With the return to the Cabinet of key players such

as Pranab Mukherjee as Finance Minister, P. Chidambaram as

Home Minister, and A.K. Antony as Defense Minister and the

addition of U.S.-friendly External Affairs Minister Krishna,

we anticipate stability in our bilateral relationship and a

continuation of the positive, if sometimes bumpy, trajectory

that has marked our ties for the past decade. The UPA

government's task, whether on foreign policy or on domestic

issues, is made easier by the steady meltdown of the

Bharatiya Janata Party, which has become victim of publicly

played out bloodletting and vicious factionalism after its

trouncing in the polls.

Aspirations and Roadblocks

----------

¶3. (SBU) India is a regional power that aspires to become a

global player. The ambition at the top echelons of the

government is readily apparent, as India vigorously pursues

its number one foreign policy goal -- a permanent UN Security

Council seat. India uses its voice in the G-20 and active

engagement in multilateral fora like the East Asia Summit and

the Brazil-Russia-India-China Summit to raise its profile.

Although the Congress Party's victory set the stage for

bolder moves on its foreign policy agenda, serious challenges

remain. India's slow-moving bureaucracy is stove piped and

suffers from a lack of capacity in every sector. Many senior

officials entered government service during the Cold War era

and still espouse the "non-aligned" rhetoric of the '60s and

'70s.

¶4. (SBU) The extreme level of domestic poverty also stands in

stark contrast to India's global ambitions. While India's

poverty levels have fallen in the past decade as the economy

has grown, hundreds of millions of Indians continue to

subsist on less than two U.S. dollars a day. India is home

to the third largest number of people living with HIV/AIDS

and one-fourth of the world's tuberculosis cases. It is one

of four nations in which polio still exists. PM Singh has

signaled that improved governance and service delivery toward

poverty reduction are top priorities in his second term.

¶5. (SBU) Despite expectations that the current coalition's

strong base would allow it to pursue "big bang" economic

reforms, the more likely approach is gradual reform with a

close watch at each step on political and social effects of

policy changes. Congress Party leaders attribute its strong

NEW DELHI 00001812 002 OF 007

showing in the April elections to the close attention it paid

to the rural sector during the previous government.

Accordingly, the UPA's July 6 budget proposal focused most

new spending on a rural employment program and rural

infrastructure.

Afghanistan-Pakistan

----------

¶6. (C) As it seeks to make strategic investments to bolster

its regional and global goals, India points with pride to its

ongoing "development partnership" with post-Taliban

Afghanistan that began in late 2001. The GOI claims that the

sum of its performed and pledged assistance to date totals

USD 1.2 billion. The bulk of the aid is channeled directly

through the Afghan government, and includes military and

police assistance. We would like to coordinate better with

India to avoid duplicative, contradictory, and incompatible

approaches and methods between Indian assistance/training and

that provided by the USG, NATO, and other international

partners. On Pakistan, the view is pessimistic about

prospects for a near-term thaw in relations; India continues

to demand that Pakistan match counterterrorism rhetoric with

deeds. Domestic political fallout over PM Singh's July

meeting in Sharm al-Sheikh with Pakistani PM Gilani and a

widespread perception of Pakistani bad faith in cracking down

on terror directed at India combine to make resumption of the

"composite dialogue" difficult for the Singh government,

though contacts between Indian and Pakistani officials are

continuing.

U.S.-India 3.0 - Strategic Dialogue Progress

----------

¶7. (SBU) Since the U.S.-India Strategic Dialogue launched

during the Secretary's visit, Mission India has been hard at

work to identify concrete deliverables for PM Singh's

official state visit to Washington on November 24. The

dialogue's five pillars break down into 18 sub-dialogues,

which require cooperation across agencies both in India and

Washington. We are also considering long-term goals for the

strategic partnership, which will demand continued

collaboration and increased resources. Post predicts the

most fruitful dialogues in the near-term will be the Defense

Policy Group, Energy and Climate Change, and Education. We

also believe there is tremendous potential when structuring

the right partnership and demonstrating the scale-up

trajectory on anti-poverty programs.

Strategic Cooperation Pillar

----------

¶8. (SBU) We seek a closer partnership with India on defense,

counterterrorism, intelligence sharing, homeland and port

security, and non-proliferation issues. This pillar covers

strategic security talks (nonproliferation), the high

technology cooperation group, the defense policy group, a

forum on global issues, the joint working group on

counterterrorism, and an expanded discussion of security

challenges in South Asia and beyond, including the Middle

East, Africa, and East Asia.

¶9. (SBU) The strategic security talks represent an

unprecedented opportunity to engage the Indian Government on

the full scope of nonproliferation policies and programs. As

we work to complete the Civil Nuclear Cooperation Agreement,

Indian officials have signaled a willingness to engage with

U.S. counterparts on nonproliferation, but are also wary of

U.S. intentions after decades of estrangement over these

issues. We anticipate the first such discussion on a

comprehensive nonproliferation agenda will take place during

the hoped-for October visit of Under Secretary Tauscher. In

addition to many policy issues on the agenda, we hope to

promote several programs that will require continued funding,

including the Export Control and Related Border Security

Program, the Secure Freight Initiative, Second Line of

Defense/Megaports, and cooperation on biological, chemical,

and radiological security.

NEW DELHI 00001812 003 OF 007

¶10. (SBU) The Civil Nuclear Cooperation Agreement marked a

watershed in the bilateral relationship. Its full

implementation is important not only to achieve commercial,

economic, nonproliferation, and environmental benefits, but

also to build the trust necessary to tackle the next set of

difficult issues, such as climate change. There are some GOI

officials and editorial writers that doubt the new

administration's full commitment to this agreement. Senior

Indian officials have said they intend to resolve several

outstanding implementation issues prior to PM Singh's visit

to Washington. These include publicly announcing the

designation of two reactor park sites for U.S. companies,

submitting civil nuclear liability protection legislation to

the Indian Parliament, and filing a declaration of

safeguarded facilities with the IAEA. U.S. and Indian

delegations will meet to continue reprocessing consultations

in late September and early October with the goal of

initialing a text before PM Singh,s visit. We are also

pressing India to provide so-called "Part 810" license

assurances to enable U.S. firms to share sensitive

information with potential Indian commercial partners.

The Defense Relationship

----------

¶11. (S) In general, the defense relationship is on a strong

growth curve despite a variety of frustrations. While the

Indian uniformed leadership of all three Services, and in

particular the Indian Navy, appreciate their improving ties

with the U.S. military, bureaucratic inertia and recalcitrant

officials in the Ministries of External Affairs

and Defense continue to complicate attempts to improve the

partnership. Despite these challenges, military-to-military

contacts continue to be a strong foundation of our strategic

partnership. We conducted the largest ground

forces/counterterrorism centric combined exercise to date in

February 2009 and are poised to conduct air and army

exercises in the fall. This year India has already hosted

visits from the Chairman of the Joint Chiefs of Staff, the

Commander of United States Pacific Command, the Commandant of

the United States Coast Guard, and the Commandant of the

Marine Corps. We continue to seek opportunities for

capacity-building, greater access and improved partnering

through more focused combined exercises, better-tailored

subject matter exchange events, and additional high-level

visitor exchanges.

¶12. (C) Defense sales have risen from near zero in 2004, to

over USD 2.2 billion already in 2009, with prospects for much

greater expansion. The recent Government-to-Government

agreement on EUM language sets the stage for even greater

success in this arena, as all three Indian services are

modernizing their forces. The next agreement we wish to

conclude with the GOI is the Communications Interoperability

and Security Memorandum of Agreement (CISMOA). This MOA is

required to legally permit sharing/selling of encryption

equipment that would enable capabilities such as secure

communications and military GPS utilization. The United

States Pacific Command has been pursuing the CISMOA with

India since 2005 without resolution, but the GOI has told us

that CISMOA would be possible after EUM language was

resolved. One challenge is in maintaining the GOI commitment

to travel abroad for education and receive military training

visitations at home (they will often cancel at the last

minute).

Counterterrorism

----------

¶13. (SBU) India continues to rank among the world's most

terror-afflicted countries. We have seen increased

willingness to accept U.S. offers of training and other

assistance, particularly from the FBI and on intelligence

sharing, in the wake of the November 2008 attacks in Mumbai.

Minister of Home Affairs Chidambaram's September 7-10 visit

to the United States will be a critical opportunity to focus

Indian attention on the need for communication across

agencies and strong relationships with our law enforcement

and intelligence agencies. He will meet with several Cabinet

NEW DELHI 00001812 004 OF 007

officials, including Secretary Clinton, the Director of

National Intelligence, and the Director of the FBI, and will

visit the Joint Terrorism Task Force in New York and the

National Counterterrorism Center in Washington. We continue

to encourage India to play a positive role in sub-regional

cooperation efforts, particularly on border issues with

Bangladesh and Nepal.

Energy and Climate Change Pillar

----------

¶14. (SBU) In addition to the boost that the Civil Nuclear

Cooperation Agreement is poised to give to our energy

relationship, India is keen to increase engagement with the

United States on research and development of technologies for

clean, renewable energy, and on energy efficiency. Both

Indian officials and business leaders are eager to work on

tangible outcomes in the renewable energy sector, including

solar and wind systems. India has agreed to host the

International Renewable Energy Conference in October 2010,

building on the successful 2008 conference in Washington.

Indian officials do not, however, expect these other energy

forms will replace existing capacities or substitute for

large scale expansion of coal-fired thermal power. (Note:

Coal-fired thermal power accounts for 53 percent of India's

total power generating capacity and over 66 percent of

India's electricity production. End Note.)

¶15. (SBU) In spite of the convergence on clean energy, U.S.

and Indian views on climate change differ and,

unsurprisingly, we have divergent expectations for

Copenhagen. Indian officials have rejected greenhouse gas

emission monitoring or reduction commitments. They argue that

primary responsibility for global warming lies with developed

countries, and that India is entitled to an equal per capita

share of the "global carbon space," particularly in light of

its need for economic development. India recently reached out

to China to seek a common position against binding

commitments at Copenhagen. (Note: India's per capita

electricity consumption and per capita carbon dioxide

emissions are five to six percent of U.S. levels; 55 percent

of the population has no access to electricity. End Note.)

¶16. (SBU) Notwithstanding our differences, Indian Special

Climate Envoy Shyam Saran told Todd Stern in July that he

"did not see a big gap in substance between the Indian and

U.S. position." India is very interested in intensifying our

bilateral Global Climate Change Dialogue to foster

cooperation on reducing greenhouse gas emissions and promote

sustainable, low-carbon development. The Mission, in

consultation with OES and SECC, is developing proposals for

climate change cooperation partnerships -- with the GOI

contributing matching funds -- that could promote a variety

of projects, including on clean energy technologies and on

black carbon reduction by wide-spread use of efficient

cookstoves. Ministers have told us India wants to conclude

its own climate change MOU with the United States, similar to

our understanding with China, but "plus alpha," including

more concrete cooperation than between the United States and

China.

Education and Development Pillar

----------

¶17. (SBU) We wish to combine U.S. and Indian expertise and

knowledge to foster new joint partnerships in education,

development, and women's empowerment. The GOI is beginning

to undertake long-overdue reforms in its education system.

With 50 percent of India's young people leaving school by

eighth grade (disproportionately girls) and 80 percent of the

remainder not completing high school, young Indians and their

parents know very well that their educational system is not

meeting their needs -- and they are increasingly agitated and

vocal about it. The government has begun a major long-term

expansion in the funding for education, building new schools

and expanding educational infrastructure. Meanwhile over

half a million Indians study overseas, over 94,000 in the

United States. The Indian government has proposed that our

Education Dialogue focus on the following areas:

NEW DELHI 00001812 005 OF 007

accreditation of schools and tertiary institutions; the role

and structure of community colleges; challenges of funding

and scaling up large educational institutions; identifying

funds to support university-to-university linkages for

research and teaching; junior faculty development and

enhancing improvements in basic education.

¶18. (SBU) The Women's Empowerment Forum (WEF) will provide

opportunities to share best practices and partner on relevant

initiatives. The indicators regarding the status of women in

India are startling: female feticide, trafficking for

commercial sex work, domestic violence (approximately 30

percent of married women), and dowry deaths (one death every

90 minutes) affect countless women throughout India. The new

government has made many promises regarding women's political

empowerment - but implementation has historically been slow.

The Mission will be working closely with S/GWI Ambassador

Melanne Verveer -- whom we hope will visit India in early

November -- on initiatives to expand partnerships between

American and Indian women.

Economics, Trade, and Agriculture Pillar

----------

¶19. (SBU) The Economic, Trade, and Agriculture Pillar focuses

on how the United States and India can work together to

strengthen bilateral economic cooperation, including reducing

barriers to bilateral trade and investment, strengthening

financial institutions, harnessing the power of our public

and private sectors to spur innovation and help India sustain

economic growth, and developing a productive, internationally

competitive, and diversified agriculture sector in India.

The Trade Policy Forum (TPF), led by USTR Ambassador Kirk and

Minister of Industry and Commerce Anand Sharma, works to

reduce barriers to bilateral investment and trade through

five focus groups and with input from a Private Sector

Advisory Group. USTR Kirk's planned visit will overlap with

your visit. U.S. exports to India have tripled since 2004

and two-way investment has also climbed, but there is

potential for much more trade and investment between our two

economies. USTR is working to arrange the next TPF

ministerial before the Prime Minister's visit, possibly in

Delhi in late October. To accelerate the positive two-way

investment trend, the United States and India launched

negotiations for a Bilateral Investment Treaty in August with

a possible second round in the fall. The Finance & Economic

Forum, led by Treasury and the Ministry of Finance,

encourages financial sector reforms and provides a forum for

exchange between regulatory experts. It is scheduled to meet

at the DAS level on October 28-29 in New Delhi and may expand

its discussion into macro-economic issues. The CEO Forum,

with government participation led by Deputy National Security

Advisor Froman and Deputy Planning Commissioner Ahluwalia,

provides senior-level private sector recommendations for

follow up by each government. Both governments are currently

working on their lists of CEO membership and ideally a CEO

Forum meeting will occur on the margins of PM Singh,s trip

to Washington.

Food Security & USDA Programs in India

---------

¶20. (SBU) The Agriculture Dialogue, led by Ahluwalia and USDA

Secretary Vilsack, will seek to increase bilateral

cooperation to maximize opportunities for food security,

poverty alleviation and income generation. We hope to remove

barriers to greater trade and investment between our

countries and harness the power of our public and private

sectors to help India achieve a sustainable agriculture

sector and food security. Agriculture and rural development

are inextricably linked with poverty reduction, but India's

chief crop yields are still lower than other major nations.

¶21. (SBU) The Indian government sees food security as

primarily a domestic challenge of self-sufficiency in basic

commodities. High food prices have been a major political

issue in past elections and could become a stumbling block

for the current UPA government. While the GOI is prickly

about the subject of food security policy, they welcome

NEW DELHI 00001812 006 OF 007

opportunities to partner with the United States in new

technologies in order to boost output of food grains

including drought resistant wheat, rice, peas, bean, and

lentils. When the Prime Minister talks of the "ever-Green

revolution," he envisions a sustainable agricultural

production system that benefits small and marginal farmers

through improved seed varieties and technology transfers.

However, significant challenges exist to carrying out this

vision given the lack of basic infrastructure in the rural

areas, the bureaucracy-laden farm programs, and land tenure

laws that limit farm size and sale of agricultural land.

Science, Technology, Health, and Innovation Pillar

----------

¶22. (SBU) India has a large and diverse S&T infrastructure

that defies generalizations, and ranges from 1950's era labs

to state-of-the-art technologies. By identifying and

promoting opportunities for mutually beneficial cooperation,

the Mission seeks to use the S&T Dialogue to enhance the

already vast academic, commercial, and official collaboration

taking place between U.S. and Indian scientists. The

Science, Technology, Health and Innovation Pillar includes a

three-part S&T Dialogue, and the first bilateral

ministerial-level dialogue dedicated to health and biomedical

sciences. U.S.-India health cooperation focuses on

high-priority areas such as HIV/AIDS, smallpox, influenza and

other infectious diseases, as well as maternal and child

health and medical capacity building. During her July

visit, Secretary Clinton concluded a USD 30 million S&T

Endowment Agreement, a key element of the S&T Dialogue. Both

sides currently are selecting their respective board members

and we anticipate funding of projects will begin in 2010.

USAID Programs in India

----------

¶23. (SBU) USAID/India is engaged in partnerships with the

Indian government, the private sector, and non-governmental

organizations to share ideas, international best practices,

technologies, and expertise that results in improved lives

and livelihoods. USAID investment attracts investment from

our partners to develop and deliver innovative models, which

are then scaled up to reach many more people for sustainable

impact. For every dollar USAID invests, an additional four

dollars is leveraged from our partners. In addition, every

USAID dollar invested in these pilot programs result in

Indian devoting an average of USD 35 to scale up the program.

USAID works with our partners to solve problems of mutual

interest to: improve the health of children and families;

reduce green house gas emissions and promote clean efficient

energy; improve agriculture productivity and help farmers get

their products to market more efficiently; prepare youth for

jobs in the modern economy; improve basic education by

developing innovative ways to teach children in the classroom

and support teachers; mitigate the risk and help communities

better prepare for and respond to floods and other natural

disasters; and improve the legal rights of women.

India's Development Assistance Abroad

----------

¶24. (SBU) India has pledged USD 1.2 billion in assistance

over ten years to Afghanistan in four broad areas: major

infrastructure projects (dams, bridges, roads, power);

humanitarian assistance (food aid, seeds, and household

supplies); and education and capacity development (supplies,

construction, scholarships, training, and capacity building);

and small and community based development projects (funding

100 small projects). India is by far the largest contributor

of foreign assistance to Nepal. During a August 21 meeting

with Nepalese Prime Minister M.K. Nepal, Finance Minister

Mukherjee announced that the GOI pledged USD 137.5 million to

Nepal to fund a three-phase project to build over 1,300

kilometers of roads in Nepal. India also plans to fund a

police academy, integrated checkpoints along the India-Nepal

border, and upgraded rail link with Nepal. India's foreign

assistance is given to Sri Lanka to fund development projects

for education, health, and infrastructure. In the wake of

NEW DELHI 00001812 007 OF 007

the LTTE's defeat, the GOI has funded de-mining efforts,

donated food aid, and provided over USD 100 million to

rehabilitate war victims in Sri Lanka's northern and eastern

areas. India donated USD 37 million for flood relief in

2007-2008.

The Platform for the Pillars: Resource Issues at Post

----------

¶25. (SBU) Mission India Program and ICASS funding, currently

at a combined USD 25 Million plus, has risen to keep pace

with Mission growth. Over the past three years, the Mission

struggled to augment ICASS support positions as our USDH

(U.S. Direct Hire) workforce ballooned by more than 130

non-support positions in response to Consular, trade, health,

and other increases in the USG presence in India. The lag

lessened somewhat with the reprogramming of two positions in

2007, and the introduction of some additional USDH and EFM

ICASS positions to Mission India in 2008 and 2009. If

Mission India receives our requested ELO positions in 2010

and 2011, and MSP-requested positions through 2012, ICASS

will have the depth and breadth to properly support the team

in our expanding partnership with India.

¶26. (SBU) For the Strategic Dialogue and related growth, our

most severe resource need is in the area of facilities. Land

has been identified, but not purchased for the NCC in

Hyderabad. OBO must secure the price and availability of the

plot they have selected now with funding. In addition,

Embassy New Delhi has formally requested to internally

re-prioritize the Mission India NCC construction list to put

NCC Hyderabad ahead of those planned for Chennai and Kolkata.

The temporary facility in Hyderabad is already undersized,

and can in no way meet the demands of Mission India through

the planned completion of an NCC in 2025. For New Delhi, an

A&E contract for the GSO/Support Annex may be funded and

awarded before the end of FY 2009; good news for our Embassy

operations, which are currently reaching the limits of

capacity. The New Delhi American Center is undergoing a

limited infrastructure renovation to keep it operational as

OBO researches lease or construction options for a Model

American Center.

¶27. (SBU) We have requested that OBO undertake a formal

assessment of all USG property holdings in India. Given the

ever increasing cost of leased properties, and the number of

valuable properties the USG will be selling in-country in the

near future, we believe this is an optimal time to channel

some of these gains into residential real estate construction

which could decrease our dependence on leased properties.

Construction costs, even for quality construction, remain

relatively low, making for a quick payback on our investment.

ROEMER

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Cable reference id: #09NEWDELHI1637

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #219376 ?

Subject Special Envoy Stern Engages Indian Government And Ngo Representatives On Climate Change

Origin Embassy New Delhi (India)

Cable time Tue, 4 Aug 2009 11:39 UTC

Classification UNCLASSIFIED

Source http://wikileaks.org/cable/2009/08/09NEWDELHI1637.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

VZCZCXRO4159

RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHDH RUEHHM RUEHLH RUEHLN RUEHMA

RUEHNEH RUEHPB RUEHPOD RUEHPW RUEHSL RUEHTM RUEHTRO

DE RUEHNE #1637/01 2161139

ZNR UUUUU ZZH

R 041139Z AUG 09

FM AMEMBASSY NEW DELHI

TO RUEHC/SECSTATE WASHDC 7605

RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

RHEBAAA/DEPT OF ENERGY WASHDC

RUEAEPA/HQ EPA WASHINGTON DC

RUCPDOC/USDOC WASHDC

RUCPDC/NOAA NMFS WASHINGTON DC

RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE

Hide header

UNCLAS SECTION 01 OF 03 NEW DELHI 001637

SIPDIS

STATE FOR OES/PCI, OES/EGC, AND SCA/INS

STATE FOR SECC TODD STERN

DEPT OF ENERGY FOR TCUTLER, CGILLESPIE, MGINZBERG

E.O. 12958: N/A

TAGS: SENV [Environmental Affairs], ENRG [Energy and Power], ECON [Economic Conditions], TSPL [Science and Technology Policy], TRGY [Energy Technology], KSCA [Science Counselors and Attachés], KGHG [Global Climate Change], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: SPECIAL ENVOY STERN ENGAGES INDIAN GOVERNMENT AND NGO

REPRESENTATIVES ON CLIMATE CHANGE

¶1. SUMMARY AND COMMENT: Special Envoy for Climate Change Todd

Stern held a series of meetings July 20-21 in New Delhi with

Government of India officials and NGO representatives to discuss the

upcoming Copenhagen Conference of Parties to the UNFCCC as well as

potential areas for U.S. - India bilateral cooperation in climate

change and clean energy. In addition, S/E Stern gave three

interviews to major Indian media outlets including CNN-IBN, the

Times of India, and the Indian Express. The talks proved

constructive on all levels and produced a strong interest on the

part of the GOI to pursue further engagement including a formal

request to conduct bilateral climate talks in Washington in

September. END SUMMARY AND COMMENT.

¶2. Special Envoy Stern held separate meetings with the following

GOI officials:

Shyam Saran, Special Envoy for Climate Change

Jairam Ramesh, Minister of Environment and Forests

Sushil Kumar Shinde, Minister of Power

Farooq Abdullah, Minister of New and Renewable Energy

Montek Singh Ahluwalia, Deputy Chairman, Planning Commission

Nirupama Rao, Foreign Secretary Designate

S/E Stern's NGO engagement included the following participants:

Ravi Singh, CEO and Secretary General, WWF-India

Ashok Khosla, President, Development Alternatives

Ritu Mathur, Associate Director, TERI

Aditi Kapoor, Economic Justice Lead Specialist, Oxfam India

K. Srinivas, Policy Advisor, Greenpeace India

Shirish Sinha, Head of Climate Change & Energy, WWF-India

Sejal Worah, Program Director, WWF-India

Pradeep Saha, Associate Director, Centre for Science and

Environment

--------------------------------------

TOWARDS COPENHAGEN: NARROWING THE GAP

--------------------------------------

¶3. In all of his meetings, S/E Stern outlined his vision for a

potential Copenhagen agreement and emphasized the areas of

convergence between the U.S. and Indian positions. He stated that

the United States recognized India's need to develop and that any

agreement in Copenhagen would not seek to limit India's overriding

poverty alleviation goals. He stated developed countries must make

robust absolute emissions reductions noting pending U.S. legislation

called for cuts of approximately 20% each decade culminating in an

80% cut by 2050. S/E Stern clarified that the U.S. would not demand

India make absolute reductions in emissions but would require a

commitment from India to put in place nationally appropriate

mitigation actions that would reduce India's emission growth from

Business as Usual (BAU) projections. He stated that while India

would not have to commit to specific emission reduction targets, it

would have to commit to specific mitigation actions that were

nationally binding, measurable, reportable, and verifiable, and

could be reflected in an international agreement. He also noted the

need for developed countries to create a significant financial

package to assist developing countries in deploying clean energy

technology. He also discussed the importance of adaptation and a

workable policy regarding Reduced Emissions from Deforestation and

Degradation (REDD). In all aspects of his discussion of a potential

Copenhagen agreement, Special Envoy Stern emphasized the need for a

practical and pragmatic approach designed to not only achieve

international consensus, but also the support of the U.S. Congress.

¶4. Indian Special Envoy Saran began his meeting with S/E Stern by

stating he did not see a big gap in substance between the Indian and

the U.S. position on climate change. He noted both countries agreed

the issues of climate change and energy were inseparable and that

the two needed to be worked on together. He was pleased to note

Stern's statement that developing countries would not be required to

restrict their efforts toward poverty alleviation. He also stated

that developing countries were not only willing to take actions to

mitigate emissions, but also recognized the pressing need to do so

as they would be most impacted by climate change. Saran added a

caveat saying the developing countries were prepared to accept a

reduction from BAU emissions in a normative, but not quantitative,

sense as long as the developed countries provided resources to do so

and if the incremental costs of new technology were compensated. He

emphasized that the extent of the reduction from BAU was directly

NEW DELHI 00001637 002 OF 003

linked to the amount of resources made available by developed

countries. He also stated all mitigation efforts supported by

international funds would be subject to being measured, reported,

and verified (MRV) internationally. Stern responded that he felt

all developing country mitigation efforts, autonomous and supported,

should be subject to MRV in order to give the process transparency

noting purely voluntary measures would not be sufficient. Saran

stated all mitigation efforts of the GOI were subject to public

scrutiny and inquired as to what level of precision would be needed

for an agreement, noting the importance of getting the language

right.

¶5. Saran emphasized India's requirement that whatever shape a new

agreement took, that it be in line with the UNFCCC and Bali Action

Plan. S/E Stern stated that the UNFCCC and the Bali Action Plan

should guide the process of developing a new agreement but should

not be considered a straight jacket, drawing a comparison between

the Berlin Mandate and the Kyoto Protocol. He stated simply because

a concept such as an international registry was not discussed at

Bali, didn't mean it shouldn't be raised at Copenhagen. Saran took

the point stating discussion of new measures that enhanced the

implementation of the UNFCCC was appropriate as long as key

provisions of the convention or the Bali Action Plan were not set

aside.

¶6. Minister of Environment and Forests Jairam Ramesh discussed the

domestic politics of a Copenhagen agreement noting that as a

politician, he had to sell the agreement to his constituency. He

stated that the Indian system will find it infinitely easier to

accept something legislated domestically than imposed

internationally. Ramesh said he would look at legislating various

mitigation plans found in India's National Action Plan on Climate

Change in order to give them the force of law. S/E Stern welcomed

the proposal and asked whether it would be possible to use executive

regulation as opposed to legislation. Ramesh affirmed that while it

was possible, legislation was necessary in order to gain

credibility, because "there is a sanctity to a law." Ramesh also

raised the issue of REDD and India's plans to spend 3 billion

dollars on reforestation. He asked for U.S. support for India's

proposal on reforestation in the UNFCCC talks. S/E Stern suggested

a technical meeting between the two countries experts to review the

proposal.

¶7. Deputy Planning Commissioner Montek Singh Ahluwalia told S/E

Stern that the developing countries rhetoric regarding historical

responsibility was a negotiating tool and while India publically

projected that it had no intention of reducing emissions, it was

putting in place measures to deploy wind and solar energy that would

reduce its emissions from business as usual. In addition, Ahluwalia

said the GOI was actively seeking to create political awareness of

the climate change issue among youth and NGOs and that it was very

interested in adopting low carbon energy technology.

¶8. Minister of Power Shinde focused on accelerating the

distribution of clean technology under an international agreement.

He was joined by Ajay Mathur, the Director General of the Bureau of

Energy Efficiency who noted the primary barrier to adopting clean

tech in India was cost stating India would like to see the

incremental costs of clean technology borne by developed countries.

S/E Stern raised the possibility of utilizing an ESCO-type

arrangement in the context of renewable energy investment, in which

initial capital costs would be paid back from the savings of the new

technology. In addition, an ESCO arrangement would protect

intellectual property rights (IPR). Shinde and Mathur were familiar

with the ESCO concept and noted it may have some potential though

questioned whether the IPR issue could be resolved in the same

fashion as IPR issues surrounding AIDS drugs. Stern responded that

to Americans, the AIDS drugs analogy sounded like compulsory

licensing for energy technology which was non-starter in the United

States.

---------------

NGO PERSPECTIVE

---------------

¶9. The NGO representatives all agreed there was a tremendous

momentum building in India to address climate change, lead largely

by the media, due to India's vulnerability. While they also agreed

much more needed to be done to raise awareness, at the village

level, they were largely appreciative of GOI efforts towards energy

NEW DELHI 00001637 003 OF 003

efficiency and its focus on renewable energy. They noted an

enthusiasm in the industrial sector to move away from business as

usual energy investments and added that world class demonstration

projects that showcase viable clean technologies would further

encourage the private sector to adopt new technologies. In a

deviation from the other NGO representatives, Development

Alternatives President Ashok Khosla raised the issue of population

reduction and noted the role demographic transitions can bring in

lowering emissions. Khosla lamented the limited scope of UNFCCC

negotiations as they do not allow for discussion of reduced

emissions from population reduction.

-----------------

PRESS INTERACTION

-----------------

¶10. S/E Stern conveyed the U.S. position in a television interview

with CNN-IBN and in print interviews with the Times of India and the

Indian Express. The reporting was reasonably balanced with a mix of

statements noting the constructive engagement between the two

countries but still highlighting the perceived areas of difference.

The interview and articles are currently available at the following

links:

http://ibnlive.in.com/news/ obamas-man-talks-of-climate

-change-deal-with -india/97751-2.html

http://timesofindia.indiatimes. com/NEWS/India/Copenhagen

-deal-Indias-demand-for-75bn- is-unrealistic/articleshow

/4805262.cms

http://timesofindia.indiatimes. com/NEWS/India/US-Drop-

dependence-on-coal/ articleshow/4805270.cms

http://www.indianexpress. com/news/us-envoy-

for-quantified-emission-cuts /492494/0

------------------------------------

BILATERAL COOPERATION AND NEXT STEPS

------------------------------------

¶11. In all of his meetings, S/E Stern asked his interlocutors to

discuss potential areas for bilateral cooperation. Special Envoy

Saran noted the importance of coal to India and suggested working

together on clean coal. Minister Shinde suggested bilateral

cooperation on co-generation technologies and an ultra-supercritical

pilot coal power plant. Minister of New and Renewable Energy Farook

Abdullah stated there was a great deal of room for bilateral

cooperation in second generation biofuels, wind, and solar.

Minister Ramesh reiterated the proposal he made to Secretary Clinton

for joint research, development, demonstration and dissemination of

solar energy, biomass, clean coal, high voltage power transmission,

smart grids, and wastewater utilization projects under a potential

Indo-US Foundation for Climate Change Technology.

¶12. S/E Saran and Minister Ramesh both recommended additional

bilateral meetings with Ramesh suggesting India and the U.S. hold

bilateral climate talks in September in Washington, DC. Ramesh

noted his intention to attend UN Secretary General Ban, Ki-Moon's

climate conference on September 22 and informed S/E Stern he would

spend as much time in Washington as needed. Ramesh also raised the

GOI's strong interest in having Secretary of Energy Chu speak on

energy security and climate change at the Delhi High Level

Conference on Climate Change: Technology Development and Transfer

scheduled October 22-23, 2009 and asked S/E Stern to discuss the

conference with Secretary Chu. Ramesh summed up the GOI position on

bilateral engagement by stating that the bridges the U.S. built with

China on climate change and clean energy could also be built with

India.

¶13. This cable has been approved by Special Envoy Stern.

ROEMER

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Cable reference id: #09NEWDELHI1535

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #217967 ?

Subject A/s Blake Discusses Strategic Partnership Dialogs With Indian Mea

Origin Embassy New Delhi (India)

Cable time Fri, 24 Jul 2009 08:29 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/07/09NEWDELHI1535.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

VZCZCXRO5333

OO RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW

DE RUEHNE #1535/01 2050829

ZNR UUUUU ZZH

O 240829Z JUL 09

FM AMEMBASSY NEW DELHI

TO RUEHC/SECSTATE WASHDC IMMEDIATE 7487

INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

Hide header

UNCLAS SECTION 01 OF 02 NEW DELHI 001535

SENSITIVE

SIPDIS

DEPT FOR SCA/INS

E.O. 12958: N/A

TAGS: PREL [External Political Relations], PGOV [Internal Governmental Affairs], PTER [Terrorists and Terrorism], ECON [Economic Conditions], ENRG [Energy and Power], SOCI [Social Conditions], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: A/S BLAKE DISCUSSES STRATEGIC PARTNERSHIP DIALOGS

WITH INDIAN MEA

¶1. (SBU) SUMMARY: Assistant Secretary Robert Blake met with

Indian Joint Secretary (AMS) Gaitri Kumar July 21 and

outlined next steps in the new Strategic Dialogue. They

agreed that Counter Terrorism was an immediate focus and that

Home Minister Chidambaram should visit Washington as soon as

possible. They identified the possibility of holding the

first energy dialog between Steven Chu and Indian Renewable

Energy Minister Farooq Abdullah on the sidelines of an

October climate change and renewable energy conference in

India. Deputy Chair of the Planning Commission Montek

Ahluwalia plans to attend the G-8 and G-20 meetings in

Pittsburgh as a sherpa creating an opportunity for a formal

economic dialog meeting. A/S Blake suggested that Indian

Education Minister Kapil Sibal reach out to U.S. Secretary of

Education Arne Duncan and schedule a visit. Gaitri conveyed

that the Indian Parliament would like to invite the First

Lady to participate in the launch of a new GOI education

campaign in New Delhi. END SUMMARY.

¶2. (SBU) Assistant Secretary for South and Central Asian

Affairs Robert Blake met with Indian Ministry of External

Affairs (MEA) Joint Secretary (Americas) Gaitri Kumar on July

¶21. A/S Blake offered thanks at the conclusion of a

successful visit by Secretary Clinton. Gaitri said that

Clinton was "amazing" with an impressive grasp on Indian

sensitivities.

¶3. (SBU) Blake and Gaitri discussed how to proceed with the

strategic partnership dialogs between the United States and

India and agreed that a robust schedule of visits would set

deadlines to motivate progress on deliverables. They agreed

to aim high on identifying specific, credible deliverables

for Prime Minister Singh's November 24th visit to the U.S.

and for a possible high level visit to India sometime in

2010. They also agreed to quickly prioritize dialogs, and to

encourage individual agencies to focus on them as soon as

possible. Gaitri indicated that this is the approach the

Deputy Chair of the Planning Commission would like to take

and that he will get cabinet ministers involved and

personally work with PM Singh in order to get appropriate

resources and officers.

¶4. (SBU) They identified counterterrorism as a more

immediate agenda item, and agreed that Home Secretary

Chidambaram should visit D.C. very soon. Blake emphasized

that Chidambaram's counterparts in D.C. were ready to meet

with him and suggested setting dates for a visit in mid

October of 2009 to encourage increased cooperation on

training and intelligence sharing. Gaitri agreed to

communicate the suggestion to Chidambaram promptly. (Note:

Chidambaram's staff have now suggested that he was ready to

visit in late August.)

¶5. (SBU) Clean energy also presented immediate

opportunities. Gaitri suggested that since FutureGen is

currently restructuring, it could be used as one deliverable

for a visit. Blake pointed out that Steven Chu has been

invited to a climate change and renewable energy conference

in India in October. He suggested that Indian Renewable

Energy Minister Farooq Abdullah invite Chu as a keynote

speaker and conduct the first energy dialog meeting on the

sidelines of the conference. Gaitri responded

enthusiastically, saying that Abdullah is enthusiastic and

energetic.

¶6. (SBU) Regarding the economic dialog, Gaitri said that

GOI has an economic agenda paper to share with the U.S., and

noted Deputy Chairman Ahluwalia would plan to go as a sherpa

to G-20 and G-8 meetings in Pittsburgh. She suggested that a

meeting to set a mutual agenda could be scheduled during that

time. Blake pointed out that the economic dialog receives

the input of the CEO's Forum, and informed Gaitri that the

U.S. CEO's Forum is being restructured with a set of criteria

and an application process for members. The forum will not

be reconstituted in time for the UN General Assembly session

in September, but the U.S. goal is to be ready for

substantive meetings on the sidelines of the PMs visit.

Gaitri agreed with the proposed timeline.

¶7. (SBU) In the education dialog, Blake suggested that

Indian Education Minister Kapil Sibal reach out to U.S.

Secretary of Education Arne Duncan and schedule a visit. It

would be best if Kapil went to the U.S. first, followed by

alternating visits, said Blake. Gaitri pointed out that

before he was Secretary, Duncan had reached out to GOI to

bring Indian math and science teachers to Chicago schools, a

project that is now under way. As a deliverable for

President Obama's visit, Gaitri suggested setting up

partnerships between U.S. and Indian universities.

NEW DELHI 00001535 002 OF 002

¶8. (SBU) Gaitri conveyed that the Indian Parliament would

like to invite the First Lady to participate in the launch of

a new education campaign in New Delhi. The Foreign Minister

and Foreign Secretary have agreed that Kapil may invite her.

Gaitri said that the MEA would share the information with the

U.S. Embassy.

¶9. (U) Assistant Secretary Blake did not have the

opportunity to clear this message.

WHITE

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Cable reference id: #09NEWDELHI1223

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Reference id aka Wikileaks id #211867 ?

Subject U/s Burns And Ahluwalia Chart Next Steps In The Bilateral Economic Agenda

Origin Embassy New Delhi (India)

Cable time Fri, 12 Jun 2009 14:21 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/06/09NEWDELHI1223.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

VZCZCXYZ0000

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DE RUEHNE #1223/01 1631421

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FM AMEMBASSY NEW DELHI

TO RUEHC/SECSTATE WASHDC IMMEDIATE 6975

RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE

RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE

RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE

RHEHNSC/NSC WASHDC

RUCNDT/USMISSION USUN NEW YORK 8167

RUEHGV/USMISSION GENEVA 8404

RUEKJCS/JOINT STAFF WASHDC

INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

Hide header

UNCLAS NEW DELHI 001223

STATE FOR SCA/INS JASHWORTH AND SCA/RA MURENA

USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN

DEPT PASS TO USTR FOR SOUTH ASIA - CLILIENFELD/AADLER

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - MNUGENT

SENSITIVE

SIPDIS

E.O. 12958: N/A

TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], ETRD [Foreign Trade], EAGR [Agriculture and Forestry], PREL [External Political Relations], PGOV [Internal Governmental Affairs], PTER [Terrorists and Terrorism], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: U/S BURNS AND AHLUWALIA CHART NEXT STEPS IN THE BILATERAL

ECONOMIC AGENDA

¶1. (SBU) Summary: Under Secretary of State for Political Affairs

William Burns met with Planning Commission Deputy Chairman, and

close economic adviser to the Prime Minister, Montek Singh Ahluwalia

on June 11 to discuss proposals for moving the economic relationship

forward. They focused on ways to expand collaboration in the areas

of education, agriculture, and renewable energy. Ahluwalia

suggested that education have its own separate forum, while

agriculture be placed within the CEO Forum for maximum private

sector participation. He encouraged more US participation in

India's renewable energy sector, especially solar electricity.

Burns and Ahluwalia reaffirmed the value of the CEO Forum and how to

reconstitute it to enable broader and deeper bilateral ties. They

looked to the September G-20 meeting to contain protectionism and

considered how to re-start Doha Round talks and move on bilateral

investment negotiations. End summary.

Strengthening the Relationship

------------------------------

¶2. (SBU) Under Secretary of State for Political Affairs William

Burns met with Planning Commission Deputy Chairman Montek Singh

Ahluwalia to gain his perspective on re-engaging on the bilateral

economic agenda. Under Secretary Burns first refuted claims that

the US was not focused on India, noting that President Obama's

administration had enormous enthusiasm for strengthening the

structure of the relationship and building on what has already been

accomplished. Ahluwalia immediately assured Burns that his

government was confident of the US's engagement with India and that

the Prime Minister's positive views towards the bilateral

relationship were in no way diminished. What has changed, Ahluwalia

opined, was the external economic environment, which required

broadened areas of economic engagement.

Education Excellence Through Collaboration

-----------------------------------------

¶3. (SBU) Ahluwalia raised education as a particular area for

enhanced collaboration between India and the US. He stated that the

two governments had started some initial discussions under the CEO

Forum, but Ahluwalia said his impression from the new Human Resource

Development (HRD) Minister Kapil Sibal was that Sibal wanted to

rewrite the bilateral agenda on education to focus on three areas:

expansion, inclusion and excellence. The Deputy Chairman said that

expansion and inclusion were already being implemented, but that

raising the quality of education was going to be the "tough part."

At least part of the solution lie in promoting Indian universities

which offer a global experience through some use of visiting

faculty, joint programs, or "twinning". (Note: Ahluwalia has

previously described this to American officials as a relationship

between an Indian and American university where students from either

institution spend one year at each university. End note.)

¶4. (SBU) Ahluwalia suggested the best way to move forward on

education was to have a separate bilateral forum on education, which

Under Secretary Burns noted was floated by HRD Minister Kapil Sibal

as well. Ahluwalia stated he had been in contact with US faculty of

Indian origin, who are interested in pursuing new types of

collaboration with Indian universities. But, Ahluwalia cautioned,

there is a lack of clarity about which among a "multiplicity of

models" would be best for US and Indian universities. Burns told

Ahluwalia that Sibal had mentioned certain legislative changes that

were required (Sibal meeting covered septel). Hazarding that he was

perhaps talking out of turn, Ahluwalia asserted that he was not very

happy with the Foreign University Bill and did not think that

legislative changes were needed (Note: The draft Bill would allow

foreign campuses in India. End note.) To move forward, Ahluwalia

suggested that a new bilateral forum identify 8-9 different

educational collaboration models and then determine where US and

Indian interest was strongest. His impression was that American

universities do not want to set up entire campuses, but rather

facilities where they could take 30-40 students for a semester.

Under Secretary Burns observed that some US universities in recent

years have set up in different countries, but Ahluwalia replied that

such models would not work in India because they are funded by the

host country, which in India would be perceived as preferential to

the foreign university. Categorically, Ahluwalia stated that the

"Dubai model" would not work. Burns returned to the creation of a

forum to explore the potential and agreed with Ahluwalia's

suggestion that it be a standalone forum, rather than a part of the

CEO Forum or other dialogue.

CEO Forum Useful, Needs New Members

-----------------------------------

¶5. (SBU) Turning to the CEO Forum, Ahluwalia noted that President

Obama and Prime Minister Singh had agreed to continue it. Ahluwalia

described the Forum as very useful, where both US and Indian

government interests were "consensually" served. However, the

Deputy Chairman told Under Secretary Burns that he thought it should

be reconstituted to move away from the original "finance heavy"

membership and had told Larry Summers this as well. Ahluwalia

suggested that perhaps during Secretary Clinton's planned visit to

India, she could announce the new membership of the CEO Forum. He

recommended companies that had investments in India, as well as

those in the technology and energy sectors.

Working Together on Renewable Energy and Agriculture

--------------------------------------------- -------

¶6. (SBU) Under Secretary Burns next explained that Secretary

Clinton wanted to unveil new areas of engagement and suggested

education and agriculture. Ahluwalia agreed to both, but also

suggested that renewable energy could be another subject for

collaboration. He stated that his government had developed an

Action Plan for Climate Change that would set out domestic goals

independent of deliberations in international fora. While many of

the relevant issues are addressed under the Energy Dialogue,

Ahluwalia suggested that the two countries re-examine possibilities

for joint research, especially in solar technology. The Deputy

Chair noted that the Clinton Foundation was working with the state

governments of Gujarat and Rajasthan on large solar thermal power

stations. For its part, the central government was devising a

National Solar Plan that would incorporate a declining subsidy in

the belief that new technologies would lower costs over time.

Ahluwalia urged that US industry be encouraged to partner with

companies in India to build a solar industry. Assistant Secretary

Blake noted that the recent stimulus package and proposed budget

included strong incentives for the development of solar

technologies.

¶7. (SBU) Turning to agriculture, Ahluwalia frankly observed that

was one area of bilateral engagement that had not worked well, save

the scholarships and faculty exchanges, which he praised and

encouraged further expansion. He saw the current structure as

limited to where Indian government institutions engaged American

universities, but where a critical commercial element was lacking.

Assistant Secretary Blake informed Ahluwalia that several US private

sector companies had expressed interest in such commercial

endeavors. Ahluwalia welcomed that, stating that the US private

sector needed to be matched with Indian private sector companies.

The difficulty, Ahluwalia perceived, was that the entry of private

companies into Indian agriculture was very nascent, but still the

need was obvious for development of private sector cold chain

systems, food processing and seed production. The Planning

Commission Deputy underlined that the agriculture research is still

important, but it cannot be the lead in this joint effort on

agriculture. He suggested that an agriculture subgroup be made part

of the CEO Forum, where the private sector could lead it.

Global Economy and Trade

-----------------------

¶8. (SBU) Burns then asked for Ahluwalia's assessment of the global

economy. He started by identifying "the good news": the world's

economic managers have averted catastrophe and the global economy is

not falling off a cliff and may even turnaround in the second half

of 2009. However, he perceived continuing uncertainty about when

and how much recovery would take place over the next few years. For

India's growth, he said they had achieved 6.7% for their last fiscal

year, which was better than other countries, but below India's

recent 9% growth. With the proper stimulus, he maintained that

India could hit 7% growth in the coming year. What was important to

consider, Ahluwalia continued, was whether countries' growth was

constrained by external demand factors or by supply factors. It is

a problem for developing countries if their growth has been driven

by external demand, for the global economy will only recover to

modest growth rates and thus subdued consumer demand. For India, he

perceived a supply constraint that could be addressed through

increasing productivity, skill training and literacy, and boosted by

India's high savings rate.

¶9. (SBU) Ahluwalia warned, however, that global economic recovery

is predicated on the G-20 containing protectionism. He asserted

that for India to remain open to trade, others must do so as well.

Under Secretary Burns agreed that protectionism was a critical issue

and expected that countering it would be a continuing theme at the

G-20 talks in September. He then asked Ahluwalia what he thought of

the fate of the Doha Trade Round. Ahluwalia claimed that the global

trade talks needed to be restarted as a signal on global openness,

to which Burns agreed. Ahluwalia opined that India has been "bad

mouthed" in the US for its stance in the WTO, while the degree to

which the gap between the different positions has been narrowed has

been overlooked. The Deputy Chairman suggested that the talks be

restarted with emphasis on how much the gap between differences has

been narrowed. He also suggested that if President Obama could

obtain Trade Promotion Authority, that would be a significant sign

to the Doha participants of the US' commitment to resolution.

¶10. (SBU) Finally, Ahluwalia asked about the status of proposed

investment treaty negotiations. When told that US proposed dates

were awaiting Indian confirmation, Ahluwalia offered his sense of

the main difference in the two countries' approaches. For India, he

said that it would be difficult to accept the US requirement of

national treatment of firms prior to entry, since currently India

provides only post-entry national treatment. His understanding is

that the US has suggested that it be done on an exclusion basis that

explicitly sets aside certain sectors from the requirement, but

Ahluwalia worries that if India concedes to this, then other

countries will ask for the same treatment. That would effectively

get rid of caps in foreign investment in various sectors, which will

be difficult to do. Under Secretary Burns closed the meeting by

welcoming the start of negotiations as another good signal of

substantive economic engagement between India and the US.

¶11. (U) Participants: Under Secretary of State William Burns,

Charge Peter Burleigh, Assistant Secretary for South and Central

Asia Robert Blake, Dr. Derek Chollet - Principal Director, Policy

Planning Office, Department of State, P Special Assistant Tom West,

Planning Commission Deputy Chairman Montek Singh Ahluwalia, Ministry

of External Affairs Joint Secretary (Americas) Gaitri Kumar, and

Econoff (notetaker).

¶12. (U) Under Secretary Burns' office cleared this cable.

BURLEIGH

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Cable reference id: #09NEWDELHI1099

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #209282 ?

Subject Government Signals Performance Is Paramount In Key Economic And Development Ministries

Origin Embassy New Delhi (India)

Cable time Fri, 29 May 2009 14:32 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/05/09NEWDELHI1099.html

References 09NEWDELHI1062

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

VZCZCXRO5957

OO RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW

DE RUEHNE #1099/01 1491432

ZNR UUUUU ZZH

O 291432Z MAY 09

FM AMEMBASSY NEW DELHI

TO RUEHC/SECSTATE WASHDC IMMEDIATE 6776

RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE

RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE

RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE

RUEHRC/DEPT OF AGRICULTURE WASHDC IMMEDIATE

RHEHNSC/NSC WASHDC

RUCNDT/USMISSION USUN NEW YORK 8102

RUEHGV/USMISSION GENEVA 8359

RUEKJCS/JOINT STAFF WASHDC

INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

Hide header

UNCLAS SECTION 01 OF 07 NEW DELHI 001099

STATE FOR SCA/INS JASHWORTH AND SCA/RA MURENA

USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN

DEPT PASS TO USTR FOR SOUTH ASIA - CLILIENFELD/AADLER

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - MNUGENT

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

SENSITIVE

SIPDIS

E.O. 12958: N/A

SUBJECT: GOVERNMENT SIGNALS PERFORMANCE IS PARAMOUNT IN KEY ECONOMIC

AND DEVELOPMENT MINISTRIES

REF: NEW DELHI 1062

¶1. (SBU) Summary. The Congress-led United Progressive Alliance

(UPA) announced the remainder of its 79-member council of ministers

on May 28, who join the earlier round of ministers announced on May

22 (see reftel). The week-long process of selection seems to have

placed more weight on capable and committed administrators and

supporters of Prime Minister Singh's policies, rather than the more

usual coterie of party and Gandhi loyalists. Many have construed a

comment by Congress Party President Sonia Gandhi to signal that

Cabinet ministers must succeed in the government's infrastructure

and social sector goals, or expect to be replaced. Indeed, the

exclusion of several senior and loyal party members who were

perceived as nonperformers can be taken as the first proof of that

resolve. Press is interpreting the assignments as designed to

maximize the Prime Minister's imprint on economic policy goals and

outcomes. If successful, that bodes well for US economic and

commercial interests. However, it may be worthwhile to heed recent

contacts who warn that reform advocacy will only be welcomed where

it is tied to concrete, direct benefits for struggling Indians.

Efficiency and openness per se will not be winning arguments, but

tangible job creation and improved service delivery in

infrastructure and the social safety net will carry the day. End

summary.

Second Time Around, Performance Matters Most

------------------------------------------

¶2. (SBU) In the UPA's last term, allies' demands within a fragile

coalition and party loyalty were larger determinants in portfolio

assignments, leading to significant underperformance in ministries

key to improving livelihoods, including roads, power, health, and

education. The ministerial appointments announced late on May 28

suggest, encouragingly, that effectiveness is now the more important

factor, with PM Singh's input seen more clearly in the allocation of

portfolios. Singh has reportedly told Congress Members of

Parliament that "business as usual" won't do. Notably, several

Gandhi loyalists are out this time around - Arjun Singh, who was

Minister for Human Resource Development (HRD), HR Bhardwaj, and

octogenarian Sis Ram Ola, amid perceptions that they held back their

ministries. Three senior Congress leaders, seen as take-charge

people who have the PM and Sonia Gandhi's support, have been

assigned key social and infrastructure ministries. They are former

Jammu & Kashmir Chief Minister Ghulam Nabi Azad at Health, Kapil

Sibal at HRD, and Kamal Nath at the Roads and Surface Transport

Ministry. These and the other assignments are credible first steps

towards the UPA's delivering on improving living standards, physical

and human infrastructure development, and job creation. Most of the

key economic ministries, along with implications for the US, are

noted below.

Ministry of Finance - Pranab Mukherjee

--------------------------------------

¶3. (SBU) Pranab Mukherjee was chosen as Finance Minister on May 22,

in the government's first tranche of senior ministers (see reftel).

He has been acting Finance Minister since January, when Prime

Minister Singh underwent bypass surgery. Key priorities for the

Finance Minister will be passage of the budget (septel), returning

India to a higher growth trajectory, and reining in the fiscal

deficit. The Finance Ministry will have to decide whether it can

afford another fiscal stimulus as well as examine how effective the

stimulus packages introduced so far have been. The fiscal

constraint may be partially mitigated by re-starting partial

divestment of public sector companies. (Note: Government figures

released on May 29 put GDP growth for the April 2008-March 2009

fiscal year at 6.7%, well within government estimates and above most

economists' forecasts. End note.) Mukherjee has also told press

that he will focus on inclusive growth and sees reforms as the way

to stimulate the economy.

¶4. (SBU) Contacts have told Econoffs that since Chidambaram moved

over to the Home Ministry in December, Planning Commission Deputy

Chairman Montek Singh Ahluwalia has provided the substantive policy

input for the government's response to the global finance crisis and

the economic downturn. There is no word yet that this will

NEW DELHI 00001099 002 OF 007

continue, but Post judges it likely, given Mukherjee's limited

economic policy experience with India's integration with the global

economy. Contacts describe Mukherjee as an astute and capable

administrator, who is most interested in improving government

performance. As such, he is viewed as agnostic on reforms, rather

than an ardent reformer. US interlocutors may find him more open to

dialogue, but not easily persuaded on the merits of liberalization

without specifically tying it to concrete results in "inclusive

growth" objectives such as more roads, electricity, or schools.

Overall, Mukherjee brings with him vast experience in government,

uncanny political instincts and uncommon intellectual ability.

¶5. Bio: 78-year old Mukherjee, from West Bengal, is the most senior

UPA Cabinet Minister. Mukherjee is frequently tagged in the press

as the country's de-facto Prime Minister as he chairs Cabinet

meetings in the Prime Minister's absence. Mukherjee was at the

forefront of the U.S.- India Civil Nuclear Deal as the Foreign

Minister from 2006-09. He is one of the Congress Party's most

highly-regarded stalwarts and strategists, and a close advisor to

Sonia Gandhi. He has favored stronger ties with the U.S., including

more economic and trade cooperation.

Ministry of Commerce and Industry - Anand Sharma

--------------------------------------------- ---

¶6. (SBU) In a move that surprised many commentators and contacts,

former Minister of State for External Affairs, Anand Sharma, was

elevated to Minister of Commerce and Industry (MOCI) on May 28.

Some industry officials were not surprised that former MOCI Minister

Kamal Nath was replaced, given political signals in recent days, but

deemed the move to bring in Sharma in his stead as 'unexpected'.

Sharma is seen by some as close to the Prime Minister, given that he

played an occasional role as an envoy and troubleshooter in helping

to advance the PM's agenda on civil-nuclear and counter

proliferation issues. Indeed, some media speculated that Nath's

tough postures in multilateral forums, particularly the WTO Doha

Round, may have undermined his position with PM Singh, with the

latter feeling better placed to remove Nath after a strong election

outcome. Embassy officials who have met Sharma in different

settings describe him as a consummate diplomat, a quick study,

polished, and not drawn to the limelight, unlike his showman

predecessor.

¶7. (SBU) Foreign mission contacts in Delhi told Econoff May 29 that

they discussed the possible attendance of MOCI Minister Sharma at

the Cairns Group Ministerial in Bali, June 7-9, with senior MOCI

bureaucrats. The Cairns meeting will be one of the first

multilateral meetings where WTO members plan to reengage on the Doha

Round agenda in the wake of the Indian and U.S. elections. The

senior MOCI bureaucrats confirmed that they will recommend that

Sharma attend the meeting. Sharma does not have sufficient clout to

change India's substantive positions in the WTO Doha Round; that

will require consensus within the government. However, Post expects

Sharma to avoid the public posturing on behalf of the developing

world that Nath did, in favor of a more constructive,

consensus-seeking approach that burnishes India's image as a global

economic player.

¶8. Bio: The 56-year old veteran Congress official Anand Sharma is

a lawyer by profession. He was appointed Minister of State for

External Affairs in February 2006. As a former Youth Congress

leader, Sharma was the face of the Congress Party when he was its

spokesman for several years leading up to his MEA appointment. In

addition to his experience in external affairs, Sharma is conversant

with parliamentary and legislative procedures and international law.

He has also organized several major international conferences,

including the Non-Aligned Movement (NAM) Youth Conference in 1985.

Although his work with NAM might give pause, Sharma is seen as a

pragmatist.

Ministry of Agriculture - Sharad Pawar

--------------------------------------

¶9. (SBU) Pawar was reappointed Minister of Agriculture and will

immediately confront certain key decisions that have to be made on

government grain stocks and minimum support prices (MSP). High MSPs

NEW DELHI 00001099 003 OF 007

in the past few seasons, especially for wheat and rice, along with

good monsoon rains, have underpinned large crops. Much of this

harvest has been procured by the government, with 33 million tons of

wheat and 16 million tons of rice projected in stocks by July 1.

Faced with a glut of wheat, in particular, Pawar will have to decide

whether to feed the stocks into the broken public distribution

system or to export. A decision to export wheat would require a

costly subsidy since the domestic MSP-supported price is higher than

the internationally-traded wheat price. In addition to adding to

India's near-term fiscal deficit, an export subsidy would likely

violate WTO rules.

¶10. (SBU) Longer-term, Indian agriculture faces a number of

intertwined economic and political challenges revolving around the

need to improve agriculture productivity and growth. If the GOI is

to make progress on raising agricultural productivity, Pawar will

have to focus during his tenure on agricultural research and

education, rationalizing the costly fertilizer subsidy and the MSP,

undertaking marketing reforms, addressing futures trading in

commodities, and finding a vehicle to provide cheap credit to

farmers without creating moral hazard. Pawar has in recent days

stated that he is looking at a soft-credit program to enhance farmer

borrowing capacity.

¶11. Bio: Pawar, 69 years old, began his career in politics early,

becoming president of the State Youth Congress at 24. In 1978, he

became the Chief Minister of Maharashtra at the age of 38. Mr.

Pawar completed two more terms as Chief Minister before being

appointed India's Defense Minister in June 1991. An additional

stint as Maharashtra CM and as an opposition leader in Parliament

followed. Pawar was appointed Union Minister of Agriculture in

2004.

Ministry of Human Resource Development (HRD)

- Kapil Sibal

----------------

¶12. (SBU) Educators across India are today breathing a sigh of

relief at the appointment of Kapil Sibal, 60, as Minister of Human

Resource Development. A member of Parliament from Delhi, Sibal

served in the previous government as Minister of Science and

Technology where he served effectively and was a regular Mission

interlocutor. Said to be Rahul Gandhi's personal choice for this

Ministry, Sibal's appointment represents a recognition by the

government that it is time to end the practice during both Congress

and BJP-led governments of using the position as a holding spot for

the PM's internal rivals, on the assumption they could never succeed

in office.

¶13. (SBU) The lack of long-expected forward movement on education

reform during PM Singh's first term was a major sore point for many

of the Congress Party's urban supporters, even as the government

raised education outlays in recent years. Mission believes that

Minister Sibal, who has traveled many times to the U.S., will be an

active interlocutor in our bilateral educational dialogue. In the

past, Sibal has told senior USG visitors that he supports the

opening of India's education market to international participation,

consistent with the intent of legislation that has been stalled in

Parliament by his predecessor for three years. Although many

questions remain about the conditions under which U.S. educational

service providers may enter the Indian market, forward movement with

these reforms represents an important litmus test for urban Indians

of the UPA's desire to modernize and expand India's creaky education

system. India's teachers and administrators are hopeful that with

Sibal's appointment, things will finally get moving.

Ministry of Civil Aviation (MOCA) - Praful Patel

--------------------------------------------- ---

¶14. (SBU) As a Minister of State with an independent charge, Praful

Patel is back in the Union Cabinet with the same portfolio. He

resumes charge of the aviation sector at a time when it is

undergoing a deep crisis globally, with estimates that the Indian

aviation industry alone accounts for almost one-third of the global

losses. Following his appointment, Patel told reporters that his

top priority will be focusing on state-run carrier Air India which

has been underperforming and continues to face stiff competition

from private carriers. Since the Air India and Indian Airlines

NEW DELHI 00001099 004 OF 007

merger in 2007, Patel has faced criticism for the huge losses

incurred by the airlines. At present, Air India is estimated to be

grappling with losses of nearly $800 million. The ministry is

likely to consider a new proposal for Air India which will include a

larger restructuring plan, equity infusion and a soft loan.

¶15. (SBU) Patel, an industrialist turned politician, has been

credited for bringing a business-like approach to the aviation

sector, including reforms to liberalize the sector, to modernize the

aviation infrastructure, and to secure new aircraft for Air India

and Indian Airlines. His reappointment is viewed as affirmation of

his solid performance under the previous UPA government. Patel will

now face the tremendous challenge of turning around the depressed

aviation sector and moving ahead with modernization plans for the

nation's airports. One of the ministry's top priorities is said to

be the implementation of a new civil aviation policy, formulated

nearly three years ago, which among other matters allows foreign

airlines to acquire up to 49% stake in domestic carriers. Patel has

been a strong supporter of closer U.S.-India ties; he signed the

historic bilateral Open Skies Agreement in 2005 and the Aviation

Cooperation Program in 2007, a public private partnership to assist

in developing India's aviation infrastructure.

¶16. (SBU) Bio: Praful Patel, 52, is a young and dynamic leader of

the Nationalist Congress Party (NCP). He has been a member of the

Rajya Sabha from Maharashtra since April 2000 and is a close

confidant of NCP chief Sharad Pawar. Patel serves as party

treasurer and spokesman. Patel is a member of the U.S-India

Parliamentary Forum, a group of Indian parliamentarians interested

in stronger US-India ties. Patel is forward leaning on reforms and

has been supportive of liberalization of India's civil aviation

sector. He is credited with allowing increased competition into the

sector with the entry of low cost carriers. Patel helped to expand

the fleets of Air India and Indian Airlines with large aircraft

orders.

Ministry of Road Transport and Highways

- Kamal Nath

----------------------------------------

¶17. (SBU) Kamal Nath, previously Minister for Commerce and

Industry, was named Minister of Road Transport and Highways with

Cabinet rank on May 28. His appointment is being cast by the GOI as

putting a Congress Party heavyweight with long standing

administrative experience in charge of key infrastructure policies.

Nath told reporters that the "old regulatory framework" overseeing

the transportation sector will be modernized to make it "practical".

He said his first priority will be to examine the major impediments

in implementing plans for infrastructure development in the country

and then introduce new models for reworking the regulatory policy

framework for roads.

¶18. (SBU) Major challenges facing Nath will include raising funds

for the sector; dealing with the liquidity crunch under the current

global recession which has delayed the financial closure of key

projects under the National Highway Development Plan (NHDP);

encouraging private investment and confidence in state-level public

private partnership projects; strengthening institutional capacity;

and helping ease land acquisition clearances. While some contacts

were surprised by the appointment of Nath to the Road Ministry, they

noted that his tough postures at multilateral forums as Commerce

Minister may have led to the change in portfolios. Nath is viewed

as an able administrator and is expected to help turn around the

road and transport ministry to deliver on major infrastructure

projects to stimulate the economy.

¶19. (SBU) Bio: While former head of MOCI, Nath was responsible for

major trade policy initiatives, bilateral and multilateral trade

negotiations, and domestic industrial policy. During his tenure, a

comprehensive Foreign Trade Policy (2004-09) was announced outlining

a coherent roadmap with a twin focus on exports as well as

employment. India's merchandise export growth rate increased during

the first four years of his tenure, before turning negative in the

past several months with the global slowdown. As MOCI, Nath pursued

major bilateral trade initiatives with ASEAN, Japan, the EU, and

within South Asia. On the WTO Doha Round, Nath has been a vocal

proponent of differential treatment for developing countries and a

leader - along with Brazil - of the G20 in the trade talks. Many

observers place the blame for the July 2008 collapse of a crucial

NEW DELHI 00001099 005 OF 007

WTO Ministerial meeting on Nath's unwillingness to reach a

compromise with the U.S. on the level of protection to be afforded

developing country farmers.

Ministry of Power - Sushil Kumar Shinde

-----------------------------------------

¶20. (SBU) Sushil Kumar Shinde, 67, retains his position as Minister

of Power, which he started on January 29, 2006. The Ministry of

Power oversees one-third of India's installed power generation

capacity and all inter-state power transmission through its

centrally-owned companies; and it affects inter-state policy related

to the state-owned and privately-owned power stations, that are 51%

and 15% of total capacity respectively. The separate Department of

Atomic Energy handles nuclear power (3%). With coal-fired thermal

power accounting for 65% of its power production, Shinde's ministry

and the power sector make up a large percentage of India's carbon

dioxide emissions, and thus any GOI climate change concerns must

take into account his responsibility for supplying electricity for

India's economic development. Shinde is tasked with achieving

India's ambitious targets of expanding power generation capacity by

over 50% by 2012 and he sees expansion of coal-fired capacity

(two-thirds of the addition) as the mainstay for growth through

2032.

¶21. (U) Bio: Sushil Kumar Shinde is a Dalit from a poor cobbler's

family in Maharashtra, a sub-inspector who studied law. He won an

assembly seat and rose through state Congress Party ranks to be

Finance Minister and then Chief Minister of Maharashtra (2003-04),

and held the non-political post of Governor of Andhra Pradesh for a

year before becoming Power Minister.

Ministry of Petroleum and Natural Gas

(MPNG) - Murli Deora

---------------------------------------

¶22. (SBU) Murli Deora, 72, continues as Minister of MPNG, which he

became in February 2006, replacing Mani Shankar Aiyar, who was seen

as acting too independently on India's hydrocarbon-related foreign

activities, including in potential deals with Iran. Deora has seen

Iran as an unreliable potential partner, such as in the proposed

Iran-Pakistan-India natural gas pipeline. With strong connections

in both the Indian parliament and the U.S. Congress, Deora was an

important behind-the-scenes player and interlocutor for the

U.S.-India Civil Nuclear Initiative negotiations. India now imports

about 26% of its natural gas and 78% of its crude petroleum

consumption (with about 10% re-exported as refined products) and is

actively seeking equity in foreign oil and gas reserves. The

MPNG-controlled ONGC Videsh Ltd has been a potential partner in

proposed oil and gas deals with Iran, but none has yet come to

fruition.

¶23. (SBU) MPNG oversees government-owned companies responsible for

the majority of India's domestic petroleum and natural gas

production, refining, transportation and marketing, as well as its

overseas exploration, production and services activity through ONGC

Videsh. Deora says he supports decontrol of refined oil product

prices, a politically delicate position, which however could end the

need for large subsidies to GOI-owned refining and marketing

companies and could attract private sector participation. MPNG does

not control private companies like Reliance Industries Ltd (RIL),

which will soon produce new natural gas that doubles India's output,

but which is also a past and potential source of diesel and gasoline

exports to Iran.

¶24. (U) Bio: Murli Deora, prior to becoming MPNG Minister, was a

member of the Upper House (Rajya Sabha) of the Indian Parliament,

and has represented the prestigious South Mumbai constituency in the

Lok Sabha for three consecutive terms in 1984, 1989, 1991, and again

in 1998. Deora is the Congress Party's liaison with corporate

funding sources. He was previously elected Mayor of Mumbai with the

highest ever majority and was the Chief of Mumbai Region of Indian

National Congress for a record period of 22 years. He graduated in

Economics from the Univ. of Mumbai.

Ministry of New and Renewable Energy (MNRE) -

Farooq Abdullah

NEW DELHI 00001099 006 OF 007

---------------------------------------------

¶25. (SBU) Farooq Abdullah, 72, of the National Conference Party and

from Kashmir's predominant political family, was appointed MNRE

Minister. MNRE is responsible for policy related to renewable

energy, including wind, solar, bio-mass, and small hydropower (under

25 Megawatts capacity), but it does not directly supervise any fuel

or power production from these sources, which is mainly run by the

private sector. The MNRE is promoting feed-in tariffs and renewable

portfolio standards (RPF) and it is drafting the "Solar Mission"

policy aimed at incentives for developing and deploying photovoltaic

and solar thermal power. MNRE has been cooperative with the

U.S.-India Energy Dialogue's New Technology and Renewable Energy

Working Group, including with the U.S. Department of Energy's Office

of Energy Efficiency and Renewable Energy in a wide variety of

programs, in addition to recently signing an MOU on Cooperation in

the Development of Bio-fuels. MNRE has also supported several

recent USDOC trade delegations for clean and renewable energy,

including the solar mission in March 2009. To date, renewables

account for only 2% of electricity production. The GOI promotes

renewables more as way to help meet the power demand-supply gap and

to deliver energy to remote areas, and less as a way to mitigate

greenhouse gas emissions.

¶26. (U) Bio: Farooq Abdullah was elected MP from Kashmir's summer

capital Srinagar in 1980 and succeeded his father as Chief Minister

succeeded on his father's death in 1982. He returned to power in

1987 and forged an alliance with Congress. After years of direct

Presidential rule, he again became the Chief Minister of Jammu and

Kashmir in 1996. His son Omar Abdullah is currently Chief Minister

of Jammu and Kashmir. His daughter Sara is married to Sachin Pilot,

the new Minister of State the Ministry of Communications and

Information Technology.

Ministry of Communications and

Information Technology (MCIT)- A. Raja

-------------------------------------

¶27. (SBU) Mr. Andimuthu Raja, 46, continues as MCIT Minister, which

he became in May 2007, after the ruling United Progressive

Alliance's coalition partner, the Tamil Nadu-based Dravida Munnethra

Kazhagam (DMK)Party forced out Minister Dayanidhi Maran, due to an

intra-DMK conflict. The MCIT is divided into the Department of

Telecom (DOT) and Department of Information Technology (DIT).

MCIT/DIT has overseen India's boom in information technology, with

India's world-class software technology and data-processing services

contrasting with its very low rate of computer and internet

penetration for the population as a whole.

¶28. (SBU) MCIT/DOT (Telecom) has presided over India's phenomenal

growth in mobile telephony, both by directly overseeing GOI-owned

MTNL and BSNL, and by allocating telecom licenses and radio spectrum

for second generation (2G: voice) and now third generation (3G:

data/video/voice) mobile services to private Indian and foreign

companies. Thus, the MCIT's authority creates a possible

susceptibility to corruption in a booming competitive private market

dependent on GOI licenses and allocations. Raja is expected to move

quickly in the long-awaited open auctions for 3G spectrum -- an act

welcomed by foreign participants. In his first term, Raja was

viewed positively for his support of raising the foreign direct

investment (FDI) ceiling to 74% and for approval of U.S. companies'

long distance licenses. However, he faced intense criticism as

"Spectrum Raja" for favoritism in his handling of 2G spectrum

allocation policy and for delays in the controversial 3G auction

policy. The Wall Street Journal India partner Live Mint's editorial

on May 29 reported that the Prime Minister had allegedly wanted Raja

out of the new cabinet, and said that Raja's reappointment "cancels

out" the PM's "positive signal" of removing another

politically-connected minister who had caused "damage."

¶29. (U) Bio: Andimuthu Raja, a 46-year old Dalit lawyer, and Member

of Parliament from Nilgiris, Tamil Nadu was groomed into a

politician by the late Murasoli Maran and is now a loyalist of

Rajathi Ammal, third wife of the DMK party Chief M Karunanidhi. He

is known for his oratorical skills. Raja held positions as Minister

of State for Rural Development and for Health and Family Welfare,

NEW DELHI 00001099 007 OF 007

and he was elevated to cabinet rank as Minister of Environment and

Forests in 2004. He is entering the Lok Sabha for the fourth time

in a row since 1996. A Raja is one of DMK's propaganda

secretaries.

A Rose by Any Other Name: New Name for Reforms?

--------------------------------------------- --

¶30. (SBU) Even amidst the positive signals coming from Congress'

stronger Parliamentary position and Ministerial choices, several

contacts this past week have mentioned that advocacy of reforms

should be handled carefully, noting that it is wrong to assume that,

because the Left is out of the way, that the government will

wholeheartedly embrace reform. Dr. Subir Gokarn, Senior Economist

for Standard & Poor, Asia, told an industry seminar on May 28 to

view the UPA's re-election mandate with caution. Calls for reform

should not be presented as "reform for reform's sake" but should be

translated into "tangible outcomes for inclusive growth." Dr.

Saumitra Chaudhury, member of the Prime Minister's Economic Advisory

Council, told Econoff on May 27 that reforms needed a new name,

comparing it (with only small irony) to US Treasury's renaming of

toxic assets as legacy assets. Chaudhury asserted that reforms in

India are seen as being pushed predominantly by those who most

benefit from them. Instead of reforms, he suggested calling

proposed changes as something like "home improvements," that would

address the new government's heightened focus on better service

delivery in roads, power, schools, and teachers.

Comment

-------

¶31. (SBU) While Post still advises tempered expectations on making

headway on key bilateral economic interests, the UPA this week sent

an encouraging message with its selection of ministers for key

economic and development posts. The Prime Minister seems to have

convinced party leader Sonia Gandhi that performance matters in

previously marginalized ministries, such as roads, health, and

education. Given the low health and education indicators that

prevail in India, these ministerial appointments are a good first

step towards improving livelihoods in India and fulfilling India's

potential as a sustained, inclusive, high growth economy, as well as

expanding opportunities for mutual, bilateral trade and investment.

The next important move will be to act quickly and decisively - the

first 18-24 months of a new Parliamentary session are the best

opportunity for policies that have longer-term gains but

shorter-term costs.

BURLEIGH

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Cable reference id: #09NEWDELHI878

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #205169 ?

Subject New Delhi Weekly Econ Office Highlights For The Week Of April 27 To May 1, 2009

Origin Embassy New Delhi (India)

Cable time Fri, 1 May 2009 13:06 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/05/09NEWDELHI878.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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RUCPDOC/DEPT OF COMMERCE WASHDC

RHEBAAA/DEPT OF ENERGY WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RULSDMK/DEPT OF TRANSPORTATION WASHDC

RHMFIUU/FAA NATIONAL HQ WASHINGTON DC

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UNCLAS SECTION 01 OF 02 NEW DELHI 000878

SENSITIVE

SIPDIS

STATE FOR SCA/INS AND EEB

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD

DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR

DEPT PASS TO USTR CLILIENFELD/AADLER/CHINCKLEY

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

USDA PASS FAS/OCRA/RADLER/BEAN/FERUS

EEB/CIP DAS GROSS, FSAEED, MSELINGER

E.O. 12958: N/A

TAGS: ECON [Economic Conditions], EAGR [Agriculture and Forestry], EAIR [Civil Aviation], ECPS [Communications and Postal Systems], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], EMIN [Minerals and Metals], ENRG [Energy and Power], EPET [Petroleum and Natural Gas], ETRD [Foreign Trade],

BEXP [Trade Expansion and Promotion], KBIO, KIPR [Intellectual Property Rights], KWMN [Women Issues], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF

APRIL 27 TO MAY 1, 2009

NEW DELHI 00000878 001.2 OF 002

¶1. (U) Below is a compilation of economic highlights from Embassy

New Delhi for the week of April 27 to May 1, 2009, including the

following:

-- India Signals Plans to Purchase IMF Bonds

-- Slowdown in Mergers and Acquisitions

-- Regulator Issues Notices to 12 Accounting Firms

-- India Considering Separate Standards for Medical Devices

India Signals Plans to Purchase IMF Bonds

-----------------------------------------

¶2. (U) At the G-20 meeting in London in April, Montek Singh

Ahluwalia, Deputy Chairman of the Planning Commission, indicated

India's willingness to boost the resources and capabilities of the

IMF through the purchase of $10 billion of IMF bonds, using its

foreign exchange reserves. India's foreign exchange reserves stood

at $252.5 billion on April 17, 2009. The $10 billion contribution

is about 2 percent of the total $500 billion committed to the IMF

globally at the April G-20 Summit. This is the same contribution as

India's share in the Fund. Ahulwalia said that "if the IMF can

issue the securities, it's an easy way for us to make a

contribution." The benefit of using foreign exchange reserves to

buy bonds comes from the fact that this process can be implemented

by the Reserve Bank of India, without any legislative approval.

Moreover, India would prefer a bond issue as it does not have the

fiscal strength to contribute $10 billion to the IMF, which amounts

to about one percent of its GDP.

¶3. (U) Under Ahluwalia's proposal, the RBI would shift some of its

funds currently held by US treasury bills or other US government

bonds to the proposed IMF securities. Analysts opine that the

proposal could face political opposition since the contribution does

not directly help India, as it is not borrowing from the IMF.

However, India will not lose the money it plans to give to the IMF.

The Fund usually makes a small profit on its loans. The modalities

of the commitment to the IMF are yet to be worked out by the Reserve

Bank of India and the government ministries.

Slowdown in Mergers and Acquisitions

-----------------------------------

¶4. (U) According to Dealogic, mergers and acquisitions

(M&As)involving Indian companies in calendar year 2009 to date have

been the lowest (due to the global slowdown) in four years,

amounting to just $7.4 billion, a decline of 51 percent from the

corresponding period a year ago. Inbound M&As totaled $1.6 billion

in 70 deals so far this year, down 77 percent from last year. The

US remained the biggest investor in Indian firms with $483 million

via 21 deals. Outbound M&A activity also fell drastically - by 96

percent - to just $334 million through 34 deals. The top two

acquisitions which took place during the year were Reliance

Industries' 25 percent equity buyout in Reliance Petroleum for $1.7

billion and Quippo Telecom Infrastructure's 49 percent equity

acquisition in Wireless II Infoservices for $1.3 billion. Other

major M&As which took place include Tech Mahindra's 51 percent

acquisition in Satyam Computer Services for $577 million, Reliance

Industries' five percent buy in Reliance Petroleum and Life

Insurance Corporation of India's two percent purchase in State Bank

of India.

Regulator Issues Notices to 12 Accounting Firms

--------------------------------------------- --

¶5. (U) The Institute of Chartered Accountants of India (ICAI -

which governs the accounting profession in India) has issued notices

to twelve Indian chartered accounting (CA) firms that have tie-ups

with foreign firms. Indian law allows only those audit firms

registered with ICAI to provide audit services. However, according

to ICAI President Uttam Prakash Agarwal, some unregistered

international audit firms have allegedly conducted audits by

associating themselves with local firms and provided services

NEW DELHI 00000878 002.2 OF 002

indirectly. "[ICAI] wants to find out how these firms are operating

and if they are sidestepping the law to do so. Therefore, notices

have been sent to 12 firms having affiliations with foreign entities

to understand their modus operandi," stated Agarwal.

¶6. (U) The twelve Indian CA firms must submit by May 23 all

documents, agreements, contracts, terms and conditions for usage of

a name, and fee-sharing arrangements with any multinational auditing

firm. While ICAI declined to divulge the names of the firms on whom

it has served notices, Price Waterhouse, an Indian arm of global

audit firm PricewaterhouseCoopers (PwC), and SR Batliboi, a member

firm of Ernst & Young, are some of the well-known Indian firms that

are affiliated with foreign firms. ICAI has reportedly formed a

committee to examine the Satyam accounting scandal and recommend

regulatory changes, wherever required, to the government and the

Securities and Exchange Board of India (SEBI).

India Considering Separate

Standards for Medical Devices

----------------------------

¶7. (U) India's Drugs Controller General of India (DCGI) has

reportedly decided to create separate quality standards for medical

devices. At present, for regulatory purposes, medical devices in

India are grouped with pharmaceuticals. The new guidelines are

expected to be notified by the end of May and will classify medical

devices based on the risks involved. Both drugs and devices are

regulated by state drug regulators under the Drugs and Cosmetics

Act. The new guidelines would make it mandatory for both domestic,

as well as foreign, manufacturers to have their medical devices

certified by bodies like the International Organization for

Standardization (ISO) and Bureau of Indian Standards (BIS) before

selling/exporting them in the Indian market. Some commentators

believe the move is expected to not only create a level playing

field for both Indian and foreign manufacturers of medical devices,

but will also provide transparency in rules and regulations

governing the export, manufacturing, and sale of medical devices in

India.

¶8. (U) The nodal department for medical devices - Ministry of

Health - has told media that DCGI has finalized the new guidelines

and submitted them to the Drug Technical Advisory Board for

approval. According to industry estimates, Indian manufacturers

produce medical devices worth $2.5 billion, with about 60 percent

exported to Europe, Middle East, Africa and North America. At the

same time, India imports approximately $1.5 billion in medical

devices to meet domestic requirements.

¶9. (U) Visit New Delhi's Classified Website:

http://www.state.sgov/p/sa/newdelhi.

BURLEIGH

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Cable reference id: #09NEWDELHI872

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #205150 ?

Subject Indian Economy Showing Signs Of Recovery

Origin Embassy New Delhi (India)

Cable time Fri, 1 May 2009 11:33 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/05/09NEWDELHI872.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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RUCPDOC/DEPT OF COMMERCE WASHDC

RHEBAAA/DEPT OF ENERGY WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RULSDMK/DEPT OF TRANSPORTATION WASHDC

RHMFIUU/FAA NATIONAL HQ WASHINGTON DC

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UNCLAS SECTION 01 OF 03 NEW DELHI 000872

SIPDIS

SENSITIVE

STATE FOR SCA/INS AND EEB

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD

DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR

DEPT PASS TO USTR CLILIENFELD/AADLER/CHINCKLEY

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

USDA PASS FAS/OCRA/RADLER/BEAN/FERUS

EEB/CIP DAS GROSS, FSAEED, MSELINGER

E.O. 12958: N/A

BEXP [Trade Expansion and Promotion], KIPR [Intellectual Property Rights], KWMN [Women Issues], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: INDIAN ECONOMY SHOWING SIGNS OF RECOVERY

NEW DELHI 00000872 001.2 OF 003

¶1. (SBU) Summary: The Indian economy is showing some signs of

recovery from the current slowdown, with many analysts predicting

that the downward cycle is expected to bottom out in the second half

of FY 2009-10 (October-April). The core sector (including power,

cement, and steel) and automobiles, telecom, port traffic and retail

sales are already showing signs of increased activity. The rural

demand for goods and services appears quite robust and the outlook

of the agricultural sector looks optimistic, as "near" normal

monsoons are predicted. Hiring in sectors such as banking is also

showing some signs of increase. However, it is too early to

conclude that this is the start of a next broad-based expansion.

Many industries such as manufacturing, small and medium enterprises,

real estate, tax collections and exports remain in the red. India's

structurally broad industrial base suggests that industrial growth

will need more time to get back to normal. Although the IMF

recently downgraded India's growth projection to 4.5% in calendar

year (CY) 2009, these recent signs of recovery suggest the

possibility of above-5 percent growth. Even with the IMF's lower

estimate, it still pegs as one of the fastest growing economies in

the world, after China. End Summary.

Some Sectors Showing Glimmers of Hope

-----------------------------------

¶2. (SBU) Planning Commission Deputy Chairman and de facto Finance

Minister Montek Singh Ahluwalia has said that the stimulus packages

and duty cuts announced by the government to revive the economy in

the past five months have started paying dividends, as evidenced by

growth in key sectors noted below. He expects the economy to start

showing definite signs of recovery in the second half of the FY

2009-10, that is, from October onwards. This week, Swiss Bank, UBS

AG, Barclays, Capital and Marquarie Bank also observed that the

Indian economy seems to be improving, and that the slump in emerging

Asia is over. Economists also point out that revival might be around

the corner, driven by interest rate cuts by the Reserve Bank of

India, a recovery in the Chinese economy, and a strong growth in the

outsourcing sector. The following positive trends also suggest a

turnaround is more probable than not later this year:

--The capital goods sector showed a healthy growth of 10.4 percent

in February compared to February 2008. The core sector, consisting

of output of steel, cement, electricity, coal, and oil products,

which together comprise 26.7 percent of the index of industrial

production (IIP), is also back on the track. It grew by 2.9 percent

in March, the highest year-on-year growth since September 2008. The

biggest surprise was power generation which touched a 13-month high

at 5.9 percent in March. The availability of coal has improved and

the coal units that were commissioned last year are working well,

resulting in higher generation of power, according to news reports.

--Cement output registered buoyant growth of 10.1 percent in March,

showing healthy construction levels. Dispatches were also robust in

March, due to restocking, and strong rural demand. Mutual funds

have increased their exposure in leading cement firms, suggesting

they expect sustained demand. The 212 million ton-cement industry

may add around 30 million tons of new capacities this fiscal year.

--Steel output, which had declined from September through November

last year, showed some recovery in December and January this year.

However, it declined by 2.6 percent in March. According to the World

Steel Association, India is the only economy whose steel consumption

is expected to grow by more than 5 percent in 2009 due to high

spending on various construction and infrastructure projects. The

construction industry, which has a multiplier effect, is responding

to higher government expenditures and lowering of interest rates for

private borrowers.

--The auto industry recovered in March 2009, with total automobile

production exceeding total sales for the first time in seven months.

Cars and two-wheelers growth was aided by the four percent cut in

central excise tax from the December stimulus package and from

discounts. The increase in government salaries, coupled with the

better credit availability and the launch of new models (including

Tata's Nano), could result in sustained trends in the coming months.

NEW DELHI 00000872 002.2 OF 003

-- Many retailers have continued their expansion plans in the past

12 months and are banking on latent rural demand and aggressive

promotional discounts to boost growth.

--India continues to be the fastest-growing telecom market in the

world, adding 15.64 million wireless subscribers in March, and

taking the total number of subscribers to 391.76 million. Declining

tariffs and innovative services have resulted in wireless

technologies becoming the preferred mode of communication in rural

markets.

--Port traffic at 12 major ports seems to have improved modestly in

March. It remained negative at 7 out of 12 ports in March 2009,

versus 9 ports in February 2009. Though trends in air passenger

traffic remain weakened in 2009, the low fares and some reduced

surcharges could result in positive growth in traffic in FY 2009-10.

--New gas facilities became operational in April. Taking into

account lower oil prices and new hydrocarbon discoveries by

Reliance, Cairn, and the state-owned Oil and Natural Gas

Corporation, Citi projects that India's net oil imports this fiscal

year could be $30 billion lower than last fiscal year.

--Foreign Institutional Investors (FIIs) turned net 2009 buyers in

the Indian markets in April, after being net sellers in January to

March of $1.3 billion. FIIs sold $13 billion worth of equities in

2008. The Sensex was the top performer among leading global indices

in April 2009 with returns of 17.7 percent in dollar terms.

More Jobs Coming Up

-------------------

¶3. (SBU) Oscar Fernandes, Labor Minister, recently indicated that

half a million jobs had been lost in India due to the slowdown.

However, media is reporting in recent weeks that firms started

hiring again in April 2009. Headhunters have seen a 50 percent rise

in the number of queries issued by companies in the past weeks, led

mainly by health and pharmaceutical sectors. Other sectors driving

up the hiring exercise include life sciences, infrastructure and

manufacturing. Public sector banks plan to hire 30,000 employees in

2009-10, due to new opportunities in the banking sector owing to

branch expansion. A recent survey by Hewitt says that 60 percent of

Indian companies are still hiring. Corporate employees expect their

salaries to increase by 8 percent this year.

...But Things Still Not Back to Normal

------------------------------------

¶4. (SBU) While positive data are trickling in, it is too soon to

call it a "recovery". A number of indicators are a cause of

concern. Manufacturing declined by 1.4 percent in February. With

exports also estimated to have declined by 30 percent in March,

industrial growth may remain weak in the coming months and may only

recover gradually. However, the fall in India's industrial

production has been less when compared to other Asian economies

primarily because India is not heavily dependent on exports.

¶5. (SBU) Falling real estate prices, coupled with low transaction

volumes are also a cause of worry. Despite lower property prices,

growth in outstanding housing loans, used as a proxy for residential

transaction volumes/demand remains weak. House buyers, though in

small numbers, have started returning to the market after developers

cut property prices between 25-40 per cent for new bookings. But a

majority of the buyers are said to be still waiting for a further

correction in prices.

Comment

------

¶6. (SBU) The recent monthly numbers are not sufficient to conclude

that the economy has fully turned the corner and is recovering.

Individually, none of the indicators are hugely powerful, but

NEW DELHI 00000872 003.2 OF 003

collectively they should drive a recovery later this year which is

likely to gain momentum in 2010. They also demonstrate the strength

of the domestic market, including a lot of healthy purchasing power

in the rural sector. Exports, a main channel of manufactured

products, will have to wait for economic revival in the US and

Europe. However, other areas of industrial growth, along with

sustained demand for services, and some good agricultural output,

can maintain a healthy level of economic growth and employment, that

suggest India will experience a V-shaped recovery in the latter half

of the year.

BURLEIGH

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Cable reference id: #09NEWDELHI152

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #188531 ?

Subject Civil Nuclear Trade Mission Reveals Implementation Challenges

Origin Embassy New Delhi (India)

Cable time Fri, 23 Jan 2009 12:50 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/01/09NEWDELHI152.html

References 08NEWDELHI2985, 09NEWDELHI29

Referenced by 09NEWDELHI173, 09NEWDELHI267

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

RUEHBJ/AMEMBASSY BEIJING 7337

RUEHRL/AMEMBASSY BERLIN 1118

RUEHMO/AMEMBASSY MOSCOW 3062

RUEHOT/AMEMBASSY OTTAWA 0780

RUEHFR/AMEMBASSY PARIS 1473

RUEHKO/AMEMBASSY TOKYO 6064

RUEHVI/AMEMBASSY VIENNA 0415

RUCPDOC/DEPT OF COMMERCE WASHDC

RUEAIIA/CIA WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

RHEBAAA/DEPT OF ENERGY WASHINGTON DC

RHEHNSC/NSC WASHDC

RUEKJCS/JOINT STAFF WASHDC

RUEKJCS/SECDEF WASHDC

RUEHUNV/USMISSION UNVIE VIENNA 1726

RUCNDT/USMISSION USUN NEW YORK 7546

Hide header

UNCLAS SECTION 01 OF 06 NEW DELHI 000152

SENSITIVE

SIPDIS

NUCLEAR REGULATORY COMMISSION, DEPARTMENT OF ENERGY FOR

RBOUDREAU, MGILLESPIE, TCUTLER

E.O. 12958: N/A

TAGS: PREL [External Political Relations], PARM [Arms Controls and Disarmament], TSPL [Science and Technology Policy], KNNP [Nuclear Non-Proliferation], ETTC [Trade and Technology Controls], ENRG [Energy and Power], TRGY [Energy Technology], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: CIVIL NUCLEAR TRADE MISSION REVEALS IMPLEMENTATION

CHALLENGES

REF: A. NEW DELHI 141

B. NEW DELHI 29

C. 08 NEW DELHI 2985

¶1. (SBU) This is an action request; please see paragraph 8.

¶2. (SBU) SUMMARY. A trade mission co-led by the U.S.-India

Business Council (USIBC) and Nuclear Energy Institute

explored opportunities for civil nuclear cooperation in

meetings with senior political and technical officials in New

Delhi January 11-14 and Mumbai January 14-16, highlighting

several critical implementation issues. India will sign its

Safeguards Agreement with the International Atomic Energy

Agency, but senior officials remained vague on when this will

take place and how they plan to fill in the Agreement's blank

declaration of separated facilities annex. India is ready

"right away" to begin negotiating the reprocessing

arrangement envisioned in Section 6(3) of the 123 Agreement,

and suggested that its conclusion was a prerequisite to

sealing commercial deals. Designating a counterpart to

India's negotiator and signaling willingness to begin this

negotiation could prevent delays harmful to the commercial

prospects of U.S. firms. Indian officials affirmed their

intention to ratify the Convention on Supplementary

Compensation for Nuclear Damage (CSC) and agreed that it

would most likely take place in the next Parliament after

India's general elections, due by April. They shared that

the politically complex process of reactor park site

selection was underway, but that no further announcements

were expected prior to the elections. Several senior

officials reaffirmed India's commitment in its letter of

intent to set aside at least two reactor park sites and to

purchase reactors with at least 10,000 Megawatts (MWe) total

generating capacity from American firms.

¶3. (SBU) SUMMARY CONTINUED. U.S. industry representatives

expressed anxiety over the uncertain and lengthy U.S. and

Indian licensing requirements, which they felt put them at a

competitive disadvantage and delayed meaningful commercial

engagement. They also expressed concern that Indian law does

not provide patent protection in the nuclear industry.

Department of Atomic Energy Chairman Anil Kakodkar's

statement that he felt "betrayed" by United States policy

supporting a ban on enrichment and reprocessing technology

(ENR) in the Nuclear Suppliers Group (NSG) reminded the

delegation that nonproliferation issues remain highly

sensitive in the context of the emerging strategic

partnership and will continue to require careful management

beyond the conclusion of the 123 Agreement. END SUMMARY.

Trade Mission Probes Opportunities, Reveals Challenges

- - -

¶4. (SBU) Forty executives representing the U.S. civil nuclear

industry visited New Delhi January 11-14 and Mumbai January

14-16 as part of a trade mission supported by the Department

of Commerce and co-led by the U.S.-India Business Council

(USIBC) and the Nuclear Energy Institute. This thematic

report highlights several of the critical implementation

issues raised during the delegation's visit, drawing from a

dozen meetings with a variety of senior political and

technical officials, including Minister of External Affairs

Pranab Mukherjee; Minister of State in the Prime Minister's

Office Prithviraj Chavan; Department of Atomic Energy

Chairman Anil Kakodkar; and Planning Commission Deputy

Chairman Montek Singh Ahluwalia (full list of meetings para

19). The parallel visit of a U.S. Department of Energy team

to restart the Civil Nuclear Energy working Group (CNEWG) is

reported ref A.

NEW DELHI 00000152 002 OF 006

Safeguards Agreement: Possibly Signed Within A Month

- - -

¶5. (SBU) Indian officials agreed that the first order of

business should be the signing of India's Safeguards

Agreement with the International Atomic Energy Agency (IAEA),

but they remained vague on when this would take place and how

they would populate the Agreement's blank declaration of

separated facilities annex. Minister Chavan echoed prior

statements from the Ministry of External Affairs that India

had "made very good progress" and expected to sign "very

shortly, even within one month's time." Indian officials

have not shared with Post how they plan to ensure that

India's declaration of nuclear facilities would be consistent

with its 2005 Separation Plan, a prerequisite to the issuance

of the U.S. Presidential certifications necessary to permit

the licensing of U.S. exports mandated by the U.S. Congress

in the 123 Agreement implementing legislation.

Fuel Reprocessing: India Ready to Negotiate Arrangement

- - -

¶6. (SBU) Indian officials made clear for the first time that

India was ready "right away" to begin negotiating the

reprocessing arrangement in Section 6(3) of the 123

Agreement. Chavan emphasized that "other countries do not

have issues with reprocessing technology" and that India

hoped to resolve this issue "as soon as you are ready."

Mukherjee referred to "technical issues that require

clarification." Kakodkar in particular suggested that India

would not conclude commercial contracts with U.S. firms

without first agreeing to the reprocessing arrangement. He

described the commercial and reprocessing negotiations as

"interlocking" and that he hoped the negotiations could take

place in parallel. In order to prevent the reprocessing

negotiation from dragging on and delaying commercial

opportunities, Kakodkar said he had been "keen to put a

timeline in the 123 Agreement" and he was now "ready and

anxious to start that process right away." (Section 6(3)

requires that consultations on arrangements and procedures

begin within six months of a request by either Party and be

concluded within one year.)

¶7. (SBU) Kakodkar elaborated on his red-lines for the

reprocessing arrangement negotiation based on his conviction

about the importance of reprocessing. "If Uranium and

derivatives are covered by IAEA safeguards, fine; but if you

say we must ask permission to reprocess, that will be

problematic," he said. Kakodkar felt strongly that

indefinite storage of spent fuel was "not an option in India"

because it was "not sustainable from an energy point of view,

in terms of credible waste management, or on security

grounds." Kakodkar concluded that he was "100 percent

certain that the whole world will move to support

reprocessing," and said he looked forward to the day when

India and the U.S. could collaborate on reprocessing

research. Apart from reprocessing, Kakodkar said provision

of a lifetime fuel stockpile would be a key component of

reactor contracts. These arrangements must be "robust,"

"prevent obstruction," and be "guided by 123 Agreement."

Kakodkar also said fuel supply contracts must permit the

manufacture of fuel in India.

¶8. (SBU) ACTION REQUEST: India's interest in commencing the

reprocessing arrangement negotiations was muddled in the

exchange of diplomatic notes that brought the 123 Agreement

into force on December 6, 2008. A second Indian diplomatic

note dated December 6 designated Ministry of External Affairs

Joint Secretary for External Affairs Gitesh Sarma, an

assistant secretary-level foreign ministry official posted to

NEW DELHI 00000152 003 OF 006

the Department of Atomic Energy in Mumbai, as "the nodal

point for the Administrative Arrangement to be established

for the effective implementation of the provisions of the

Agreement, pursuant to Article 17," but the note said nothing

about the Reprocessing Arrangement described in Section 6(3).

Post requests that the Department designate Sarma's

counterpart and indicate willingness to begin negotiating the

Section 6(3) arrangements at the earliest opportunity so as

not to delay the commercial prospects of U.S. firms.

Liability Convention: To Parliament After Elections

- - -

¶9. (SBU) Indian officials expressed their intention to ratify

the Convention on Supplementary Compensation for Nuclear

Damage (CSC) to provide the liability protection required by

U.S. firms to do business in India, and seemed to agree that

it would most likely be done in the next Parliament after

elections due in April-May. Adoption of the Convention

requires an extensive inter-agency review followed by Cabinet

and then parliamentary approval. Mukherjee said the

inter-ministerial consultations had been completed and he saw

"no difficulties getting the legislation passed." He did not

indicate a timeline, saying only that ratification would have

to wait for Parliament to act. (He appeared to have

abandoned the idea of implementing the Convention

"administratively," as reported ref B.) Ahluwalia was less

familiar with the issue, but responded positively to the

suggestion that India needed the Convention to have the

widest possible choices among foreign vendors to meet its

ambitious nuclear power generation goals and Indian private

industry needed it to participate in the global civil nuclear

market. At Ahluwalia's request, a USIBC delegation member

gave him a one-page brief on the Convention and its

advantages for India. Ahluwalia seemed keen to advocate for

early adoption of the Convention.

¶10. (SBU) Chavan and Kakodkar each said India's work toward a

liability regime had pre-dated the July 2005 joint statement

launching the Civil Nuclear Cooperation Initiative with the

United States, stemming from the Indian government's

realization that civil nuclear power would be required to

fuel India's rapid growth and that achieving its goal of a

three-stage Thorium cycle would be "too big for laboratory

development" and would have to be implemented "in the

commercial domain." They likewise agreed that the draft

legislation to implement the Convention was "in the advanced

stage," according to Chavan, and "almost complete," according

to Kakodkar. Chavan shared that major bills usually go to

committees first, so Parliament probably does not have

sufficient time to enact the measure in the upcoming abridged

February 12-26 session which is mainly aimed at passing a

temporary budget measure (a "vote of account") to allow the

government to function until the new Parliament convenes

after the election. The options of dispensing with

committees and going straight to the floor of Parliament or

taking direct executive action were "theoretically possible,

but practically difficult." Therefore, he did not expect

Parliament to take action prior to elections that must be

held by April. He stressed, however, that Cabinet approval

would constitute "a major task achieved," since a commitment

by the Cabinet was usually not undone, even by successive

governments.

¶11. (SBU) Kakodkar stressed that he understood the importance

of the Convention, observing, "It is clear the world is

converging on the Supplementary Convention as the global

liability standard." He believed the next Parliament would

act on the law and dismissed political concerns, saying the

123 Agreement debate has created "a clear national consensus

NEW DELHI 00000152 004 OF 006

on nuclear power." Kakodkar rejected suggestions that India

might implement an intermediary measure, saying decisively,

"Our law will be 100 percent consistent with the Convention."

(COMMENT: Some NPCIL officials and Indian industry

representatives suggested that the government may implement

intermediary measures to address liability not fully

consistent with the Convention, which caused some alarm among

U.S. industry representatives, but this possibility was not

confirmed by senior Indian officials.) Like the reprocessing

arrangement, Kakodkar again stressed his hope that the lack

of the Convention would not be a "constraining factor" for

U.S. industry in the short term and that India's work on the

Convention should move in parallel with commercial contract

negotiations. (Delegation members expressed concern to the

Indian officials that they may have difficulty engaging in

contract negotiations without the Convention in place.)

¶12. (SBU) Chavan also elaborated on other upcoming business

before Parliament related to civil nuclear cooperation. The

government is planning amendments to India's Atomic Energy

Act to grant more autonomy to the Atomic Energy Regulatory

Board (AERB). The government is also preparing legislation

to permit a private sector firm to take a minority stake in

the nuclear generation business in joint ventures with public

companies, such as the Nuclear Power Corporation of India

(NPCIL) and the National Thermal Power Corporation (NTPC).

He explained that private firms, including fully-owned

foreign firms, would not be required to enter into a joint

venture for manufacturing or construction in the nuclear

industry, but that this new rule would permit Indian private

firms to take an equity stake in the power generation and

management business.

Site Selection: Will Honor Letter of Intent

- - -

¶13. (SBU) Indian officials were clear that although

exploratory work on new reactor sites is complete, the

process of site selection and allocation is a politically

complex and that no new reactor sites would be announced or

allocated prior to the next elections. Mukerjee gave away

nothing, saying only that the selection process was

"underway." Chavan recalled that the government had

announced Jaitapur, Maharashtra as the latest site, and that

"shortly we will seek necessary clearances and announce new

sites." He added that the government was looking at multiple

sites and he could not say whether they would be announced

one at a time or all at once. (France is widely rumored to

have a lock on the Jaitapur site.) Chavan shared that

"Everything has been done to select the sites; we are

collecting and analyzing the information." He revealed there

was "intense competition among states" to host reactor park

sites. Kakodkar said the site selection process was a

"technical as well as political process," and that he was

unable to discuss it. He concluded, "What is clear is you

will have two sites."

¶14. (SBU) Kakodkar and Chavan each reaffirmed the September

10, 2008 letter of intent from Foreign Secretary Menon to

Under Secretary Burns committing India to set aside at least

two reactor park sites and to purchase reactors with at least

10,000 MWe total generating capacity from U.S. firms. Chavan

said, "We stand by the letter of intent and see a major role

for the U.S. industry in India's program." In response to

concern about level playing field and first-mover advantage

of the Russians and French, Chavan replied, "We will not let

U.S. interests suffer; the letter of intent commitment will

be fully met." Kakodkar said, "We have no problem honoring

the letter of intent commitment of 10,000 MWe because our

requirements are so large." India had interests in "diverse

NEW DELHI 00000152 005 OF 006

technologies," according to Kakodkar, so the U.S. "need not

be concerned that we are talking with different countries."

Kakodkar cautioned, however, that the "only condition is that

you must be able to generate energy at competitive rates

because under the Indian system nuclear power must compete

with the alternative sources on a unit cost basis."

(Kakodkar also stressed this point to Nuclear Regulatory

Commission Chairman Dale Klein, ref C.) He argued that the

"best strategy is to team up with Indian firms, which produce

cheaper than some global competitors and can satisfy all

requirements except the ability to make large forgings." He

concluded, "Without Indian partnerships, I'm pretty certain

you will find it difficult to compete on price here."

Anxieties About Licensing and Patent Protection

- - -

¶15. (SBU) During the course of the visit, U.S. firms

expressed a variety of concerns with U.S. and Indian

licensing requirements that they felt put them at a

competitive disadvantage and delayed meaningful engagement

with the Indian civil nuclear market. Many firms felt the

"Part 810" licensing process -- coordinated by the U.S.

Department of Energy along with the Departments of Defense,

State, and Commerce -- was unclear and protracted. In

particular, they felt the uncertainty of the licensing

process in the Indian context and the time required to obtain

licenses -- likely several months -- constrained firms from

sharing meaningful technical information and commercial

proposals with potential Indian partners. Some Indian

industry interlocutors privately lamented that they had

little reason to engage U.S. firms until they received

licenses permitting them to share information beyond what was

already available in the public domain.

¶16. (SBU) Kakodkar noted that U.S. firms also had to obtain

Indian licenses from the Atomic Energy Regulatory Board

(AERB). The AERB requires firms to submit detailed proposals

and that firms must already have received an export license

from the country of origin -- in the case of U.S. firms, from

the Nuclear Regulatory Commission (NRC). Thus, the AERB

process cannot begin until after the Part 810 process and the

NRC licenses are issued. According to Kakodkar, "Both the

AERB and NRC processes are detailed and elaborate, but not

identical. They will take time, but the reprocessing

negotiation will take longer, so all these processes should

move in parallel." (COMMENT: In practice, Kakodkar's hope

that these processes can move in parallel discounts his own

sequencing stipulations and fails to recognize the

constraints on U.S. firms: that they cannot engage in

meaningful commercial discussions until the licenses are

issued or make binding commercial decisions until the

liability convention is in place, and that servicing the

Indian industry requires new captial investment with long

lead times before the work can actually begin. In practice,

while no single requirement is unduly onerous, sequencing

issues constrain the prospect of advancing all of these

processes in parallel and cumulatively threaten considerable

delays -- perhaps years -- in the ability of U.S. industry to

execute large projects in India.)

¶17. (SBU) U.S. firms also expressed concern that India's

Atomic Energy Act did not recognize patents in the nuclear

industry. Kakodkar confirmed that items for nuclear reactors

do not receive patent protection under Indian law. He added,

due to prior experiences with Tarapur, "I think this will

remain until the last bit of the embargo is removed." (Note:

Ministry of External Affairs Joint Secretary for the

Americas Gaitri Kumar later clarified that he was referring

to restrictions on high technology exports to India.) U.S.

NEW DELHI 00000152 006 OF 006

industry representatives noted that without patent protection

they could not collaborate with Indian companies on

developing new technology, and that they were concerned not

only with protecting their own technology, but also had

obligations to protect the intellectual property of their

commercial partners. Kakodkar dismissed the concern, saying

any item on India's control list manufactured in India

required a Department of Atomic Energy license, and U.S.

firms could establish confidentiality arrangements in

commercial contracts between the parties. He noted that

general purpose items that can be used in nuclear power

plants do not receive patent protection. Kakodkar concluded

that General Electric built India's first nuclear reactors

and India never violated patent rights. U.S. industry

representatives agreed their lawyers would explore options.

Nonpro Policy: Acute Sensitivities Remain

- - -

¶18. (SBU) The meeting with Kakodkar in particular was a

reminder that nonproliferation remains a particularly

sensitive issue in the emerging strategic partnership and

that careful management will be required beyond the

conclusion of the 123 Agreement. Kakodkar opened the meeting

January 15 saying that he felt "betrayed" by U.S. policy

supporting a global ban on enrichment and reprocessing

technology (ENR) in the Nuclear Suppliers Group (NSG), saying

that it looked to be "directly targeting India" by requiring

signature of the Nuclear Non-Proliferation Treaty (NPT). He

added, "The long term relationship we are developing is not

consistent with this kind of negative development."

(COMMENT: The Ministry of External Affairs has been silent

on the reprocessing issue, only asking for a read-out of

Suppliers Group deliberations once they are releasable to

non-participating governments. It appears that while MEA may

understand the U.S. position, Kakodkar felt stung by its

implications for his expansive reprocessing ambitions.

Differences over nonproliferation policy could continue to

affect India's commercial decisions as it tests the limits of

U.S. flexibility in the context of the emerging strategic

partnership.)

List of Meetings

- - -

¶19. (SBU) This report draws from meetings with the following

government officials: Minister of State in the Prime

Minister's Office Prithviraj Chavan (Delhi, January 13);

Minister of External Affairs Pranab Mukherjee (Delhi, January

13); National Thermal Power Corporation (NTPC) Chairman D.K.

Jain (Delhi, January 13); Planning Commission Deputy Chairman

Montek Singh Ahluwalia (Delhi, January 14); Nuclear Power

Corporation of India Limited (NPCIL) Chairman S.K. Jain

(Delhi, January 14); Ministry of Power Secretary V.S.

Sampath, Power Finance Corporation Chairman V.K. Garg, Power

Grid Corporation Chairman S.K. Chaturvedi (Delhi, January

14); Department of Atomic Energy Chairman Anil Kakodkar

(Delhi, January 15); A FICCI-organized roundtable with Indian

Parliamantarians; and additional technical and commercial

sessions with NPCIL and Indian industry. A planned meeting

with senior opposition BJP leader L.K. Advani and colleagues

did not take place.

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Cable reference id: #09NEWDELHI103

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #187576 ?

Subject India Managing Impact Of Global Financial Crisis Although Distracted By Elections And Regional Tensions

Origin Embassy New Delhi (India)

Cable time Fri, 16 Jan 2009 12:49 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2009/01/09NEWDELHI103.html

References 08NEWDELHI2995, 08NEWDELHI3177, 09NEWDELHI22, 09NEWDELHI44

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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TO RUEHC/SECSTATE WASHDC 5082

INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

RUCPDOC/DEPT OF COMMERCE WASHDC

RHEBAAA/DEPT OF ENERGY WASHDC

RUEATRS/DEPT OF TREASURY WASHDC

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RUEHRC/DEPT OF AGRICULTURE WASHDC

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UNCLAS SECTION 01 OF 03 NEW DELHI 000103

SIPDIS

SENSITIVE

STATE FOR SCA/INS AND EEB

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD

DEPT PASS TO USTR MDELANEY/CLILIENFELD/AADLER

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

E.O. 12958: N/A

TAGS: EAGR [Agriculture and Forestry], ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], ETRD [Foreign Trade], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: INDIA MANAGING IMPACT OF GLOBAL FINANCIAL CRISIS ALTHOUGH

DISTRACTED BY ELECTIONS AND REGIONAL TENSIONS

REF A) SECSTATE 00134459 B) 08 NEW DELHI 002995 C) NEW DELHI 00022

D) 08 NEW DELHI 00003177 E) 08 NEW DELHI 3143 F) NEW DELHI 000044

¶1. (SBU) Summary. Per Ref A, Mission provides an update on how

India is weathering the global financial crisis and subsequent

economic slowdown and on the political economy of the impact and

government response. India's economy, already slowing from lower

domestic spending in a high interest regime, has also been hit since

October by decreased global demand for its textiles and jewelry, as

well as seeing private and public investment in infrastructure and

capacity expansion stymied by frozen credit markets (ref B). Two

stimulus packages were dominated by relatively aggressive monetary

loosening and foreign financing liberalization, along with some

targeted fiscal support. Most economists still expect the Indian

economy to expand between 6-7% in the current fiscal year, ending

March, and then to fall to a 5-6% growth band for the rest of 2009.

National elections by May and tensions with Pakistan may limit Prime

Minister Singh and his economic team from contributing more to G-20

efforts than these domestic responses. End summary.

FISCAL STIMULUS PACKAGES

-----------------------

¶2. (SBU) The Government of India and the central bank, the Reserve

Bank of India (RBI), have created two stimulus packages in the last

month (ref C and D). Since big populist programs this year already

limited the government's capacity to spend, the fiscal stimuli were

very modest, mainly targeting the hard hit sectors of

infrastructure, real estate, and SMEs, which are labor-intensive.

CRISIL's principal economist, DK Joshi, and IMF resident

representative, Sanjaya Panth, both think there is little left the

government can do on the fiscal side because of spending

constraints. Indeed, when the government announced the January 2

package, it noted its intention that this would be the last fiscal

package of the year, although a fuel price reduction is rumored.

¶3. (SBU) Monetary policy has notably loosened since September, and

the two stimulus packages cumulatively brought the main policy

lending rate down by 100 basis points to 5.5%, while the reverse

repo rate, the rate at which the RBI pays banks for parking their

funds with it, has been brought down to 4% to deter banks'

preference to keep funds safe with the central bank rather than

lend. These moves, along with reductions in the cash reserve ratio

(CRR) and government pressure on public sector banks, have prompted

a few banks to lower their deposit and lending rates, although the

prime lending rate has barely moved. Vaishali Nigam Sinha, Senior

Vice President, Macquarie Capital Advisers, thinks the first

stimulus package has eased borrowing for some companies, especially

in the infrastructure and real estate sectors. In addition, bankers

in Mumbai think that trade finance has eased recently. However, RBI

data shows banks are still parking significant funds with the

central bank, suggesting that liquidity has eased but banks are

still hesitant to lend. Meanwhile, regional economic differences

limit the usefulness of looser monetary policy. Our Consulate in

Kolkata noted that commodity-consuming industries in resource-rich

eastern India are struggling with lower commodity prices and higher

inventory and are not in need of working capital.

FINANCIAL REFORMS SLOWLY SOLDIER ON

----------------------------------------

¶4. (SBU) Commendably, the regulators have continued with planned,

albeit incremental, financial liberalization while the government

has introduced newer measures to encourage capital inflows. In

response to a net outflow of portfolio investment, the stock market

regulator, SEBI, removed the ban on participatory notes, a form of

derivative portfolio investment. The Ministry of Finance also

loosened the restrictions on external commercial borrowings and

raised the cap on foreign portfolio investment in the corporate debt

market. Finally, RBI continued with its rollout of futures

derivatives last fall and is on track to launch interest rate

derivatives this month.

ECONOMIC OUTLOOK: STILL MIXED, LESS DIRE

-----------------------------

¶5. (SBU) Since steep contractions were noted in October export and

production data (ref B), recently released November production and

NEW DELHI 00000103 002 OF 003

infrastructure data shows a return to positive territory, although

still off from strong showings last year at the same time. The

index of industrial production (IIP) rose 2.2% in November compared

to 4.9% growth in November 2007; April-November growth was 3.6%

compared to 6.4% during the same period in 2007. Preliminary

estimates of exports in December were still off, but only down by

1%, compared to the October year-on-year plummet of 12%. Meanwhile,

some major Indian steel companies noted this week that domestic

demand seems to be picking up and they are planning to return to

full production after having cut back in late 2008.

¶6. (SBU) Some sectors of the Indian economy continue to hurt,

especially textile and gems and jewelry exports and auto component

domestic and export sales (ref F). The Ministry of Commerce has

revised downwards its export target for the fiscal year from $200

billion to $175-180 billion. Total exports last fiscal year were

$162 billion; exports from April to December were $130 billion,

representing the 30% growth exports experienced in April to August.

The stimulus packages had some targeted concessions for these

groups, but industry representatives say they are not enough.

¶7. (SBU) Although the balance of payments turned negative in the

April to September quarter (latest available data), foreign exchange

reserves, at $250 billion, remain sufficient to cover 2.5 times

short term debt. Since much of the April-September trade deficit

was due to the peak oil prices over the summer, analysts expect the

import bill to fall in the coming months, although declining exports

mitigate the improvement. Anecdotally, foreign worker remittances

remained strong through December, especially through

government-sponsored Non-Resident Indian (NRI deposits), whose

deposit rates were raised to attract such funds. India leads the

world in remittances, last year earning roughly $40 billion.

Foreign exchange reserves have not fallen in recent weeks and the

rupee has remained in the 48-49 range. This suggests that capital

flows may have stabilized compared to the $60 billion loss in

reserves last year as the RBI intervened in forex markets to

mitigate the rupee's roughly 20% depreciation from September to

December.

BILATERAL TIES NOT HARMED

-------------------------

¶8. (SBU) Post has not seen any signs of negative fallout from the

financial crisis on bilateral relations. Indeed, when Post

delivered the recent G-20 demarche to the Ministry of Commerce and

Industry (ref E) on how the government's November increase in

several import tariffs went against the G-20 Communique, the

Ministry's response was mild and rather technical in nature.

Government officials have not spoken critically of any US domestic

policy moves, and in recent months, have not framed the global

economic slowdown as the US' fault. The government has not

instituted any additional tariff increases since the raising of

several import duties in November, although it remains under

pressure from industry to do so.

ELECTIONS LOOMING; GOVERNMENT DISTRACTED

--------------------------------------

¶9. (SBU) While the GOI has crafted two stimulus packages, domestic

politics are strongly dominating government bandwidth these days.

The two main events are approaching national parliamentary

elections, which must take place no later than the April-May

timeframe, and ongoing tensions with Pakistan in the wake of the

November Mumbai attacks. The government was probably motivated to

move quickly on the stimulus packages, a key recommendation of the

G-20 summit, because mitigating the economic slowdown is in the

ruling coalition's interest as it prepares for elections. However,

active G-20 participation by India in the next few months may be

constrained by election preparation. In addition, the government is

preoccupied with a "coercive diplomacy" effort to pressure other

governments to apply harder pressure on the Pakistani government to

move against the perpetrators of the Mumbai attacks.

¶10. (SBU) India's apparent attempt to pursue non-military responses

could lead it to seek punitive economic steps against Pakistan,

which would go against the spirit of the G-20 Communique supporting

united efforts towards world growth. Home Minister Chidambaram was

quoted in the London Times this week (and widely re-quoted) as

NEW DELHI 00000103 003 OF 003

threatening to sever trade and civil ties with Pakistan if it did

not take adequate steps to help find those responsible for Mumbai.

Meanwhile, Chidambaram's move to the Home Ministry in December has

left the Finance Minister's position empty. Contacts have told

Econoffs that Planning Commission Deputy Chairman Montek Singh

Ahluwalia is informally filling the role in conjunction with Prime

Minister (and a former Finance Minister) Singh. While they are both

highly capable economic managers, the elections and regional

tensions leave less room for the Prime Minister to dedicate to

global issues.

COMMENT

-------

¶11. (SBU) India's top economic leadership has so far rather deftly

handled the impact on India of the global financial and economic

downturn. But looming elections and regional tensions, combined

with double-hatted economic management, could constrain India's

ruling coalition from active leadership in the G-20 process in the

coming months. However, these distractions may not matter much to

India's economic performance during the next six months as several

economists tell Econoffs that there is little left the government

can do to mitigate the crisis. While forecasts on India's growth

diverged significantly late last year, there is growing consensus on

India's growth projections for the coming year as its trajectory

becomes clearer. India's exports will have to ride out the global

slowdown, but the country's domestic demand appears resilient enough

to maintain growth in the 5-6% range through the worst of the global

downturn and keep India as one of the fastest growing economies.

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Cable reference id: #08NEWDELHI3138

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #182585 ?

Subject New Delhi Weekly Econ Office Highlights For The Week Of December 8 To December 12, 2008

Origin Embassy New Delhi (India)

Cable time Fri, 12 Dec 2008 10:14 UTC

Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY

Source http://wikileaks.org/cable/2008/12/08NEWDELHI3138.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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RHMFIUU/FAA NATIONAL HQ WASHINGTON DC

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UNCLAS SECTION 01 OF 04 NEW DELHI 003138

SIPDIS

SENSITIVE

STATE FOR SCA/INS AND EEB

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD

DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR

DEPT PASS TO USTR CLILIENFELD/AADLER/CHINCKLEY

DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA MNUGENT

TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN

USDA PASS FAS/OCRA/RADLER/BEAN/CARVER/RIKER

EEB/CIP DAS GROSS, FSAEED, MSELINGER

E.O. 12958: N/A

TAGS: EAGR [Agriculture and Forestry], EAIR [Civil Aviation], ECON [Economic Conditions], ECPS [Communications and Postal Systems], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], EMIN [Minerals and Metals], ENRG [Energy and Power], EPET [Petroleum and Natural Gas], ETRD [Foreign Trade],

BEXP [Trade Expansion and Promotion], KIPR [Intellectual Property Rights], KWMN [Women Issues], PHUM [Human Rights], SENV [Environmental Affairs], ASEC [Security], KFLU [Avian and Pandemic Influenza Activities], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF

DECEMBER 8 TO DECEMBER 12, 2008

¶1. (U) Below is a compilation of economic highlights from Embassy

New Delhi for the week of December 8 to December 12, 2008, including

the following:

-- Macro Update

-- Speculation on New Finance Minister

-- World Bank to Address Infrastructure and Poverty

-- India's Infrastructure Registers Sluggish Growth

-- GOI Allows Fertilizer Companies to Issue Fertilizer Bonds

-- India to Go Slow on Bilateral Trade Plans with Pakistan

-- Renault Scales Down Chennai Facility

-- Tamil Nadu Changing Policies on Electricity Sales

Macro Update

-------------

¶2. (U) Economic outlook for India deteriorates with World Bank &

Morgan Stanley further downgrading India's growth forecasts (5.8%

for 2009 & 5.3% for FY09 respectively). A blend of monetary and

fiscal measures were announced, like policy rate cuts (1% reduction

in Repo and Reverse Repo rates), excise duty cuts (across the board

4% excise duty cut barring petroleum products) and increased

government outlays (USD 4 bn), to combat the decelerating growth

momentum. The fiscal package drew a mixed response from industry

with some sectors like construction and real estate expecting a

bigger boost. In addition, the government permitted IIFCL to raise

tax free bonds to the tune of USD 2 bn, to facilitate financial

closure for infrastructure projects under the PPP route. The

government is also taking steps to ensure that the already budgeted

expenditure of USD 60 bn is actually spent over the next four months

of the current fiscal year. The recent fiscal stimulus package of

approximately 0.6% of GDP will imply a further slippage in the

deficit figures. Inflation rate fell further to a seven month low of

8% (Nov 29) mainly on account of easing food prices.

Speculation on New Finance Minister

-----------------------------------

¶3. (SBU) Press reported this week on possible replacements for

Chidambaram, who became Home Minister following the November 26

Mumbai terrorist attack, as Minister of Finance. Names being

considered include former Karnataka Chief Minister SM Krishna, Union

Commerce and Industry Minister Kamal Nath, Rajya Sabha Member and

Former Reserve Bank of India Governor C Rangarajan, and Deputy

Chairman of the Planning Commission, Montek Singh Ahulwalia. Some

Econoff contacts suggest that the most likely of the four is

Rangarajan because the Ministry needs someone well-versed in finance

to manage the daily flow of issues and decision-making, especially

during the ongoing financial and economic slowdown. The other most

likely possibility is that no one is named before national

elections, in which case Montek Ahluwalia will de facto run MOF,

reporting directly to the Prime Minister as he does now in the

Planning Commission.

¶4. (SBU) SM Krishna, (76 years old) may be favored because of his

political credentials. Krishna, a lawyer by profession has held

many prestigious positions such as former Governor of Maharashtra

and former Chief Minister of Karnataka. Krishna resigned as Governor

of Maharashtra on March 5, 2008 in order to return to active

politics in Karnataka. Kamal Nath, (62 years old) Union Commerce

and Industry Minister, appointed since May 2004 has earlier served

in various ministerial capacities including as Union Minister of

State for the Environment and Forests and Textiles. Nath has

witnessed major trade policy initiatives as Minister of Commerce and

Industry. (Comment: One contact theorized that Nath may be

generally discredited in Congress party circles for having promised

a definitive win in his home state of Madhya Pradesh, which did not

happen. End comment.) Dr. C. Rangarajan (76 years old), who

recently became a Rajya Sabha Member, is a leading economist who has

played a key role as a policy maker. He has held several important

positions including as Chairman of Prime Minister Manmohan Singh's

Economic Advisory Council, Governor of Reserve Bank of India and

Governor of Andhra Pradesh. Rangarajan may be Prime Minister Singh's

NEW DELHI 00003138 002 OF 004

choice because of his vast technocratic experience. Montek Singh

Ahluwalia (65 years old) has been the Deputy Chairman of the

Planning Commission since June 2004 and is considered a close

economic advisor to the Prime Minister. He is not a member of

Parliament could hold the office for six months without being a

member of either house. He was Finance Secretary in Manmohan

Singh's team in the Finance Ministry, which initiated economic

reforms in the early 1990s.

World Bank to Address Infrastructure and Poverty

--------------------------------------------- ---

¶5. (U) The Wnrld Bank on December 11 released India's Country

Strategy for the years 2009-12, anticipating total lending of $14

billion over the next three years, of which $9.6 billion will be

from the International Bank for Reconstruction and Development

(IBRD) and $4.4 billion from the concessional International

Development Association (IDA). The strategy aims to fast-track the

development of much-needed infrastructure and to support the seven

poorest states (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh,

Orissa, Rajasthan, and Uttar Pradesh) in achieving higher standards

of living for their people. World Bank's Economic Adviser Giovanna

Prennushi argues that in order to sustain India's rapid growth, it

needs to include the 300 million people who live below the poverty

line. India's vast infrastructure deficits also need to be

addressed as no Indian city provides water 24 hours a day and only

half the population has access to safe drinking water. About 40

percent of India's 600,000 villages are not connected to a road.

India was the largest IDA and second largest IBRD borrower from the

Bank in 2008.

India's Infrastructure Registers Sluggish Growth

--------------------------------------------- ---

¶6. (SBU) India's infrastructure sector, with a combined weight of

26.7 percent in the index of industrial production (IIP), slowed to

3.4 percent growth in October 2008 versus 4.8 percent in the

previous month and 4.6 percent in October 2007. The core sector has
been posting weak growth throughout the fiscal year. Cumulative
core sector growth for April-October 2008 was just 3.9 percent as
compared to 6.6 percent registered during the corresponding period
of last year. The steel sector was the worst hit, registering a
negative growth of 0.5 percent against 5.2 percent in October 2007,
due to a slowdown in demand and a sharp downturn in steel prices.
Electricity production remained flat at 4.4 percent. However, coal
output was up by 10.9 percent in October 2008 vis-`-vis 8.9 percent
in the previous year. Output of petroleum products nearly doubled
to 5 percent from 2.7 percent. Cement output grew by a healthy 6.2
percent in October 2008, with cement inventories at wholesalers
increasing.

¶7. (SBU) This week, in order to make more funds available to the
infrastructure sector, the government approved the issuance of tax
free bonds totaling $2 billion (Rs 100 billion) by the state-owned
India Infrastructure Finance Company (IIFCL). The IIFCL will raise
the funds through a combination of private placement and public
issue. The coupon rate for the proposed bonds will be 7.5 percent.
IIFCL will lend the funds to banks for refinancing infrastructure
projects, particularly in the road and ports sector, at 8.5 percent.
IIFCL will also lend directly through consortium-lending sources.
The government is expected to invite bids for over 50 highway
projects worth $10 billion (Rs 500 billion).

GOI Allows Fertilizer Companies to Issue Fertilizer Bonds
--------------------------------------------- ----

¶8. (SBU) The Finance Ministry on December 10 gave permission to 23
government-owned fertilizer companies to issue special bonds worth
$2 billion (Rs 100 billion) as compensation towards the fertilizer
subsidy during FY 2008-09. The largest subsidy ($596 million) is
being given to Indian Farmers Fertilizer Co-operative Ltd followed
by Coromandal Fertilizers Ltd ($230 million) and Indian Potash Ltd
($219 million) to help these firms meet their working capital

NEW DELHI 00003138 003 OF 004

requirements. The 14-year bonds are being issued at the coupon rate
of 7 percent. These bonds will not be eligible as statutory
requirements of banks for investment in government securities.
However, the investment by the provident funds, gratuity funds and
superannuation funds in the bonds will be treated as an eligible
investment. Banks will be allowed to sell these bonds to the
Reserve Bank of India whenever they want, thus ensuring liquidity of
these bonds. The government received approval for reimbursing
fertilizer companies for the cost of the controlled fertilizer
prices for $7.8 billion (Rs 389 billion) by way of cash outgo and
$2.8 billion (Rs 140 billion) through bonds in the supplemental
budget passed in October. With global crude prices now coming down,
the fertilizer subsidy may also be lower. Analysts point out that
the fertilizer companies wanted to receive the subsidy in cash
rather than through bonds, because they had to sell them at a 15
percent discount last fiscal year.

India to Go Slow on Bilateral Trade Plans with Pakistan
--------------------------------------------- ------

¶9. (U) Last month's Mumbai terror attack will likely affect nascent
trade openings between the two countries going forward. Minister of
State for Commerce Jairam Ramesh has reportedly said that in the
aftermath of the attacks, no new initiatives will be started and
India will have to revisit trade plans with Pakistan. India and
Pakistan, in September 2008, took steps to promote bilateral trade
despite the traditional sensitivities involved between the two
countries. India's trade plan included removing Pakistan from the
list of countries from where foreign direct investment was not
allowed due to security reasons; opening two branches of commercial
banks of India and Pakistan on a reciprocal basis; permitting trade
in several hundred items compared with the current 13 across the
Attari-Wagah border and the Khokrapar-Munabao border; and opening
the Skardu-Kargil route in Jammu and Kashmir for commerce. The
Indian government has also dropped a plan to launch a website
containing specific details of procedures to be followed by
Pakistani exporters aiming to trade with India.

¶10. (U) Immediately after the Mumbai attacks, India abandoned plans
to set up border posts to facilitate movement of goods and people to
and from Pakistan, Bangladesh, Nepal and Myanmar. However, India
will continue to allow trade across the Line of Control in Jammu and
Kashmir, which is restricted to 21 items including fresh and dry
fruits, spices, honey, leather slippers, walnut-wood furniture, wall
hangings, embroidery items, tamarind, green gram, carpets, shawls,
black mushrooms, pillows and pillow covers, medicinal plants, rice,
blankets, rugs, woolen garments, saffron and kadam, a vegetable.

¶11. (U) Bilateral legal trade between India and Pakistan increased
to $2.3 billion in 2007-08 (0.5 percent of India's total trade
turnover) from $345 million in 2003-04. According to some trade
observers, suspension of trade ties has more of an impact for
Pakistan than for India, given Pakistan's minimal share in India's
trade.

Renault Scales Down Chennai Facility
------------------------------------

¶12. (SBU) Carmaker Renault-Nissan announced on December 9 a scaling
down of its plans to manufacture automobiles in Chennai. The
company is currently building a plant -- due to open in 2009 -- that
was originally supposed to produce up to 500,000 cars per year. A
company spokesman told Consulate General Chennai that the plant will
now operate only one line and produce only two types of sub-compact
cars developed for the Indian market, which should be available to
consumers in 2010. He said that Renault-Nissan had dropped plans to
produce a larger sedan at the facility because a key supplier
withdrew from an agreement to provide critical components for the
project. A journalist from a leading business daily told us,
however, that Renault-Nissan dropped its sedan plans because larger
cars are selling extremely poorly in India.

Tamil Nadu Changing Policies on Electricity Sales

NEW DELHI 00003138 004 OF 004

--------------------------------------------- ----

¶13. (SBU) Still reeling from electricity shortfalls, the state of
Tamil Nadu continues to shift policy on sales of power by private
producers to encourage greater use of as-yet untapped sources of
electricity generation. The Tamil Nadu Electricity Regulatory
Commission (TNERC) has hitherto required that private producers of
electricity (i.e., producers other than the Tamil Nadu Electricity
Board, TNEB) pay a "cross-subsidy surcharge" to TNEB. The purpose
of this fee was ostensibly to help TNEB compensate for potential
lost revenues required to achieve its "social goals," which include
below-cost power to most individual consumers and free power to
farmers. (Consulate General Chennai hears frequent complaints from
companies that farmers tend to sell this electricity rather than use
it to irrigate crops.) The actual effect was to discourage
potential private producers from generating electricity for sale to
power-starved industries.

¶14. (U) The TNERC will now allow the TNEB to drop the surcharge
requirement. This move, championed by the Confederation of Indian
Industry (CII) and other business groups, should increase the
incentive for private producers to sell power. CII argued that many
companies in the state have installed back-up generators that could
be used to generate electricity for sale to other companies,
particularly in the current economic climate, when many
manufacturers are seeing orders for their products plummet. The
chairman of a Coimbatore-based textile company told us that his
facility has installed back-up generation capacity of 2 MW. His
textile facility is operating below capacity and he has long wanted
to sell electricity to nearby companies to generate additional
revenue, but the required surcharge made it unprofitable. He told
us, however, that he should now be able to do so profitably.

¶15. (SBU) Comment: Environmentally conscious observers may cringe
at the prospect of hordes of private producers generating
electricity inefficiently with relatively small diesel- and heavy
fuel oil-powered generators, but the shortfall in electricity in the
state is so acute that such concerns receive scant attention by
policy makers. End Comment.

¶16. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi

MULFORD

Media

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Cable reference id: #08MUMBAI491
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #173725 ?
Subject Dow Continues To Run The Gamut Of Indian Politics
Origin Consulate Mumbai (India)
Cable time Wed, 15 Oct 2008 04:31 UTC
Classification CONFIDENTIAL
Source http://wikileaks.org/cable/2008/10/08MUMBAI491.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Wed, 6 Apr 2011 19:54: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Re-published, unredacted, however non-text content differs
Thu, 8 Sep 2011 13:29: Original unredacted version published, with HTML goodies
VZCZCXRO5829
PP RUEHBI RUEHCI
DE RUEHBI #0491/01 2890431
ZNY CCCCC ZZH
P R 150431Z OCT 08
FM AMCONSUL MUMBAI
TO RUEHC/SECSTATE WASHDC PRIORITY 6652
INFO RUEHNE/AMEMBASSY NEW DELHI 7890
RUEHCG/AMCONSUL CHENNAI 1897
RUEHCI/AMCONSUL CALCUTTA
RUEHBI/AMCONSUL MUMBAI 1805
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEHIL/AMEMBASSY ISLAMABAD 0803
RUEHKA/AMEMBASSY DHAKA 0803
RUEHLM/AMEMBASSY COLOMBO 0794
RUEHKT/AMEMBASSY KATHMANDU 0619
Hide header
C O N F I D E N T I A L SECTION 01 OF 03 MUMBAI 000491

SIPDIS

E.O. 12958: DECL: 11/15/2023
TAGS: EINV [Foreign Investments], EIND [Industry and Manufacturing], ECON [Economic Conditions], PGOV [Internal Governmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: DOW CONTINUES TO RUN THE GAMUT OF INDIAN POLITICS

REF: MUMBAI 459

CLASSIFIED BY: BANSALG, ECON, ECON, STATE.
REASON: 1.4 (b)

¶1. (SBU) Summary. On October 1 Maharashtra Chief Minister (CM)
Vilasrao Deshmukh ordered a halt to construction of the Dow
Chemical Company's Research and Development facility near Pune
until a commission can review Dow's plans. The CM ordered this
halt to defuse broadening protests against the construction of
the facility, which had risen to the attention of major
political leaders outside the state. Dow is dispirited by this
move, and blames continued local political problems and
corruption for the problems. Protest leaders say that Dow needs
to answer the villagers concerns, and hope the conflict can be
resolved peacefully. Dow is contemplating other options -
including pulling out from the site - but fears that protests
will dog its investments elsewhere in the country. In this, Dow
continues to underestimate the political ramifications of its
purchase of the assets of Union Carbide, a company whose legacy
in Bhopal still provokes fear and concern in Indian communities.
Meanwhile, political opportunists and grassroots politicians
seek advantage in the travails of Dow, while senior political
leaders find it difficult to confront head on a situation that
seems combustible. End Summary.

Maharashtra Chief Minister Puts Dow Project on Hold
--------------------------------------------- ------

¶2. (SBU) On October 1, Maharashtra State Chief Minister
Vilasrao Deshmukh announced that he was ordering a halt to
construction of Dow's Research and Development facility for at
least 30 days. (Note: Deshmukh made the announcement from
London; he had traveled to the U.K. and the U.S. to promote
Maharashtra as a good investment destination. End Note.) Dow
began construction on the facility -- a $100 million research
and development facility outside of Pune which will eventually
employ 500 scientists - this year. This facility is located in
a new industrial area developed by the Maharashtra Industrial
Development Corporation (MIDC) about 40 kms from Pune, rural
land that had previously been used for grazing. Dow's facility
has been plagued with] protests, largely stemming from Dow's
2001 purchase of the U.S. remnants of Union Carbide, the company
responsible for history's largest industrial accident in Bhopal,
India, in 1984 where over 3000 people were killed (see reftel
for background). When protests at the facility turned violent
in July, the state government assigned round the clock police
protection to secure the site. Construction resumed, but the
agitation against the facility had grown and diversified.

Protesters Increasingly Diverse. And Effective
--------------------------------------------- -

¶3. (SBU) According to Dow, three major groups have combined to
protest Dow's facility. The initial groups consisted of NGOs
and activists involved in the campaign for justice on behalf of
the victims of the Bhopal tragedy. These activists have
targeted Dow since its purchase of Union Carbide, and have
protested Dow's operations throughout India. According to Dow,
these activists have told villagers about the Bhopal tragedy,
and invoked fear that Dow would do the same at this site. The
second faction is led by local Shiv Sena Member of Parliament,
Shivajirao Adilrao Patil. While Dow has met Patil several times
to explain the nature of their facility, Patil has continued to
stir up trouble against the company, and has led several
protests. The third angle stems from concerns by a popular
local religious sect, the Warkaris, who worship at a river
shrine about 60 kilometers from the site. They fear that Dow
will dispose of chemicals at the site, which will pollute the
groundwater and the river they revere.

¶4. (SBU) Dow representatives told Congenoffs that Warkari
leaders met recently with visiting Union Minister for
Agriculture Sharad Pawar, who is from Maharashtra, to protest
the Dow facility. According to Dow, Pawar dismissed their
complaints, telling the religious leaders that Dow is a good
company, and that they should not interfere in the industrial
policies of the state. This prompted the Warkaries to publicly
denounce Pawar and his connection with Dow, and threaten to
protest during the Commonwealth Youth Games which are to be held
in Pune in October. Dow said that Pawar subsequently asked CM
Deskmukh to stop the construction until a commission can review
the charges. This will be the second state-appointed commission

MUMBAI 00000491 002 OF 003

to look into charges that Dow could pollute or damage the
environment at this site. Dow representatives said that
Deshmukh called Dow CEO Andrew Liveris to reassure him about
Dow's investments, and said the commission will take two months;
Liveris, increasingly frustrated, told Deshmukh that it needs to
take less than one month.

Patil Says That Dow Needs to Do More to Meet Village Concerns
-----------------

¶5. (SBU) In a September 25th meeting with the Consul General,
Shivajirao Adhilrao Patil expressed his desire to resolve the
dispute peacefully. He informed the CG that he opposes the
project because the local villagers are not informed about the
project, and do not want it. Even though the state government
owns the land, the villagers look after it and they should have
been taken into confidence. As a business owner himself, Patil
said that he is usually very pro-business and claimed to have
helped create one of the largest Special Economic Zones (SEZs)
in the country on 5,000 acres in his constituency which already
has operations by multinationals like General Motors and
Hyundai.

¶6. (SBU) According to Patil, the villagers learned that Dow was
connected to Union Carbide from newspaper stories. Patil said
that Dow has drilled dozens of holes near the site and run pipes
throughout the area, and villagers feared that Dow will pollute
their groundwater and sacred rivers. Patil informed the CG that
he responded to the villagers concerns by meeting
representatives of the National Chemical Laboratory who showed
him that the approvals that Dow had received. These documents
showed that the company had received permission to manufacture
chemicals. According to the MP, this was startling news. He
explained that even the Environment Department had not been
aware that the company had received permission to manufacture
chemicals.

¶7. (SBU) In July 2008, Patil met Dow's CEO and stressed that
the company needed to explain the project to the villagers,
preferably through a public relations agency that was
experienced at this. The MP stated that company ignored his
advice and decided to rely on police force and started work on
the site. Patil noted that it was because of this decision that
the Warkaris started protesting and a Dow vehicle was burned.

¶8. (SBU) Patil reassured the CG that the safety of any American
or Indian working for Dow will not be compromised. However, the
strong police presence is focusing anger at Dow, and the
situation could get out of control. He advised that Dow should
go slow for now and reduce the police presence, and work harder
to convince villagers that the facility is truly a research and
development facility. He still thought that Dow should hire a
public relations agency like the one that the local company
Bharat Forge hired when it ran into problems, and give donations
to local villagers to resolve the situation.

Dow Says Corruption and Politics At Root of the Problem
--------------------------------------------- ---------

¶9. (SBU) On September 29, Congenoffs met with Rakesh Chitkara,
Dow's Head of Corporate Affairs, to discuss the recent
developments. Chitkara said that Dow has met with Patil several
times to clarify issues. Three months ago, the company hired
the public relations specialist Patil recommended for USD 20,000
per month. (Note: Chitkara said that the PR specialist is a
"close associate" of Patil. End Note.) They have also hired a
number of local villagers for construction projects, helped
refurbish a local school, expanded water services, and acted on
a number of other public works projects that were requested in
writing by the local village council.

¶10. (SBU) On the issue of drilling holes into the ground,
Chitkara countered Patil's charges, stating that Dow has been
drilling holes to study the soil strata which is standard
construction practice; he added that after receiving government
approval, four holes had been drilled to ascertain the water
content of the subsoil. He noted that the soil contained no
water so water is currently being brought to the site by tanker,
not the local rivers; furthermore Dow shares this tanker water
with a Korean company, Hyundai, which is also building at the
site (and has had no problems).

MUMBAI 00000491 003 OF 003

¶11. (SBU) On the charge that their approval allows them to
manufacture chemicals, Chitkara countered that the state
application forms do not have a category for R and D facilities,
and it was mistakenly labeled as a manufacturing facility. Dow
had taken the step to rectify this language to show that
manufacturing will not take place at the site. (The facility
will be used to research and develop chemical applications for
alternative energy and transportation.) He added that all of
the information that he had shared with us had already been
shared with Patil -- repeatedly.

¶12. (SBU) Chitkara said that the company was pessimistic that
the Maharashtra state government will make any decisions in the
time period specified by the Chief Minister. Moreover,
Maharashtra Chief Secretary Johnny Joseph called Dow to express
his support, but asked for time to defuse the situation. Dow
expects the state government to appoint another committee to
review the claims against Dow, all of which had been answered
before. In the meantime, the company is losing USD 250,000 a
month. Dow CEO Ramesh Ramachandran told Congenoffs that these
protesters are seeking a "buy-out," but have not yet
"internalized" that Dow will not pay.

Dow Faces More Problems with Gujarat Project
--------------------------------------------

¶13. (C) Chitkara said that Dow is also having problems with
its investment in a Gujarat state-owned company. The investment
requires approval from the Foreign Investment Promotion Board
(FIPB), which it expected because of support from the Gujarat
government and the Finance Ministry. However, Dow was told that
the Ministry of Chemical and Fertilizers has put a hold on the
project. According to Chitkara, however, when agents of Dow met
with Union Chemical and Fertilizer Minister Ram Vilas Paswan, he
demanded a large sum of money from the company before he would
support the project. The company refused to pay and the
investment remains on hold. Dow has also discussed this problem
with Deputy Chairman of the Planning Commission, Montek Singh
Ahluwalia, who was reportedly sympathetic, but unable to
overcome this opposition. [Note: It is unclear at this stage
what ostensible reason the Chemicals Ministry offered to the
FIPB for not approving what is a routine application. End
note].

Comment:

¶14. (SBU) Dow has told Congenoffs that they do not have infinite
patience for the political and other problems faced by their
business in India. While Dow could write off the $15-20 million
of their investment so far, the company fears it could face
protests and harassment wherever it settles in India. Clearly,
Dow has become an easy target for politicians seeking to exploit
the company's situation, especially as state and national
elections are just around the corner. Currently, Maharashtra is
run by a coalition under a weak and ineffective Chief Minister.
While another commission could put this issue off the table for
a few more months, opposition politicians have found a
combination of issues close to the hearts of their voters: land,
environment, livelihood, and religious devotion. In relying on
the promises of protection of the state, Dow continues to
underestimate the political ramifications of the company's
connection to the legacy of Bhopal and Union Carbide. End
Comment.
FOLMSBEE

Media

The Hindu : News / The India Cables : Sops for chemicals?
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Cable reference id: #08NEWDELHI2367
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #168360 ?
Subject Ambassador Meets With Montek Singh Ahluwalia
Origin Embassy New Delhi (India)
Cable time Thu, 4 Sep 2008 00:59 UTC
Classification CONFIDENTIAL//NOFORN
Source http://wikileaks.org/cable/2008/09/08NEWDELHI2367.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXRO4795
OO RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #2367/01 2480059
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FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3233
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE IMMEDIATE
RUCNNSG/NUCLEAR SUPPLIERS GROUP COLLECTIVE IMMEDIATE
RUEAIIA/CIA WASHDC IMMEDIATE
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RHEHNSC/NSC WASHDC IMMEDIATE
RUEKJCS/SECDEF WASHDC IMMEDIATE
RUEHUNV/USMISSION UNVIE VIENNA IMMEDIATE 1623
RUCNDT/USMISSION USUN NEW YORK IMMEDIATE 6851
Hide header
C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 002367

SENSITIVE
SIPDIS

E.O. 12958: DECL: 09/03/2028
TAGS: EAGR [Agriculture and Forestry], ECON [Economic Conditions], EDU [European Democratic Union], EINV [Foreign Investments], ENRG [Energy and Power], ETRD [Foreign Trade], ETTC [Trade and Technology Controls], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], KNNP [Nuclear Non-Proliferation],
PARM [Arms Controls and Disarmament], PREL [External Political Relations], TRGY [Energy Technology], TSPL [Science and Technology Policy]
SUBJECT: AMBASSADOR MEETS WITH MONTEK SINGH AHLUWALIA

1. (C) Summary. Ambassador met with Planning Commission
Deputy Chairman Montek Singh Ahluwalia on September 2 to
discuss upcoming high level bilateral meetings, including the
President-Prime Minister meeting on September 25 and the CEO
Forum scheduled for October 14. In addition, the Ambassador
provided an update to Ahluwalia on the August 22-23 Nuclear
Suppliers Group meeting in Vienna and his outlook for the
second meeting scheduled for September 4-5. End summary.

AMBASSADOR REVIEWS NSG DEVELOPMENTS
-----------------------------------

¶2. (C) First, Ambassador Mulford provided Ahluwalia an
update on events at the August 21-22 Nuclear Suppliers Group
(NSG) Plenary in Vienna. The Ambassador expressed
disappointment and shock at the positions that many of the
NSG members took. USG officials had engaged with the NSG
members in the lead-up to the Plenary and the members had
signaled that they were "supportive" but had "concerns." The
Ambassador then noted that NSG members submitted over 60
amendments in the Vienna meeting to the draft NSG exception
that the U.S. had submitted. Ambassador Mulford observed
that the surprising number of substantial amendments nearly
amounted to a question of good faith, with key NSG members'
non-proliferation advocates allowed the upper hand.

¶3. (C) The Ambassador described to Ahluwalia how the meeting
in Vienna had 400 people ) minus the Indian delegation that
had to remain outside ) with all the chairs facing forward
toward the Chairman's desk, in a configuration that
discouraged debate and enabled NSG members to offer tough
amendments semi-anonymously. Ambassador Mulford also
explained to Ahluwalia that in the briefing with the Indian
delegation ) primarily Foreign Secretary Meno and Special
Envoy Shyan Saran ) during a scheduled break in the NSG
Plenary, the Indian side solicited questions from the NSG
members. None were offered. US representative John Rood
also encouraged the participants to utilize the opportunity
to ask questions of the Indian delegation, but no one did.

Looking Forward
---------------

¶4. (C) The Ambassador then considered the next steps. He
noted that India and the US have negotiated a "clean" text,
but that he anticipates it will be an extremely hard sell in
the next NSG meeting in Vienna on September 4-5. Ambassador
Mulford assured Ahluwalia that the US goal was to try to keep
the text "sacrosanct," with NSG member concerns limited to
comments in the Chairman's Summary. The Ambassador
identified several text changes that he thought would be
unacceptable: the "multilateralization" of the Hyde Act, and
any language that demanded automatic sanctions in response to
further nuclear testing. Whether it would be possible to
avoid such language, Mulford didn't know.

¶5. (C) Secretary Rice had asked the Ambassador to stay in
Delhi during the September 4-5 Vienna Plenary to engage the
GoI if needed. Mulford noted that National Security Advisor
Narayanan had spoken with him that day and was not happy to
learn that the Ambassador would not be in Vienna to help move
the deal through. Mulford observed that one of the problems
with the NSG meetings was the representational mode )- that
NSG members had designated their non-proliferation advocates
as participants at the Plenary rather than senior political
representatives who could see the big picture at stake. The
big issue for the NSG was whether the international
nonproliferation system would be stronger with India on the
inside. The US delegation on September 4-5 would be led by
State Department Under Secretary for Political Affairs Bill
Burns, which added weight to the meeting.

¶6. (C) Ambassador Mulford apprised Ahluwalia of his
discussions with the "Group of Six" like-minded country
members of the NSG ) Austria, Ireland, New Zealand,
Netherlands, Norway and Switzerland ) as well as with Canada
and Japan. The Ambassador explained that they needed to
realize the importance of the NSG exception to India. The
Ambassador had pointed out to them that any country that
blocks the NSG waiver should understand that its relationship
with India would not be able to meet its maximum potential as
India was likely to start a blame game, should the NSG

NEW DELHI 00002367 002 OF 005

exception not go through. Ahluwalia agreed that political
pressure was needed to keep the focus on the big picture. To
that end, Ambassador Mulford pointed out, President Bush and
Secretary Rice were making calls to the leadership of these
countries; however, the non-proliferation issues were often
emotive for some countries. Some of the NSG representatives
in Vienna had never been to India and had an outdated view of
the country and the world today.

¶7. (C) Mulford pointed to the substantial reductions in
carbon-based emissions that would result from India,s access
to nuclear energy made possible by the civil nuclear
initiative. The Ambassador referenced an estimate that the
amount of coal substituted with nuclear energy in India over
the next twenty years was equivalent to half the amount of
emissions from the state of California and more than all of
the EU25 emission cuts combined (Note: according to a study
by David Victor published by the Council on Foreign
Relations, July 18, 2006. End note). Ahluwalia responded
that India,s lead nuclear scientist, Department of Atomic
Energy Chairman Dr. Anil Kakodkar, had projected that by 2050
India's access to uranium through the civil nuclear
cooperation initiative would treble the amount of uranium
India could process and use toward nuclear energy, going from
the equivalent of 200,000 MW of power to 600,000 MW of power.
But, Ahluwalia questioned, do the nonproliferation people
care? The Ambassador responded that they apparently did not,
since they went so far as to request that the statements in
the NSG waiver text referring to the energy benefits of the
deal be removed.

¶8. (C) Ahluwalia opined that keeping the language on energy
benefits in the text was useful, if not to the NSG members,
then to a larger audience that would consider the text. The
Ambassador concurred, noting that it was important to get the
text through the NSG quickly so that the bilateral deal could
move not just to Congress but also to President Bush for
needed presidential determinations. These determinations
were one-time requirements that did not need to be repeated
in a new administration.

UPCOMING PRESIDENT-PRIME MINISTER MEETING
-----------------------------------------

¶9. (C) Ambassador Mulford moved to the topic of the
scheduled September 25 meeting between President Bush and
Prime Minister Singh in Washington. He asked Ahluwalia what
issues he thought the two leaders should discuss, noting that
the President was interested to know the latest on the
government's reform impulse that it indicated after winning
the confidence vote in Parliament in July. Ahluwalia started
with a longer-term observation: that the government's
decision to part ways with the Left was decided on the issue
of the Indo-US civil nuclear deal, but that the parting of
ways was done with the sense of it being a longer, durable
split. In the short-term, Ahluwalia continued, there is
still the question of whether any legislative reforms can be
done before elections. He thought the most that could be
done would be to introduce the insurance amendment
legislation that raises the cap on foreign direct investment
(FDI) from 26% to 49% and to pass the pending banking
amendment act that removes the limit on voting rights of
shareholders. Ahluwalia opined that introducing the
insurance legislation would be the government's signal of its
commitment to reform. He thought the banking amendment
should go through, but it mostly depends on whether the BJP
signals its support, because otherwise, the government is
unlikely to be able to amass enough of its new supporters to
vote for the bill.

¶10. (C) The Deputy Chairman also pointed to non-legislative
reforms as being very possible. He suggested that Commerce
Minister Kamal Nath could do more on investment (Note: The
Commerce Ministry has the lead on the government's FDI policy
that designates most FDI caps in the country not controlled
by existing legislation. End note.) Ahluwalia also looked
to the Banking Roadmap which is supposed to be revisited by
the government and the central bank, the RBI, in 2009. He
thought a new roadmap that opened India's banking sector to
more foreign participation would not be issued until after
national elections next year. He noted that the currently
scheduled October-November parliamentary session was not very

NEW DELHI 00002367 003 OF 005

long, and that after that, there was not likely to be a
substantive session until after elections. He opined that
since the deadline for a new Parliament to be in session was
May 2009, that elections would have to be held by March.
However, he noted, the election schedule would have to work
around key school exams during that part of the year.

¶11. (C) Returning to the scope of possible reforms,
Ahluwalia reiterated that the Finance Minister wants to get
the banking bill through and that on non-legislative side,
improving the investment environment through "debugging" the
"creaking machinery" of the bureaucracy would be an important
reform. The Ambassador supported the idea, noting that
several American companies , most recently Oshkosh and
Sikorsky, had been disqualified from bids just shortly before
the bids were to be opened, raising questions of
transparency. Ahluwalia admitted that he had not heard of
these companies' situation. Ambassador Mulford suggested the
issue could be an agenda item for the October 14 CEO Forum.
Addressing the issue of questionable disqualifications would
help improve the business investment image of India.
Ahluwalia agreed, stressing that transparency was very
important. However, he countered, he has seen instances
where foreign companies were properly disqualified on a
technicality that they knew of, yet failed to communicate
circumstances properly. Even so, the Ambassador said, it
would be a good idea not to have disqualifications occur just
1-2 days before the opening of bids.

EDUCATION FOCUS AT CEO FORUM
----------------------------

¶12. (SBU) The Ambassador next suggested that education
collaboration might be a good agenda focus at the CEO Forum,
to which Ahluwalia agreed emphatically. Ambassador Mulford
asked about the possibility of commercial and military
offsets being used for investments in India's education
sector. Ahluwalia expressed the view that commercial offsets
-- mostly generated from aviation purchases -- were a more
likely source of revenue for higher education investments,
because the Ministry of Defense is likely to use defense
procurement offsets with its captive, protected state
interests.

¶13. (SBU) Ahluwalia indicated that the Indian side is "keen"
to step up its educational dialogue with the United States
and may wish to have it included in the joint statement
between the President and the Prime Minister at their meeting
in late September. He went on to suggest that, at the
October 14 CEO Forum, the CEOs could "sanctify" a plan to
move forward on education collaboration. He explained that
he has been reaching out to Indian CEOs and to prominent
Indians in the US, asking for suggestions for cooperation
between Indian and American universities. He was trying to
get the Secretary of Higher Education to the CEO Forum to
help get acceptance and commitment to moving forward on some
kind of collaboration. Under Indian law, Ahluwalia asserted,
all kinds of foreign investment in education was possible
short of giving a foreign university degree. He wanted to
get the CEO Forum to "sanctify" support for enhanced
cooperation and to establish a formal framework. Ahluwalia
also noted that, in addition to support for the idea, he
wanted the private sector to help pick up the costs of
exchanging students or faculty between Indian and American
universities.

¶14. (SBU) The Ambassador asked for clarification that newly
established programs could be for-profit, but Ahluwalia
explained that for-profit universities are not currently
allowed in India, based on a Supreme Court decision. But, he
observed, several states were taking the lead in developing
new education efforts, such as the Indian School of Business
in Hyderabad or Haryana Chief Minister Hooda's plan to build
an education city north of Delhi. India's private
universities and schools get around the obligation to be
nonprofit institutions by establishing a trust or society
that contained hidden fees or very profitable hidden lease
and other costs passed from the nonprofit educational
subsidiary to a holding company's real estate subsidiary.

¶15. (SBU) Ahluwalia explained that he had proposed to Bill
Harrison, former CEO of JP Morgan and lead US CEO of the CEO

NEW DELHI 00002367 004 OF 005

Forum, that a subgroup be created to identify areas of
educational collaboration. He had proposed that Infosys
co-founder Nandan Nilekani be the Indian side lead, and had
asked Dan Price for suggestions on a lead from the US side.
Ahluwalia claimed that some collaborations are already
underway between US universities and the Indian Institutes of
Technology (IITs) and of Management (IIMs), India's premier
universities. In fact, Ahluwalia asserted, it would not be a
problem for US universities to identify an Indian university
partner, where each side would send students for a part of
the home program to study in the partner university and
recognize the credits of each other towards the home degree.

¶16. (SBU) Embassy Public Affairs Counselor Schwartz asked
whether Ahluwalia had ideas for specific deliverables that
could be announced at the CEO Forum or proposed actions for
the Education Working Group. Ahluwalia opined that there
might be a limited deliverable, such as announcing that
Nandan Nilekani and a US counterpart as co-chairs of a group
to provide a report to both governments after the Indian
elections. Schwartz asked whether a previously discussed
idea, the creation of a junior faculty development program,
perhaps funded by commercial offsets, could be kicked off at
the CEO Forum working group meeting. Ahluwalia thought that
was a good idea, adding that there was no doubt that a report
from the CEO Forum working group to pinpoint the use of
offsets would find a lot of takers and proposed that the idea
of offsets be cast as a note of suggestion, along with other
suggestions, for review by Nilekani's group. (Comment:
Ahluwalia's suggestion sidestepped Schwartz's proposal of
obtaining GOI government approval for the use of offsets by
simply incorporating it as an area of study for the newly
formed group. End comment.)

¶17. (SBU) Schwartz suggested that another deliverable might
be the establishment of a US - India Higher Education
Council, which ECA Assistant Secretary Goli Ameri had agreed
to fund during her recent trip to India. The Council would
be housed for simplicity at the Fulbright Commission which
has a bilateral Board of Directors and serve as a regular
consultative body for educators, along with their supporters
in government and industry. Ahluwalia thought that made "a
lot of sense," and suggested that in advance of the CEO Forum
meeting, it would be good to discuss the idea with MEA Joint
Secretary Gaitri Kumar and CII leader Tarun Das.

DE-CONSTRUCTING DOHA
--------------------

¶18. (C) Ambassador Mulford lastly noted to Ahluwalia that
President Bush might wish to discuss with Prime Minister
Singh the recent failed mini-Ministerial in Geneva on the
Doha Round. Mulford asked Ahluwalia if he thought it worth
raising, to which Ahluwalia replied that anything that the
President felt should be raised would be fine and in fact the
two had often exchanged views on Doha before. Further,
Ahluwulia felt that if the US judged there was the
possibility of movement, then a discussion at the Bush-Singh
level would be especially useful. Ahluwalia noted that he
had not yet received a full briefing from the Indian
delegation, but that Joint Secretary Gopal Krisha was
scheduled to come over during the week to discuss with him.
However, Ahluwalia said that he had heard from the US
National Security Council's Dan Price on the August meeting.
Ahluwalia understood that the breaking point had been over
the special safeguard mechanism (SSM). The Indian view,
Ahluwalia believed, was that the 40% increase in imports as
the threshold trigger for raising tariff rates was too high.
As an economist, Ahluwalia opined, he didn't understand why
the percentage of imports had been used. More relevant, he
asserted, was the size of imports to the economy. The larger
the importance of imports to the economy, the more important
a small increase in imports was.

¶19. (C) Ahluwalia further offered that his limited
understanding from the Indian side was that U.S. Trade
Representative (USTR) Susan Schwab had hardened the US
position on SSM and would not consider a compromise proposal
that would have phased in an increase in the import increase
trigger. The Ambassador quickly countered that the US
perceived that India had hardened its stance on SSM after
Commerce Minister Nath had returned to Geneva from the July

NEW DELHI 00002367 005 OF 005

21 Confidence Vote in the Indian Parliament, and that the
change was unexpected. Ahluwalia replied indirectly, noting
that India's view of the SSM was that since the main proposal
for the Doha bound rates was so similar to the rates from the
Uruguay Round that the SSM only applied to Uruguay products
with no margins. The key question was what should be the
trigger for raising tariffs under the SSM? Economic
Counselor Davison explained that SSM was very important to US
agricultural interests. Many of them felt that without the
SSM, the US concessions on agriculture were too much. They
felt the overall package would not have resulted in increased
and predictable access to Indian markets.

¶20. (C) As the meeting drew to a close, Ahluwalia reiterated
that he agreed with the Ambassador that the President and
Prime Minister should discuss Doha at their meeting.
Ahluwalia thought there was maybe a communication issue that
could be addressed. The Indian government, he assured the
Ambassador, was not taking the view that there was nothing
there at Doha for India. If there are small points where
re-thinking and clarification could be made, and USTR Schwab
and Minister Nath were to meet again before the President-PM
meeting, then it would be useful to know what the US needs
are. If it is just this "SSM thing" of choosing between
either no SSM until 40% or creating a lower, graduating
trigger, Ahluwalia concluded, then it did not seem to be a
major difference.

MULFORD
MULFORD

Media

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Cable reference id: #08NEWDELHI1479
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Reference id aka Wikileaks id #156119 ?
Subject New Delhi Weekly Econ Office Highlights For The Week Of May 26-30, 2008
Origin Embassy New Delhi (India)
Cable time Fri, 30 May 2008 13:00 UTC
Classification UNCLASSIFIED
Source http://wikileaks.org/cable/2008/05/08NEWDELHI1479.html
Referenced by 08NEWDELHI1561
History
Time unknown: Original unredacted version, leaked to Wikileaks
Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXRO7116
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #1479/01 1511300
ZNR UUUUU ZZH
R 301300Z MAY 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 1953
INFO RUEHCG/AMCONSUL CHENNAI 2969
RUEHCI/AMCONSUL KOLKATA 2261
RUEHLH/AMCONSUL LAHORE 4433
RUEHBI/AMCONSUL MUMBAI 2075
RUEHPW/AMCONSUL PESHAWAR 4869
RUEHIL/AMEMBASSY ISLAMABAD 4943
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
Hide header
UNCLAS SECTION 01 OF 04 NEW DELHI 001479

SIPDIS

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR
DEPT PASS TO USTR CLILIENFELD/AADLER
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA ABAUKOL
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN
STATE FOR SCA/INS AND EB/TRA JEFFREY HORWITZ AND TOM ENGLE
USDA PASS FAS/OCRA/RADLER/BEAN/CARVER/RIKER
EEB/CIP DAS GROSS, FSAEED, MSELINGER
USTR FOR CATHERINE HINCKLEY

E.O. 12958: N/A
TAGS: EAGR [Agriculture and Forestry], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], EPET [Petroleum and Natural Gas], ETRD [Foreign Trade], SENV [Environmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], ECPS [Communications and Postal Systems], BEXP [Trade Expansion and Promotion]
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR THE WEEK OF MAY
26-30, 2008

NEW DELHI 00001479 001.2 OF 004

¶1. (U) Below is a compilation of Economic highlights from Embassy
New Delhi for the week of May 26-30, 2008, including the following
items:

-- INDIAN GOVERNMENT RELAXES OVERSEAS BORROWING NORMS
-- RETAIL REPORT DRAWS VARIED RESPONSES
-- BANGALORE AIRPORT OPENS
-- SLIGHT PROGRESS ON INDO-EU FTA
-- AHLUWALIA IN RACE FOR THE POST OF RBI GOVERNOR
-- FINANCE MINISTER PRESENTS CSR AWARDS
-- REPORT PROJECTS 528 MILLION CELLULAR SUBSCIBERS BY 2010
-- INDIA BALKS OVER OFFER OF LIECHTENSTEIN BANK DATA
-- BANGALORE HOTEL ROOM RATES DECLINE

INDIAN GOVERNMENT RELAXES OVERSEAS BORROWING NORMS
----------------------------------
¶2. (U) The Finance Ministry at a May 29 high-level committee meeting
on External Commercial Borrowings (ECBs), chaired by Finance
Secretary Subbarao and attended by other Finance Ministry and
Reserve Bank of India (RBI) officials, agreed to ease the overseas
borrowing norms for companies. The liberalized guidelines will allow
infrastructure companies to bring into India $100 million in foreign
financing which should boost investment in airports, ports, and the
power sector (companies still face no limit on foreign borrowing
that is used for investment abroad). According to the 11th five
year plan (2007-12), India's infrastructure sector requires $500
billion worth of investment, of which $30 billion is expected to
come through the ECB route. For other corporates, the ceiling on
ECBs to fund rupee expenditure has been raised to $50 million from
the current $20 million. Under the approval route, a borrower
requires prior approval of RBI to borrow for permissible end-uses.
The government has also increased the interest rate ceiling over six
month London Interbank Offer Rate (LIBOR), making it easier for
small and medium firms to access the foreign debt market.
¶3. (U) The government has also enhanced the investment limits for
Foreign Institutional Investors (FIIs-registered with the Securities
and Exchange Board of India) in government securities to $5 billion
from the current $3.2 billion and doubled the ownership in corporate
bonds to $3 billion in an attempt to strengthen the debt market. The
relaxation in the ECB rules and the easing of FII rules will help
bring in higher capital flows, which have declined over the past
eight months, both because of ECB restrictions imposed in August
2007 as well as more cautious global capital market sentiment
towards emerging markets - especially those that, like India, have
seen strong returns and become more richly valued in the past few
years.

RETAIL REPORT DRAWS VARIED RESPONSES
----------

¶4. (SBU) The Indian Council for Research on International Economic
Relations' (ICRIER) report on the impact of organized retail has
finally been released, approximately seven months after it was
originally due. The report's early findings were laid out by
business daily The Mint in December 2007, and the findings of the
final report are much the same. [Comment: A source at ICRIER told
Econoff in November 2007 that the report had been completed on time
and was ready for release in October 2007 but that the Ministry of
Commerce & Industry had asked ICRIER to hold off on its release.]

¶5. (U) The report indicates that while organized retail will
definitely cut into the business of mom-and-pop shops in the near
term, the impact on profits for small traders will diminish over
time. The report further projects that even with dramatic growth in
the organized sector, unorganized retailers will retain 84 percent
of the market share even in 2013, down from 95 to 97 percent today.
The report's authors also dubbed unorganized retail "a major

NEW DELHI 00001479 002.2 OF 004

bottleneck to raising productivity in both agriculture and industry"
and encouraged the GOI to reduce licensing requirements to encourage
the growth of organized retail. Media responses have been varied,
with some sources hailing ICRIER's advice as rational and
progressive, while others cite it as further proof of the need to
protect small traders by denying entry to organized retailers.

BANGALORE AIRPORT OPENS
-----------------------

¶6. (U) Bangalore International Airport Limited (BIAL) began
operations at midnight between May 23 and May 24 with a low key
inaugural function. Bangalore High Court dismissed several public
interest lawsuits brought by prominent Bangalore citizens such as
Kiran Mazumdar Shaw, CEO of Biocon, and Mohandas Pai, Director of
Infosys, to keep the old Hindustan Aeronautics Limited airport
operational. Vinay Rao, Vice President, Infosys, told post it takes
over two hours to reach the airport from the company headquarters
requiring the use of a helicopter to cut travel times. Apart from
high costs, the levy of a user development fee of a little under $20
caused considerable heart burn; BIAL management decided to waive the
fee for three months for domestic travelers following protests.

¶7. (U) Manish Kaushal, Manager of Aviation Contracts, told Post that
vendors were still in the process of setting up operations. He
expected airport operations to settle down in two weeks. Sebastian
Krugmann, Assistant Manager, Global Ground, providers of ground
support services, told post that some of the workers were getting
used to the equipment and procedures. He said complaints of delayed
baggage arrival and fueling was normal in the first few days of any
airport. He pointed to the problems at Heathrow's new T5 terminal
as an example.

SLIGHT PROGRESS ON INDO-EU FTA
--------------------------------------------- --

¶8. (SBU) European Commission Trade Counselor Bermejo has reported
some progress in Indo-EU FTA talks. Two weeks ago the GOI submitted
it list, originally promised for November 2007, of the 90 percent of
European goods whose import tariffs will be zeroed out by India in
the seven years following the signing of an FTA. The next round of
negotiations is tentatively scheduled for the second week of July,
at which time the GOI may propose the time sequencing that they are
seeking for lowering tariffs.

AHLUWALIA IN RACE FOR THE POST OF RBI GOVERNOR
-----------------------------------------

¶9. (U) Media reported that according to a Ministry of Finance
official, Montek Singh Ahluwalia, Deputy Chairman of the Planning
Commission may be a strong contender for the post of Governor of the
Reserve Bank of India (RBI). The current Governor Reddy's term comes
to an end in September 2008. Other potential candidates being
considered are Rakesh Mohan, currently RBI's Deputy Governor,
Finance Secretary Subba Rao and Adarsh Kishore, India's Executive
Director at the IMF in Washington, with the final decision taken by
the Prime Minister and the Finance Minister. If the BJP-led
government comes to power (elections are due next May) Ahluwalia may
lose his present job at the Planning Commission as he is a political
appointee of the present UPA government. RBI governors have a fixed
term of at least three years regardless of change in government; in
the case of current Governor Y.B. Reddy, the term was extended to
five years.

¶10. (U) Ahluwalia is extremely close to PM Singh. He served as
Singh's secretary in the Department of Economic Affairs, Ministry of
Finance, and later as the Finance Secretary. He was instrumental in

NEW DELHI 00001479 003.2 OF 004

pushing through the reforms process initiated in 1991 by then
Finance Minister Singh. As Deputy Chairman of India's Planning
Commission, he is also the core convener of the US-India Economic
Dialogue. Importantly, he has recently been a strong voice for
financial market reform, including endorsing the Rajan Committee
recommendations. Mohan came to RBI as Deputy Governor in late 2002
but, before finishing his three-year term, transferred to the
position of Secretary of the Department of Economic Affairs at the
Finance Ministry, only to come back to the central bank after eight
months. He is considered a good economist and is very familiar with
the functioning of the central bank. The biggest challenge for the
new governor will be controlling inflation, currently running at
7.8%, above the RBI's target of 5%. GDP growth is also slowing,
following tightening of monetary policy through a series of hikes of
banks' cash reserve ratio.

¶11. (SBU) Numerous contacts in private sector financial firms,
foreign and domestic, academics and the press have noted the need
for fresh blood at RBI to enable India's financial sector reform
process to move faster. RBI is widely viewed as a key obstacle in
almost every facet of financial market development. From a policy
perspective, Rakesh Mohan is considered to be an ideological heir to
Y.B. Reddy. Most analysts and market participants in Mumbai feel
that Mohan would continue the slow, cautious path of Reddy. The
Economic Research team at Goldman Sachs India believes that a dark
horse candidate may yet be the final choice of the government, much
like C.B. Bhave was chosen to head the Securities and Exchange Board
of India over several other more prominent candidates. In this
case, the Goldman Sachs analysts told Congenoffs that Kishore was
still in the running.

FINANCE MINISTER PRESENTS CSR AWARDS
---------

¶12. (U) Finance Minister P. Chidambaram reinforced the importance of
Corporate Social Responsibility (CSR) while presenting awards to six
companies in a FICCI organized event in mid-May. Both public and
private sector companies were amongst the awardees. He mentioned
that inclusive growth could only be sustained through 'social
conscience' which will lead to social responsibility. He urged
FICCI to publicize the Prime Minister's social charter for companies
to bring about the genuine growth. Industry representatives stated
that their involvement in finding solutions to social issues helped
their own businesses in the long run. They agreed that CSR is
gradually morphing from a mere philosophy to a strong business case
for Indian industry and that many companies are committed to CSR.

REPORT PROJECTS 528 MILLION TELECOM SUBSCIBERS BY 2010
-----------------------------
¶13. (U) A recent joint report released by business chamber ASSOCHAM
and PricewaterhouseCoopers (PwC) indicates that India will continue
to be the fastest-growing telecom market in the world. The market
is expected to comprise 528 million subscribers in 2010, of which
480 million will be mobile and 48 million fixed-line. This compares
to the current figure of 310 million total customers and implies a
compound annual growth rate of 28%. Revenues from mobile services
are expected to increase to $35 billion by 2010 versus $22 billion
in FY 2007-08. The Indian telecom market enjoys the advantage of
being a predominantly pre-paid driven market, with the lowest rates
in the world, some of the world's cheapest mobile handsets, and
intense competition driven by the a large number of players. The
report adds that constant innovation in pricing of services and
handsets were the two main factors contributing to growth. Further,
while urban markets are fast reaching saturation, operators are yet
to work out successful business models to target rural India, as the
cost of setting up mobile network in such places is high.

NEW DELHI 00001479 004.2 OF 004

INDIA BALKS OVER OFFER OF LIECHTENSTEIN BANK DATA
------

¶14. (U) According to The Times of India, the German government has
offered to share a list of account holders at Liechtenstein's LTG
Bank with the GOI, but the GOI has not yet accepted the offer.
Liechtenstein has long served as a tax haven for wealthy Indians,
among many others, and some fear that its banks could also be used
for terrorist financing or other illicit purposes. The Times quotes
a representative of Transparency International as saying, "It is
alleged that this money belongs to rich and powerful politicians,
industrialists and stock brokers, and that is [the reason for] the
reluctance on the part of [the] government of India."

BANGALORE HOTEL ROOM RATES DECLINE
--------------------

¶15. (U) Hotel room rates softened over the last two months following
a drop in the number of business travelers to Bangalore. M.P.
Purushothaman, President, South India Hotels and Restaurants
Association and Empee Hotels, told post that occupancy in Bangalore
had dropped from 85 percent to 78 percent over the last six months;
consequently four and three star hotels dropped rates between 5 and
10 percent. Amala Pothen, Sales Director at Taj Hotels, told post
that the group has not changed rates in Bangalore yet but did not
rule out cuts with an estimated 2000 five star rooms coming online
in the next two years.

¶16. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi

MULFORD

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Cable reference id: #08NEWDELHI703
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #144561 ?
Subject Assistant Secretary Boucher Presses For Progress On Bilateral Issues With Foreign Secretary, Joint Secretary
Origin Embassy New Delhi (India)
Cable time Thu, 6 Mar 2008 12:42 UTC
Classification CONFIDENTIAL
Source http://wikileaks.org/cable/2008/03/08NEWDELHI703.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXYZ9083
OO RUEHWEB

DE RUEHNE #0703/01 0661242
ZNY CCCCC ZZH
O 061242Z MAR 08
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0778
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEAIIA/CIA WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUEKJCS/JOINT STAFF WASHDC
RHEHNSC/NSC WASHDC
RUEKJCS/SECDEF WASHDC
RUEHUNV/USMISSION UNVIE VIENNA 1424
RUCNDT/USMISSION USUN NEW YORK 6119
Hide header
C O N F I D E N T I A L NEW DELHI 000703

SIPDIS

SENSITIVE
SIPDIS

E.O. 12958: DECL: 03/04/2018
TAGS: PREL [External Political Relations], PGOV [Internal Governmental Affairs], EAGR [Agriculture and Forestry], ETRD [Foreign Trade], AMGT [Management Operations], CVIS [Visas], MARR [Military and Defense Arrangements], OEXC [Educational and Cultural Exchange Operations], OVIP [Visits and Travel of Prominent Individuals and Leaders],
PTER [Terrorists and Terrorism], TSPA [Space Activities], TSPL [Science and Technology Policy], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: ASSISTANT SECRETARY BOUCHER PRESSES FOR PROGRESS
ON BILATERAL ISSUES WITH FOREIGN SECRETARY, JOINT SECRETARY

Classified By: Ambassador David Mulford for Reasons 1.4 (B and D)

¶1. (C) Summary: In separate March 4 meetings, Assistant
Secretary Richard Boucher reviewed the bilateral relationship

SIPDIS
with Foreign Secretary Shivshankar Menon and Joint Secretary
Gaitri Kumar. The Ambassador joined in the Menon meeting.
They agreed on a renewed effort to achieve progress on
several issues with promise for stregthening the foundations
of the relationship. They identified the following issues
which can be advanced in the coming months: Defense
Agreements, Fulbright Agreement, cooperation in education and
agriculture, Technology Safeguards Agreement, Agriculture
Knowledge Initiative and visas. They previewed the proposed
visit by External Affairs Minister Pranab Mukherjee to
Washington later this month, agreeing to work together to
develop a good agenda. Joint Secretary Gaitri Kumar promised
a prompt response to the proposed May 5 date for the next
round of the counterterrorism dialogue. Assistant Secretary
Boucher proposed establishing a structured bilateral dialogue
to discuss regional policies in Africa, East Asia and the
Gulf. End Summary.

Bilateral Relationship: Nuts and Bolts
--------------------------------------

¶2. (C) In a March 4 meeting, Foreign Secretary Shivshankar
Menon and Assistant Secretary Richard Boucher shared an
optimistic assessment of the relationship. During a separate
March 4 meeting, Joint Secretary Gaitri Kumar gave an upbeat
read-out of the recent visits to India by Secretary of
Defense Gates and Under Secretary of Commerce Mancuso. She
noted that the Secretary of Defense's visit, in particular,
highlighted the breadth and depth of the United States-India
bilateralQelationship. She underscored the "excellent" and
intense discussions that the two sides had on Afghanistan and
Pakistan during Secretary Gates' visit.

¶3. (C) Drawing attention to the limited time remaining for
the current Indian and United States administrations, Boucher
proposed that the two sides focus in the coming months on
accelerating work to achieve progress on issues that will
strengthen the foundations for the bilateral relationship.
Menon and Kumar agreed that the U.S. and India must "lock in"
the various pending agreements and activities currently under
discussion "irrespective of elections." In this context,
Boucher raised the following issues with Menon and Kumar:

-- Defense Agreements (Logistics Support Agreement, End Use
Monitoring Agreement, Communication Interoperability and
Secure Memorandum of Agreement): Menon said that the End-Use
monitoring and Communications agreements are "very close,"
but Defense Minister A.K. Antony has asked for one more
inter-ministerial consultation on the Logistics Support
Agreement. Kumar noted that the Indian Ministries of Defense
and External Affairs have instructions from the "highest
levels to do what needs to be done" to finalize the
agreements. She added that the Indian Government is acutely
aware that time is running out. She explained that the
outstanding question was merely one of timing where the
Indian side needs to find the best way of dealing with the
domestic political implications of entering into these
agreements. (Note: National Security Advisor Narayanan had
previously told Defense Secretary Gates that the Prime
Minister had charged him with concluding all three agreements
quickly. Narayanan had said that a short intense effort
could close out all three agreements. End Note.)

-- Fulbright Agreement: Menon and Kumar confirmed that the
holdout Indian Ministries had cleared the agreement and the
matter was on its way to the Cabinet for approval. (Note: PA
Min/Couns had earlier been told by Indian officials that the
agreement had been cleared by all the Indian government
stakeholders. End Note.) Boucher suggested that the two
sides consider signing the agreement during External Affairs
Minister Pranab Mukherjee's proposed Washington visit later
this month.

-- Education: Kumar was enthusiastic about the idea of the
United States supporting an American Center and a library at
Osmania University in Hyderabad. She suggested that private
sector funding for establishing chairs at Indian universities
be pursued through the CEO Forum, which is in the process of

drafting a paper on education. She believes that Planning
Commission Deputy Chairman Montek Singh Ahluwalia is the key
person to shepherd education issues through the CEO Forum.
Boucher urged liberalization of the Indian education sector.
He noted that such reform would result in an explosion of
private sector involvement in the sector.

-- Fulbright Visas: Boucher and Kumar expressed satisfaction
that a mechanism had been found to expedite issuance of
Indian visas to Fulbright scholars. (Note: the new
procedures shift the responsibility of providing clearance
for Fulbright scholar visas from the Ministry of Home Affairs
in Delhi to the Indian Embassy in Washington on the grounds
that Indian consular officers in the United States are in a
better position to evaluate the background, interests and
affiliations of the applicants. The new system will be
tested starting April, when we expect a large number of new
Fulbright visa applicants. End Note.)

-- Mantis Reciprocity: Boucher expressed grave concern at the
newly-established Indian visa requirements for U.S. visitors
traveling to India for science and technology-related
purposes. Conceding that the U.S. Visas Mantis requirements
for visitors in the science and technology fields are
onerous, he noted that the U.S. has worked assiduously during
the last year to expedite the processing. While we were
working hard to move our visa regime in the right direction,
the India government is moving in the wrong direction, he
cautioned. Kumar acknowledged that the Indian visa
requirements were imposed on the basis of the reciprocity
principle. She did not offer a way out, only suggesting that
the two sides work within the reciprocity constraints to
smooth the processing of visas.

-- Approval of Embassy Positions: Boucher drew attention to
the Secretary's Global Repositioning Initiative from which
the Mission in India has gained more than possibly any other
U.S. Mission in the world. However, he noted,the
restructuring is not going smoothly because of the
two-to-four months that the Indian Government takes in
approving new positions. This has caused uncertainty and
occasional financial hardship for new officers assigned to
India. Kumar responded that she has put in place a system to
expedite the approval process and alert her when delays are
occurring. She asked that action offices in both governments
remain closely in touch with each other to ensure prompt
processing of requests for new positions. Pol/MinCouns noted
that we currently have one pending approval -- the incoming
Consul General for Hyderabad -- but cautioned that the new
system will be put to the test when our requests start
increasing as we approach the summer rotation season.

-- Commercial Space Launch Agreement: Handing Kumar a
nonpaper, Boucher offered a revised U.S. proposal in which
the U.S. would agree to separation of the Technology
Safeguards Agreement and the Space Launch Agreement. He
noted that the U.S. would be prepared to proceed with the
Technology Safeguards Agreement provided we received a
commitment, preferably in writing, from the Indian Government
that it was prepared to engage in regular consultations on
commercial satellite launch and services in a specified
forum. The U.S. would begin licensing civilian,
non-commercial satellite launches, which could be expanded to
other areas if there is progress on the Space Launch
Agreement. Kumar agreed to discuss the new U.S. concept
paper with Indian stakeholders and respond after they have
had an opportunity to study it. Menon also pledged to involve
the Indian Space Research Organization, which has the lead on
this issue and will be our key interlocutor.

-- Agriculture: Referring to a recent letter from Under
Secretary Burns to Foreign Secretary Menon on enhanced

SIPDIS
cooperation in agriculture, Kumar noted that the Indian side
has not yet completed its inter-Ministerial deliberations.
With regard to the U.S. proposal of drawing in the private
sector, she suggested that this would best be accomplished
by bringing in the Federation of Indian Chambers of Commerce
and Industry and the U.S.-India Business Council, which would
generate participation by private companies. Boucher
reinforced the U.S. desire to expand the dialogue while
pointing out that funds were running out.

Mukherjee Visit: Strong Agenda
------------------------------

¶4. (SBU) Kumar outlined the Indian Government's thinking on
the proposed visit of External Affairs Minister Pranab
Mukherjee to Washington beginning on March 24. Aside from
developing a strong agenda for Mukherjee's meetings with the
Secretary, Kumar said they are seeking meetings with Senator

SIPDIS
Biden and Representative Berman as the heads of the foreign
relations committees in the two houses. In addition, the
Indians will plan a speech/public event at a nonpartisan
think-tank and a public outreach event to recognize
Indian-American groups which supported the U.S.-India civil
nuclear agreement. She singled out two items that the
Indians would like on the agenda for visit: a U.S. response
on the Indian nonpaper on science and technology cooperation;
and movement on Social Security totalization. Kumar noted
that Foreign Secretary Menon will accompany Mukherjee in
Washington.

¶5. (SBU) Boucher welcomed Mukherjee's Washington visit and
suggested to Kumar that the narrative of the visit should be
two-fold: the two countries are committed to finalizing the
civil nuclear agreement; and, separate from the civil nuclear
agreement, the two countries will strengthen the numerous
other areas of cooperation that make this a strong and
growing bilateral relationship.

¶6. (SBU) Menon confirmed that Mukherjee would go to
Washington, and asked whether Mukherjee should go the Hill.
Boucher advised that Mukherjee would have a good opportunity
to expose key members of the U.S. Congress to the Indian
government's commitment to the partnership with the U.S. and
the civil nuclear initiative, particularly with new
leadership in the House Foreign Relations Committee.
However, he cautioned, Mukherjee will be in Washington during
the Easter recess, which might make meetings difficult to
arrange.

Structured Dialogue: Africa, Gulf, East Asia
--------------------------------------------

¶7. (C) While acknowledging the dramatic growth of the
bilateral relationship in recent years, Boucher noted that
one aspect that remains missing from the partnership is a
systematic, regular dialogue between the two countries on
parts of the world outside the South Asia region. Handing
Kumar a nonpaper, he proposed that the two sides establish a
structured discussion about Africa, the Gulf and East Asia.
Kumar was receptive to the proposal. She noted that while we
have maintained a bilateral strategic dialogue at the Under
Secretary-Foreign Secretary level, we should consider

SIPDIS
expanding the areas under discussion to include regions
identified by Boucher. She said the Indian side will respond
after studying the ideas contained in the U.S. paper.

Counterterrorism Dialogue: Going Well
-------------------------------------

¶8. (SBU) Noting that he had talked to Coordinator for
Counterterrorism Dell Dailey before embarking on this visit,
Boucher expressed U.S. satisfaction at the bilateral dialogue
on counterterrorism. He said U.S. participants in the
dialogue looked forward to working with Additional Secretary
Katju, who recently replaced K.C. Singh as head of the
Political and International Organization division at the
Ministry of External Affairs. He reiterated the U.S.
proposal that the next round of bilateral discussions on
counterterrorism be held on May 5. Kumar responded that the
Indian side is eager to schedule the discussions during this
timeframe but is checking to see if there might be a conflict
with a Non-Aligned Movement meeting on the same date. She
promised to get back to us with a firm answer at the
earliest.

Trafficking in Persons: Show Progress
-------------------------------------

¶9. (SBU) Boucher related that Secretary Rice has followed the
issue of trafficking in persons closely, and much of the
discussion between our two sides has focused attention on
bonded labor. Noting that with each review, we are "at risk

of disaster," he urged Menon to show progress. Menon
responded that "we are working on it intensively."

McDermott: Please Keep at Secretary Level
-----------------------------------------

¶10. (SBU) Boucher and Ambassador Mulford urged Menon to
continue to give high level attention to the McDermott
dispute so it can be resolved at the earliest.

¶11. (U) This message has been cleared by Assistant Secretary
Boucher.
MULFORD

Media

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Cable reference id: #07NEWDELHI4272
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #122608 ?
Subject Ambassador Discusses Ceo Forum Issues With Planning Commission Deputy Chairman Ahluwalia
Origin Embassy New Delhi (India)
Cable time Tue, 18 Sep 2007 12:16 UTC
Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY
Source http://wikileaks.org/cable/2007/09/07NEWDELHI4272.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Wed, 6 Apr 2011 19:54: First publication, unredacted, however non-text content differs
Fri, 26 Aug 2011 02:34: Re-published, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
O 181216Z SEP 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8314
INFO RUEHCG/AMCONSUL CHENNAI 1496
RUEHCI/AMCONSUL KOLKATA 0853
RUEHLH/AMCONSUL LAHORE 4124
RUEHBI/AMCONSUL MUMBAI 0588
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
Hide header
UNCLAS SECTION 01 OF 02 NEW DELHI 004272

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR NEC DIRECTOR HUBBARD
USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR
DEPT PASS TO USTR DHARTWICK/CLILIENFELD/AADLER
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA ABAUKOL
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN
STATE FOR P, SCA/INS AND EB/TRA JEFFREY HORWITZ AND TOM ENGLE

E.O. 12958: N/A

TAGS: EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], EPET [Petroleum and Natural Gas], ETRD [Foreign Trade], SENV [Environmental Affairs], PREL [External Political Relations], PARM [Arms Controls and Disarmament], TSPL [Science and Technology Policy], KNNP [Nuclear Non-Proliferation], TRGY [Energy Technology], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: AMBASSADOR DISCUSSES CEO FORUM ISSUES WITH PLANNING
COMMISSION DEPUTY CHAIRMAN AHLUWALIA

NEW DELHI 00004272 001.2 OF 002

¶1. (SBU) Summary: The Ambassador met September 14 with Planning
Commission Deputy Chairman Montek Ahluwalia to discuss the upcoming
CEO Forum, mid-October visit to India by Energy Deputy Secretary
Sell for the APP and Energy Dialogue, and the end of October visit
by Treasury Secretary Paulson and NEC Director Hubbard. Ambassador
also urged GOI resolution of the outstanding legacy issues of
McDermott and Dow Chemical. End Summary.

¶2. (SBU) The Ambassador noted that the CEO Forum was unique in that
it was one of the few private sector forums that attracted great
interest and attendance from senior government officials. It was
therefore important that the September 24 discussion focus on
critical issues including infrastructure financing and the impact of
inadequate IPR protection on foreign investment in India that has
lead to the recent decision by the Swiss pharmaceutical company,
Novartis, to pull out of India after its latest patent application
was denied. Ahluwalia agreed and said that he hoped the U.S.-India
civil nuclear agreement would not be on the agenda since the ball
was in India's court to move forward in a process well known to
everyone. Ambassador noted that, at some point, prospects for U.S.
private sector investment in India's civil nuclear industry would be
an appropriate discussion topic at the CEO Forum, but not until the
Agreement had been operationalized. Ahluwalia said that he would
discuss with Foreign Secretary Menon keeping the civil nuclear
agreement off the agenda, and Ambassador said that he would take it
up with Under Secretary Burns.

¶3. (SBU) The Ambassador said that it might be useful to repeat the
formula used in last year's successful CEO Forum by using the lunch
to follow up on important economic issues previously raised in the
morning meeting, and avoid topics like civil nuclear and the Doha
Round that will accomplish little in the short time available.
Ahluwalia agreed and said that CII and the Ministry of External
Affairs had been discussing with State and the NSC the idea of
moving from one large rectangular table to several round tables that
would group CEOs and government officials according to their
interest in particular issues/topics. Ahluwalia added that the GOI
intended to present a 14 point non-paper on progress made and
remaining/new issues that could be useful for discussion and follow
up after the meeting. Ahluwalia said that Hubbard in a recent phone
conversation said that the U.S. also intended to raise
agricultural/phyto-sanitary concerns.

¶4. (SBU) The Ambassador said that the October 29-30 visit of
Treasury Secretary Paulson to India presented a great opportunity to
focus on creating a climate of finance for infrastructure. He added
that Paulson and his team will bring great knowledge and experience
on financial market supervision, regulatory issues, securitization,
debt, and other key areas. Ahluwalia said that he will be joining
the Ambassador in the October 29 Infrastructure Conference in Mumbai
that Paulson and Indian Finance Minister Chidambaram will open.
Ahluwalia noted that it would be helpful if there was some movement
on U.S. approval of ICICI's and Bank of India's long-pending U.S.
bank branch applications. He added that there was a lot of
irritation in MOF over this issue, especially since Secretary
Paulson had told Chidambaram a year ago that there would be action.
Despite the lack of progress, Ahluwalia noted that MOF had recently
approved three new branches in India for Citibank. Ambassador
responded that the delay was not due to protectionism on the U.S.
part, but because of regulatory issues that required India's
establishment of an anti-money laundering/terrorist financing regime
(AML/CTF) that meets international standards. The Ambassador noted
that India had joined the Financial Action Task Force (FATF) as an
observer with the goal of full membership, which was a welcome step.
Ahluwalia asked for a one page note on outstanding issues related
to AML/CTF that he could discuss with Chidambaram before the CEO
Forum.

¶5. (SBU) The Ambassador said that Deputy Secretary of Energy Clay
Sells will visit India in mid-October for the Asia Partnership
Program (APP) summit and the U.S.-India Energy Dialogue. He added
that Secretary Rice is also considering coming out for the APP.

¶6. (SBU) Aluwalia asked what the key deadlines are for

NEW DELHI 00004272 002.2 OF 002

operationalizing the Civil Nuclear Agreement. The Ambassador said
that there can be no Congressional vote until India has reached
agreement first with the IAEA, then the NSG. Given the 90 day
Congressional review requirement before a vote is possible, India
would have to conclude the first two steps by December in order to
get a vote in Congress by the end of February. After that, getting
it on the Congressional calendar next year would be much more
difficult. Ambassador added that the U.S. has been very quiet
publicly on the Agreement since July in order to avoid "stirring
things up" for the GOI as it deals with political debate here.
Ahluwalia said that the issue in India is who will blink first,
Congress or the Left. For the Left, it is clear the issue is not
the 123 Agreement, but the deepening U.S.-India relationship which
they vehemently oppose. Ahluwalia said that there are two
possibilities if Congress calls the Left's bluff: it could continue
as a minority government until calling for elections, or the Left
could join with the BJP in bringing down the government, leading to
elections. In either case, Ahluwalia said the Government is
presently in a good political position to go into elections, but it
would be better to go to the polls on issues other than the 123
Agreement.

¶7. (SBU) Returning to the CEO Forum, the Ambassador said that
McDermott International CEO Nesbitt will be attending and there are
reports that the GOI may announce at the Forum that it is taking
steps to finally resolve this long outstanding legacy issue.
Ambassador cautioned that any action that fell short of
expeditiously settling in full the Supreme Court Judgment in favor
of McDermott, such as a partial payment through the bankruptcy
proceedings, will go down badly and create major ill feelings in the
U.S. business community. The Ambassador also cited the GOI's
continued third party claims against Dow Chemical in the ongoing
Bhopal land reclamation lawsuit as a further impediment by Dow and
others to invest in India, and he asked that the GOI drop its claims
against Dow. Ahluwalia took the Ambassador's points on McDermott,
noting the importance of finally putting the issue to rest. On Dow,
he said that the GOI does not understand Dow's concern about future
civil or criminal liability since the GOI third-party claims do not
suggest a GOI presumption that Dow is responsible for the cleanup.
The GOI's problem is that the NGOs are very active and vocal in this
case, and it is very difficult for the Government to now drop its
claims against Dow. The GOI was hoping for a quick resolution of
the case which would have settled the issue, but Dow prevented this
by asking for a stay in the proceedings. Ahluwalia noted that the
issue of whether a company like Dow can be held liable for the
actions of another company solely on the basis of acquiring that
company after the culpable activity occurred is an important and
novel legal issue in India that needs to be resolved. Ahluwalia
recommended that the Ambassador discuss the issue with Finance
Minister Chidambaram - a noted jurist.

¶8. (SBU) Ambassador again stressed the importance of the financial
sector in upcoming U.S.-India discussions, noting that a central
economic issue for India is the long-term status of its financial
markets. He added that India's financial markets today have the
makings for a regional financial center, given India's huge
hinterland and large and increasing savings rates that mirror the
conditions in the U.S. banking sector a generation ago. The
Ambassador said that virtually all large U.S. banks were once
domestic-centered, before they went global. Ahluwalia agreed,
noting that the GOI (with MOF and Prime Minister approval) had just
commissioned a High Level Committee on Financial Sector Reforms,
composed mostly of private sector individuals, to make
recommendations by next March on next steps in financial sector
reform. He added that, until India ends the dominance of the State
in the banking sector, there will never be a level playing field for
private or foreign banks that is necessary if India is to establish
itself as a regional financial center.

MULFORD

Media

The Hindu : News / The India Cables : Calling the Left's ‘bluff': Ahluwalia on the nuclear deal
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Cable reference id: #07NEWDELHI4212
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #122216 ?

Subject New Delhi Weekly Econ Office Highlights For September 10-14, 2007
Origin Embassy New Delhi (India)
Cable time Fri, 14 Sep 2007 10:13 UTC
Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY
Source http://wikileaks.org/cable/2007/09/07NEWDELHI4212.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXRO7609
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DE RUEHNE #4212/01 2571013
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TO RUEHC/SECSTATE WASHDC 8224
INFO RUEHCG/AMCONSUL CHENNAI 1464
RUEHCI/AMCONSUL KOLKATA 0837
RUEHLH/AMCONSUL LAHORE 4119
RUEHBI/AMCONSUL MUMBAI 0563
RUEHPW/AMCONSUL PESHAWAR 4641
RUEHIL/AMEMBASSY ISLAMABAD 3916
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
Hide header
UNCLAS SECTION 01 OF 05 NEW DELHI 004212

SIPDIS

SENSITIVE
SIPDIS

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR
DEPT PASS TO USTR DHARTWICK/CLILIENFELD/AADLER
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA ABAUKOL
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN
STATE FOR SCA/INS AND EB/TRA JEFFREY HORWITZ AND TOM ENGLE

E.O. 12958: N/A
TAGS: EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], EPET [Petroleum and Natural Gas], ETRD [Foreign Trade], SENV [Environmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS FOR SEPTEMBER
10-14, 2007

NEW DELHI 00004212 001.2 OF 005

¶1. (U) Below is a compilation of Economic highlights from Embassy
New Delhi for the week of September 10-14, 2007.

NEW MORE LIBERAL AND
RATIONAL FDI POLICY
IN OCTOBER
-------------------------

¶2. (U) Director Gauri Singh in the Department of Industrial Policy
and Promotion at Ministry of Commerce and Industry told Econoff on
September 13 that the GOI will release a new FDI policy this October
2007. Singh said the new policy will allow for "greater
liberalization and rationalization" in core sectors and essential
services. In reviewing some of the important measures under
consideration, the meeting highlighted following reforms under
consideration:

-- Petroleum sector - removal of condition that company will have to
divest 26 percent of the equity in favor of Indian partner/public
within five years of commencing actual trading and marketing
petroleum products. Singh highlighted that the new policy is likely
to ease the FDI limit for PSU refineries.

-- Civil aviation sector - creating new supervisory body for air
traffic services and formulating separate guidelines to regulate
foreign investment in air traffic services, in close consultation
with Ministry of Civil Aviation. There is also a proposal to allow
FDI in maintenance and repair operations (MRO) and up to 100 percent
investment in aviation-related services like charter flights, ground
handling, and helicopter services (which are currently subject to a
49 percent FDI cap).

-- Retail sector - increasing FDI limit in companies trading
single-brand products and permitting foreign investment in companies
trading multi-brand products. Singh noted that before the GOI
makes any decisions on opening up the retail sector to further
investment, they will wait for an ICRIER study (commissioned by GOI)
to look at gains and losses from relaxing foreign investment limits
in retail trading.

¶3. (U) Singh was careful not to give many details or lengthy
responses to questions to avoid revealing specific details about the
policy. As FDI equity inflows in India continue to increase in
comparison to past years, the new FDI policy is expected to go
further in streamlining the process for foreign investment to help
India sustain capital flows in critical sectors. During the first
quarter of 2007-08, FDI inflows totaled USD 4.9 billion as against
USD 1.7 billion in the corresponding quarter of 2006-07, an increase
of 185 percent. Commerce Minister Nath has also emphasized the new
policy will be aimed at job creation, new investment, and "if there
are any inefficiencies, will be ironed out."

SHAPING THE GLOBAL
INNOVATION ECONOMY
------------------

¶4. (U) FICCI and the Los Angeles-based Pacific Council on
International Policy gathered in Delhi on September 10-11 for the
first meeting of a task force of prominent buriness leaders on
"Shaping the Global Innovation Economy: Enhancing Cooperation in
India-US relations." The bi-national task force will look at issues
to shape the global innovation economy - particularly in new
technology and aerospace sectors - and identify areas of cooperation
between India and US. The discussions focused on how India is no
longer just a manufacturer of technology products but is becoming a
promising market for technology innovation. Also, U.S. business
leaders highlighted the strong cooperation in IT and with
Indian-Americans, particularly on the West Coast. The task force is
co-chaired by Habil Khorakiwala, President of FICCI, and Richard
Celeste, former US Ambassador to India, and is expected to release
their study on policy recommendation for increasing U.S.-India
innovation economy trade and investment in 2008.

NEW DELHI 00004212 002.2 OF 005

MUST MOVE BEYOND A
DENIAL REGIME
--------------

¶5. (U) Minister Kapil Sibal of Science & Technology and Earth
Sciences opened the Task Force meetings on September 10 and focused
his remarks on the "lively debate on the civil nuclear deal," which
he commented is expected in any democracy. Sibal emphasized that
both governments need to move away from a "denial regime" and take
into consideration actual concerns, referring to dual use
technologies. Today, he said, nearly all technologies can be put to
dual use. Minister Sibal said that at the "heart of the nuclear
deal is that it creates a gateway of opportunity ... and will help
realize India's potential as a market for nuclear power." He
further commented that India is a "one stop" country - "democratic
and with a process to move away from denial to regulatory phase."
In linking the ongoing 123 Agreement debate in India to the Task
Force's broader mission of promoting global innovation, the Minister
said the concept of dual use in the 21st century is a "non-starter."
He also remarked on how the 123 Agreement is helping to change
India's relationship with global players and noted that as soon as
the 123 Agreement is signed, "India will be happy to see the U.S.
and other countries stepping forward and willing to work with Indian
nuclear power." The Minister also emphasized that by giving India
access to nuclear fuel, the global community is increasing the
potential for huge strides in the Indian economy. He tasked FICCI
with drafting an Innovation Act in the next three months for the
ministry's consideration to promote greater global innovation
collaboration and sharing of technology make-up and research.

CREATING A KNOWLEDGE ECONOMY
WITH PPPs IN EDUCATION
--------------------

¶6. (U) Deputy Planning Commission Chairman Montek Singh Ahluwalia
addressed the Task Force on September 11 and focused on how the
government is considering a policy to facilitate greater private
sector participation in the education sector. (Note: In a separate
meeting with Commercial Counselor and Econoffs in late August 2007,
Finance Joint Secretary for Infrastructure Arvind Mayaram also
mentioned how the GOI is looking at public-private partnerships
(PPPs) in education.) According to news reports, these policy
changes are being opposed by the nodal ministry of education, the
Human Resources Development (HRD) ministry, but strongly endorsed by
the Planning Commission representatives who believe these change are
critical in helping India evolve into a knowledge economy.
Ahluwalia also confirmed that the policy would encourage foreign
universities and institutions to set up collaborative institutions
in India through both public and private partnerships as well as
offer degrees and diplomas of same quality and standards of
education as in their own countries. He said the aim is to increase
India's gross enrollment ratio in higher education from the current
10 percent to 15 percent by 2014 and 21 percent by 2020, which will
require a significant increase in the capacity of colleges and
universities to accommodate 6 million additional students.

LETS MOVE FULL STEAM
AHEAD WITH SEZ DEVELOPMENT
--------------------------

¶7. (U) On September 13, 2007 at the fourth annual general meeting
of the Export Promotion Council for Export Operation Units and
Special Economic Zones (SEZs) units, Commerce Minister Kamal Nath
appealed to the state governments to efficiently implement the SEZ
policy by providing single window facilities and all other promised
benefits to promoters. According to Nath, all government
departments should realize that SEZs will be crucial to the Indian
economy as it becomes more open, especially after a number of free
trade agreements (FTAs) come into force. The Minister painted an
optimistic picture of the SEZs' potential role in creating world
class manufacturing facilities, increasing exports, attracting FDI,

NEW DELHI 00004212 003.2 OF 005

and expanding jobs in India. According to the latest GOI data, at
present SEZs - new and converted - are already providing direct
employment to over 230,000 people, with over 100,000 additional jobs
projected by December 2007. Nath also noted that after all the 366
formally approved SEZs become operational, 4 million additional jobs
are likely to be created, and the manufacturing sector will get a
big boost. Thus far, most of the employment provided through SEZs
has been to the rural youth - considered by Nath and others to be
the greatest contribution of SEZs to the Indian economy.

LINES DRAWN ON
ORGANIZED RETAIL
----------------

¶8. (U) The Indian Farmers Association (IFA) and the Bhartiya Udyog
Vyapar Mandal (BUVM), respectively India's largest organization of
farmers and largest organization of traders, announced Tuesday that
they will form a pair of cooperatives to compete with organized
retail if they are unable to accomplish their primary aim of keeping
large retailers out of the food and grocery sector. Under this
model, a cooperative of 2.5 million farmers in Uttar Pradesh, Bihar,
Madhya Pradesh, Punjab, and Haryana would sell to the traders'
cooperative rather than to organized retailers. Mahendra Singh
Tikait, leader of the IFA, said that organized retailers might offer
good prices at first to preclude competition, but eventually farmers
would become dependent and organized retailers could lower prices
whenever they liked. BUVM president Shyam Bihari Mishra claimed
that by sourcing on this model, the trader cooperative could offer
prices to compete with those offered by organized retailers.
Dharmendra Kumar of India FDI Watch supported Mishra's claim.
(Comment: India FDI Watch is affiliated with an anti-globalization
American NGO and also orchestrated the widespread "Quit Retail"
protests in India on August 9. It is possible that they suggested
forming these cooperatives. End comment.)

¶9. (U) Meanwhile, in Kerala, where the communist government is
pushing a modification of the Essential Commodities Act that would
severely restrict the entry of organized retail, a local
consumer-protection committee organized a rally of 2,000 people in
support of big retailers. The Economic Times quoted committee
president Abdulla Koya as saying, "The traders are warning us to be
wary of the big retailers, telling us that they will sell at low
prices for five years and then hike prices. We think it is not a
bad idea to get things at low prices for five years." A farmers'
union in Lucknow also gathered to demand the reopening of organized
retail outlets in Uttar Pradesh that Chief Minister Mayawati ordered
closed on August 23.

¶10. (U) The Left parties in the central government's ruling
coalition have put forward a plan to reduce the political fallout
that the growth of organized retail might cause. They suggested
putting a tax on each item sold by organized retailers, the proceeds
from which would go into a fund used to provide affordable credit to
small retailers and help them compete. The BUVM's Mishra, however,
said that credit is a small piece of the problem and that the only
course of action that would protect traders would be the complete
ban on corporate retail.

¶11. (U) The Indian Council for Research on International Economic
Relations (ICRIER), which the central government tasked with
analyzing the potential impact of organized retail on small vendors,
has announced that it will not endorse such a taxation policy in its
upcoming report. ICRIER's preliminary findings, to be released next
month, are expected to indicate (according to press reports) that
organized retail does not threaten smaller stores. The report is
expected to state, inter alia, that in southern India, where
organized retailers have been operating for some time, small
vendors' revenues have not suffered.

POWER EXPANSION HIGHLIGHTS
COAL-FIRED THERMAL
--------------------

NEW DELHI 00004212 004.2 OF 005

¶12. (SBU) At India Energy Forum's 10th Annual Power Forum, top GOI
energy officials and heads of public and private energy companies
underscored the commitment to sustain India's rapid GDP growth by
expanding India's power generating capacity from its current 132,110
megawatts (April 2007) by 78,530 MW during the 11th Five-Year Plan
(FYP) to over 210,000 MW by March 2012, despite India adding only
21,180 MW of its targeted 41,110 MW of capacity during the 10th
Five-Year Plan of 2002-2007. With 56% of India's households still
lacking access electricity, the GOI is ambitiously aiming to provide
connection to all villages by 2009 and to every household by 2012.
India's per capita electricity consumption is about 40% that of
China, 4% that of the USA, and 22% of world average. The current
gap between demand and supply is 9.9% overall and 13.5% at peak
periods.

¶13. (SBU) While coal-fired thermal now makes up 53.5% (70,682 MW)
of total capacity, it accounts for over 68% of electricity
production due to higher plant load factors, and it will make up
52,905 MW or 67% of the total targeted incremental increase in
capacity in the 11th FYP. Although the Coal Ministry has changed
policies and committed to expanding coal washing and beneficiation,
incentive obstacles remain to realizing the economic and
environmental benefits of washing. For the several proposed
coal-fired, super-critical-reactor, Ultra-Mega Power Projects of
4,000-MW, two have been awarded, a third will soon be bid, and more
states are applying to the GOI to have a UMPP in their jurisdiction.

¶14. (SBU) Hydroelectric capacity is now 26% (34,654 MW) of total
capacity out an estimated potential of 150,000 MW, but yields only
17% of power output due to seasonal rain fluctuations, especially on
run-of-river plants, compared to dam/reservoir plants. Planned
expansion of 16,553 MW during the 11th FYP will be 21% of total
incremental capacity increase. Moreover, peak demand for power in
the northern Indian plains, just south of the hydro capacity in the
Himalayas, for pumping irrigation water occurs during the dry months
(April-July) just before the monsoon, when river flow is lowest.
Whereas, peak hydro production is during and after the monsoon, when
power demanded by irrigation is lowest. The Ministry of Power has
expanded relocation and compensation packages for people displaced
by reservoir/dam hydropower projects.

¶15. (U) Natural gas fired thermal plants, based on domestic
production and imported liquefied natural gas, now provide about 10%
(13,692 MW) of capacity and about 10% of output, but will make up
only 4,242 MW or 5.4% of new incremental capacity in the 11th FYP.
A large share of current natural gas fired power capacity is idle
due to natural gas shortages. Expected new offshore gas output from
the Krishna Godavari basin is expected in the market by early 2009,
but domestic and foreign producers remain concerned about getting
common carrier access at transparent prices to natural gas pipelines
and about future government control over gas allocation prices to
final consumers.

¶16. (SBU) Nuclear power is now about 3% (4,120 MW) of capacity and
about 3% of total output, with 3,380 MW planned for the 11th FYP or
4.3% of the incremental increase. Prospects for nuclear energy's
growing share have improved with the progress on the U.S.-India
Civil Nuclear Agreement.

¶17. (SBU) Wind power continues to have regional prospects, but is
constrained by low load factors and the lack of substation
facilities for evacuation of power. India now has the fourth largest
installed wind power capacity in the world after Germany, United
States, and Denmark. Out of the total installed capacity of
approximately 9,000 MW of grid interactive renewable power in India,
wind power accounts for a major share - 7,028 MW (March 2007) or
about 5.4% of total power capacity. Estimates put India's wind
power potential at 45,000 MW. However, low load factors or capacity
utilization factors averaging about 22% mean wind power contributes
only about 2% of total power output.

NEW DELHI 00004212 005.2 OF 005

Load factors of 35% are being achieved in a few isolated cases with
the use of high efficiency low speed wind machines, sub-transmission
facilities and better synchronization with the typically unstable
Indian grids.

¶18. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi

MULFORD

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Cable reference id: #07NEWDELHI3429
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #116877 ?
Subject New Delhi Weekly Econ Office Highlights
Origin Embassy New Delhi (India)
Cable time Fri, 27 Jul 2007 11:45 UTC
Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY
Source http://wikileaks.org/cable/2007/07/07NEWDELHI3429.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Wed, 6 Apr 2011 19:54: First publication, unredacted, however non-text content differs
Fri, 26 Aug 2011 02:34: Re-published, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXRO4211
RR RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #3429/01 2081145
ZNR UUUUU ZZH
R 271145Z JUL 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 7182
INFO RUEHCG/AMCONSUL CHENNAI 1010
RUEHCI/AMCONSUL KOLKATA 0518
RUEHLH/AMCONSUL LAHORE 4061
RUEHBI/AMCONSUL MUMBAI 0186
RUEHPW/AMCONSUL PESHAWAR 4608
RUEHIL/AMEMBASSY ISLAMABAD 3707
RHEBAAA/DEPT OF ENERGY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHDC
Hide header
UNCLAS SECTION 01 OF 02 NEW DELHI 003429

SIPDIS

SENSITIVE
SIPDIS

USDOC FOR ITA/MAC/OSA/LDROKER/ASTERN/KRUDD
DEPT OF ENERGY FOR A/S KHARBERT, TCUTLER, CZAMUDA, RLUHAR
DEPT PASS TO USTR DHARTWICK/CLILIENFELD/AADLER
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA ABAUKOL
TREASURY PASS TO FRB SAN FRANCISCO/TERESA CURRAN
STATE FOR SCA/INS MICHAEL NEWBILL AND EB/TRA JEFFREY HORWITZ AND TOM
ENGLE

E.O. 12958: N/A
TAGS: EAGR [Agriculture and Forestry], EFIN [Financial and Monetary Affairs], EINV [Foreign Investments], ETRD [Foreign Trade], ENRG [Energy and Power], SENV [Environmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: NEW DELHI WEEKLY ECON OFFICE HIGHLIGHTS

REF: NEW DELHI 5942

¶1. (U) Below is a compilation of Economic highlights from Embassy
New Delhi for the week of July 23 - 27, 2007.

POSITIVE GOI NOISES ON DOW AND MCDERMOTT
----------------------------------------

¶2. (SBU) There are indications that the legacy issues of Dow and
McDermott may be moving closer to resolution. Econ discussions with
a senior Dow India official in late July, as well as a July 27 media
report, indicate that the legacy issues of GOI involvement in a
court case against Dow and the GOI's unwillingness to pay $100
million owed to McDermott International may be sent for high-level
discussion in the Trade and Economic Relations Committee (TERC) and
the Cabinet Committee on Economic Affairs (CCEA).

¶3. (SBU) In the case of Dow, the chemical company had purchased
some of the assets of Union Carbide in 2001, 17 years after the
industrial disaster in Bhopal. Victims' rights groups and NGOs have
since been involved in public interest litigation (PIL) against Dow
(as well as other defendants, including the state and central
governments). As part of the ongoing PIL, the GOI Ministry of
Chemicals filed a request for a court order forcing Dow to set aside
a Rs100 crores ($25 million) bond as an indemnity for potential
clean up costs at the disaster site, despite a strong legal case
that Dow has no liability. During the CEO Forum event in October
2006, GOI officials including Commerce Minister Nath and Planning
Commission Deputy Chairman Montek Singh Ahluwalia stated that they
welcomed further Dow investment in India and did not believe that
Dow was responsible for the disaster site clean-up. Dow's sole
request to the GOI during the PIL has been for the Ministry of
Chemicals to withdraw the application for remediation costs based on
Dow not being responsible for the Bhopal tragedy. Dow has not asked
the GOI to interfere in the PIL - only that it withdraw its separate
application for the $25 million deposit.

¶4. (SBU) In the case of McDermott, the company had built oil
platforms for GOI-owned Burn Standard (BSCL) in the late 1980s.
BSCL did not fully pay for those platforms, triggering a lengthy and
complex litigation. After many years of courts cases and
arbitration, the Indian Supreme Court dismissed a petition by BSCL
in October 2006, exhausting BSCL's final legal avenue to challenge
an arbitration award in favor of McDermott. BSCL's liability to
McDermott now totals $100 million, with additional interest
accumulating at a rate of $14,500 per day. In January 2007,
then-Cabinet Secretary Chaturvedi indicated to the Ambassador that
there was consensus within the Government that McDermott should be
paid. Since then, the GOI has been stepping back from this
position, suggesting that McDermott may have to get in line with
other creditors of Burn Standard.

¶5. (SBU) Despite significant USG and company efforts (by both Dow
and McDermott), including a number of high-level interventions by
the Ambassador and visiting Cabinet officials, these cases have
lingered without positive GOI action. On July 27, the senior Dow
official alerted Econoff to a press report in the Economic Times
indicating that the issue of Dow and McDermott would be referred to
TERC and CCEA, respectively. Dow had met with newly-appointed
chemical secretary Arun Ramanathan (replacing Satwant Reddy) on July
¶24. Dow's opinion was that Ramanathan, though not fully up to speed
on the case, was unlikely to take actions to drag the case out,
unlike his predecessor. Similarly, the news in the Economic Times
that the Ministry of Heavy Industries has circulated a note to the
CCEA to make a final decision on the McDermott case is welcome, if
true. Embassy New Delhi will continue to forcefully press for a
resolution of these two cases, both on their own merits, and as a
GOI signal that US-India economic relations are key to the bilateral
agenda.

RE-BIDDING FOR SASAN POWER PROJECT
----------------------------------

NEW DELHI 00003429 002 OF 002

¶6. (U) The Ministry of Power in early 2006 launched its "Ultra-Mega
Power Project (UMPP) proposal to attract domestic and foreign
investors to build seven coal-fired thermal power plant complexes of
4,000-MW each, based on "super-critical" reactor technology and
using either domestic coal at pithead sites or imported coal at
coastal sites. In December 2006, the pithead-coal based Sasan Power
Ltd. UMPP project in power-hungry Madhya Pradesh was awarded to a
consortium of the sole foreign bidder Globeleq-Singapore and
Hyderabad-based Lanco Infratech, which bid "Rs 1.19 per unit" --
about US 3.0 cents per kilowatt-hour (kwh) -- in the tariff-based
tender. The consortium thereby beat out Reliance Energy Generation
Ltd (Rs 1.296/kwh), Jaiprakash Associates (Rs. 1.65/kwh), Jindal
Steel and Power (Rs 1.799/kwh) and the GOI-owned National Thermal
Power Corporation (NTPC) (Rs 2.12/kwh). The 4,000-MW Sasan project
is expected to cost 16,500 to 20,000 crore (about US4.1 billion to
US$5 billion). U.S. industry sources told us the Globeleq bid was
unrealistically low and NTPC had claimed its twice-as-high offer was
the minimum realistic price.

¶7. (U) A special "Empowered Group of Ministers (EGoM) around July
24, 2007 declared the winning Globeleq-Lanco bid to be "null and
void" due to an unapproved change in ownership structure for Sasan
Power. Globeleq Ltd had sold off its Globeleq- Singapore subsidiary
with 40% going to Jindal Steel and Power Company, resulting in Sasan
Power being owned 72% by Lanco and 28% by Jindal, a previously
unsuccessful bidder. Globeleq-Singapore had not submitted the
requisite guarantees from its original parent company and Lanco by
itself had neither the technical nor financial qualifications. The
EGoM headed by Power Minister Sushil Kumar Shinde ruled July 26 that
the three remaining qualified bidders -- Reliance, Jaiprakash, and
NTPC -- should submit revised bids for an award decision by August
4, instead of simply awarding the Sasan project to the second
highest original bidder -- Anil Dhirubhai Ambani Group (ADAG)'s
Reliance Energy Generation Ltd.

NATIONAL SECURITY SCREENING OF INVESTMENT
------------------------------------------

¶8. (U) Press reports this week indicated that differences among
government ministries continue over what kind of provisions should
be instituted to screen foreign direct investment (FDI) for national
security threats. The Economic Times reported on July 23 that the
National Security Council Secretariat (NSCS) had recommended new,
umbrella legislation to be modeled on the Exon-Florio Act in the US.
However, the Indian Express stated on July 27 that the Ministries
of Finance and External Affairs were against such legislation, which
the NSCS had previously proposed be called the National Security
Exception Act.

¶9. (U) Currently under discussion among the ministries is to
determine certain categories of investment that would trigger a
security review, such as entities on money laundering and terrorist
lists, investments into "sensitive sectors" which the NSCS has said
previously should include ports and telecom, and thirdly, sensitive
locations, such as sites near international borders. Indian Express
claimed that the other ministries prevailed in refusing to name
countries, such as China, as banned investment sources, concerned
about the economic and political impact of such targeting. Post
will continue to monitor the development of a consensus regulation
or legislation regarding national security-based screening of FDI.

¶10. (U) Visit New Delhi's Classified Website:
http://www.state.sgov/p/sa/newdelhi

WHITE

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The Hindu : News / The India Cables : U.S. presses India on Dow's liability
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Cable reference id: #07NEWDELHI1218
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #100159 ?
Subject Scenesetter For Department Of Energy Secretary Samuel W. Bodman's March 2007 Visit To India
Origin Embassy New Delhi (India)
Cable time Tue, 13 Mar 2007 13:28 UTC
Classification CONFIDENTIAL
Source http://wikileaks.org/cable/2007/03/07NEWDELHI1218.html
History
Time unknown: Original unredacted version, leaked to Wikileaks
Wed, 6 Apr 2011 19:54: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Re-published, unredacted, however non-text content differs
Thu, 8 Sep 2011 13:29: Original unredacted version published, with HTML goodies
VZCZCXRO3817
OO RUEHBI RUEHCI
DE RUEHNE #1218/01 0721328
ZNY CCCCC ZZH
O 131328Z MAR 07
FM AMEMBASSY NEW DELHI
TO RHEBAAA/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RUEHC/SECSTATE WASHDC IMMEDIATE 3842
INFO RUEHBI/AMCONSUL MUMBAI IMMEDIATE 8513
RUEHCI/AMCONSUL KOLKATA 9009
RUEHCG/AMCONSUL CHENNAI 9352
RUEHLM/AMEMBASSY COLOMBO 9116
RUEHKA/AMEMBASSY DHAKA 9221
RUEHIL/AMEMBASSY ISLAMABAD 2413
RUEHKT/AMEMBASSY KATHMANDU 9821
Hide header
C O N F I D E N T I A L SECTION 01 OF 04 NEW DELHI 001218

SIPDIS

SIPDIS

FOR SECRETARY SAMUEL BODMAN FROM CHARGE PYATT

E.O. 12958: DECL 03/9/2017
TAGS: ENRG [Energy and Power], TRGY [Energy Technology], EPET [Petroleum and Natural Gas], EAID [Foreign Economic Assistance], SENV [Environmental Affairs], PREL [External Political Relations], PGOV [Internal Governmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: SCENESETTER FOR DEPARTMENT OF ENERGY SECRETARY SAMUEL W.
BODMAN'S MARCH 2007 VISIT TO INDIA

Classified by CDA GEOFFREY PYATT FOR reasons 1.4 (b, d)

¶1. (C) SUMMARY: Secretary Bodman, the members of the Country Team
warmly welcome you to New Delhi and Mumbai and look forward to your
arrival on March 19. You are visiting at a crucial time in Indo-U.S.
relations and are positioned to significantly advance our growing
government-to-government, commercial, and investment relationship in
the energy sector. The GOI will stress that, in order to sustain the
high level of economic growth needed to lift millions out of poverty,
India must rapidly expand its energy production, consumption, and
imports, while inevitably increasing its carbon emissions and
maintaining domestic energy price controls. However, from the
perspective of the Indian press and political class, the U.S.-India
civil nuclear agreement will take center stage during your visit.

¶2. (C) Your scheduled meetings in Mumbai with Department of Atomic
Energy Secretary Dr. Anil Kakodkar and in New Delhi with Special
Envoy Shyam Saran offer an opportunity to highlight the many benefits
of U.S.-India civil nuclear cooperation, which could be lost if India
does not conclude the 123 Agreement quickly. We hope you can win
over the Indian nuclear scientific establishment with the prospect of
future-oriented programs like GNEP. We expect that your meeting with
Prime Minister Singh will follow the Saran meeting, and he will want
to hear your views on next steps toward concluding the 123 Agreement.
The Prime Minister will likely tell you that his number one priority
is extending the benefits of India's rapid growth to the 700 million
Indians - mostly in the rural sector - who continue to live at a near
subsistence level. Rising food and fuel prices have particularly
hurt the poor, creating a political backlash against the UPA
government in recent state elections. Prime Minister Singh and your
other interlocutors will be very interested in your ideas on how the
United States can help with India's energy needs in the short and
long term, particularly with respect to the rural sector.

¶3. (SBU) Your meeting with Planning Commission Deputy Chairman
Ahluwalia provides an opportunity to review India's Integrated Energy
Policy and the U.S.-India Energy Dialogue's nearly two years of
progress.
Aside from the five Energy Dialogue working groups, India and the
United States are also active in multilateral projects for
commercially-viable reduction of green house gases through the
Asia-Pacific Partnership (APP-6) for Clean Development and Climate.
You can also promote closer collaboration between USDOE's
laboratories and their Indian counterparts. The Mission's USAID
programs, particularly in energy efficiency, power distribution,
clean coal, and regulatory policy, and South Asia Regional Initiative
for Energy (SARI-Energy) have been at the core of our bilateral
cooperation, but face severe budget cuts and even zeroing out owing
to severe budget constraints.
Minister of Petroleum and Natural Gas Murli Deora has close ties to
Sonia Gandhi's inner circle and a political base in Mumbai, and he is
central to India's international quest for growing petroleum and
natural gas imports, and cooperation with the United States in
domestic industry development and regulatory policy. You can also
engage Power Minister Shinde on India's need to sustain its high GDP
growth goals by greatly expanding its power generating capacity,
predominately with coal-fired thermal plants, which will require
clean-coal technology to keep CO2 emissions in check. END SUMMARY.

CIVIL NUCLEAR NEGOTIATIONS
--------------------------

¶4. (C) Despite a lull in the domestic debate over the U.S.-India
civil nuclear cooperation initiative, the nuclear deal still commands
high-profile press coverage and political debate. Foreign Secretary
Shiv Shankar Menon handed Under Secretary Burns a completely
inadequate counter-draft to the 123 Agreement --authored by the
skeptics in India's nuclear establishment who remain concerned about
U.S. efforts to "entrap" India and constrain its strategic program.
U/S Burns asked Menon to provide a more workable basis on which the
U.S. and India can continue talks, and invited an Indian team with
negotiating authority to the U.S. for the next round of discussions.

¶5. (C) The right for India to reprocess U.S.-origin spent fuel
remains the most contentious issue in the 123 talks. The nuclear
scientists also have the lead on negotiating a safeguards agreement
with the IAEA and here too are wary of anything that would constrain
India's vision of Thorium-based power. Despite assurances from the
Indian government that an IAEA safeguards agreement would be easy to
complete, little progress has been evident. A safeguards agreement
is necessary for the Nuclear Suppliers Group to adjust the Guidelines
to allow civil nuclear commerce with India. Led by Special Envoy

NEW DELHI 00001218 002 OF 004

Shyam Saran, the Indian government has made some progress in
tempering the concerns of traditionally nonproliferation-minded
countries like Ireland, South Africa, Norway and Japan. Saran plans
to visit Australia and New Zealand at the end of March. We expect
Foreign Minister Pranab Mukherjee will discuss the nuclear deal
during his March 22-23 visit to Tokyo.

INTERNAL POLITICS UNDERSCORE VULNERABILITIES
--------------------------------------------

¶6. (C) The politics around India's energy policy reflects a struggle
between needed economic reform and political impediments to change.
Prime Minister Singh and Deputy Chairman Ahluwalia are well aware of
what economic reforms are needed to enhance India's long term growth.
They realize that reasonable regulation and market-based pricing of
electricity, petroleum products, natural gas, and coal would be most
conducive to encouraging investment, reliable revenue streams, energy
efficiency, and rational choice among projects and energy sources.
However, the political imperatives of middle-class and poor voters'
resistance to price increases, particularly with consumer inflation
recently exceeding 6%, have induced the GOI to maintain price
controls and government subsidies. Similarly, although the GOI
privately doubts Iran's reliability as a potential source of natural
gas by pipeline or of liquefied natural gas, it continues
negotiations with Iran to appease Muslim and left-wing voters and
Members of Parliament.

¶7. (C) The ruling coalition remains dependent on the Communists and
other left wing members of parliament to stay in power. Following a
string of recent local-level electoral defeats in Mumbai,
Uttarakhand, and Punjab, Sonia Gandhi and her personal advisors are
very concerned that the impending Uttar Pradesh (UP) elections will
turn out horribly for Congress. As a result, some are advocating
that she jettison Prime Minister Singh -- whose message of
rapprochement with Pakistan has been criticized by the BJP -- and put
a more saleable political face at the head of the government. Others
are urging that the Congress hunker down and play it safe on the
budget, inflation, economic reform, and foreign policy -- including
the nuclear deal -- to minimize the negative impact on UP voters,
many of whom are Muslim and take a dim view of the United States.

¶8. (C) What seems clear in the aftermath of recent polls is that the
reform cadre of Manmohan Singh, Montek Singh Ahluwalia, and Finance
Minister Chidambaram are politically diminished, Sonia Gandhi's inner
coterie is deeply worried, and the old line Congress and their
Communist fellow-travelers are empowered. Politics in India are a
mess right now for Congress, and while the GOI is publicly optimistic
about the nuclear deal, it is clearly caught in a domestic political
eddy.

U.S.-INDIA ENERGY DIALOGUE AND INDIA'S DEVELOPMENT
--------------------------------------------- -----

¶9. (SBU) Building on the momentum of President Bush's return visit to
India in March 2006, the President's signing of the Henry J. Hyde
U.S.-India Peaceful Atomic Energy Cooperation Act on December 18,
2006 was an important step forward in fulfilling the commitments of
the July 2005 Joint Statement and in transforming the dynamics of
U.S.-India relations after decades of estrangement.

¶10. (SBU) USDOE Under Secretary David Garman co-chaired the Energy
Dialogue's Steering Committee meeting in New Delhi during his visit
February 8-9, 2006. The White House's Council on Environmental
Quality's (CEQ) Chairman James L. Connaughton visited India to
promote the Asia-Pacific Partnership on Clean Development and Climate
in August 2006, including meetings with Deputy Chairman Ahluwalia and
several ministers.

¶11. (SBU) In addition to India joining the International
Thermonuclear Experimental Reactor (ITER) project, key activities and
agreements reached in 2006 under the Energy Dialogue included:
-- India joining the FutureGen clean-coal power project;
-- MOU on a Coal Bed Methane and Coal Mine Methane Information
Clearing House;
-- MOU on safety between the Minerals Management Services and India's
Oil Industry Safety Directorate;
-- DOE/EIA Information Sharing Agreement with the Ministry of
Petroleum and Natural Gas;
-- Agreement for USTDA Gas Grid Feasibility Study;
-- Carbon Sequestration Leadership Forum and APP-6 projects for clean
and safe coal development;
-- Energy Efficiency and Green Buildings Cooperation;

NEW DELHI 00001218 003 OF 004

-- Natural Gas Conference and cooperation on India's new oil and gas
regulatory frameworks;
-- International Partnership for the Hydrogen Economy (IPHE);
-- Renewable Energy cooperation on wind and solar resource mapping;
-- Offshore Exploration for Natural Gas Hydrates; and
-- Orientation Visit for Petroleum Refining.

INDIA'S ENERGY SCENE
--------------------

¶12. (SBU) ENERGY NEEDED FOR GDP GROWTH: For India to achieve its
goals of sustained rapid annual GDP growth of 8%-9% through 2032,
alleviation of widespread poverty, and modernization of its stagnant
agricultural sector, which employs 65% of its population, India must
increase its energy consumption by at least 6.4% to 7.2% annually
through higher energy production, imports, and efficiency. India's
per capita commercial energy consumption is 1/3 of the world's
average and only 1/15 that of the United States. Energy intensity
would probably have to increase for India to improve growth rates in
the manufacturing and agricultural sectors of its services-oriented
economy. India's primary commercial energy mix consists of Coal
(54%); Oil (30%); Natural Gas (9%); Hydropower (5%) and Nuclear (2%),
according to BP statistics in 2006. For electricity generation, as
of January 2007, India had over 128,000 MegaWatts (MW) of installed
generation capacity, consisting of: Hydro (26.5%); Thermal-Coal
(54.2%); Thermal-Natural Gas (10.5%); Thermal-Diesel (0.9%); Thermal-
Total (65.7%); Renewable (4.8%), and Nuclear (3.0%).

MEETING WITH OIL AND GAS MINISTER DEORA
---------------------------------------

¶13. (C) MPNG Minister Murli Deora has close ties to Sonia Gandhi and
the Congress Party's inner circle, and his own strong political base
in Mumbai, where his son now holds his previous parliamentary seat.
Deora has been a key interlocutor with Ambassador Mulford on the
dynamics between India's Parliament and the U.S. Congress on
bilateral legislation issues. The MPNG has control over the several
central government oil and gas companies that continue to dominate
India's exploration, production, and distribution. Secretary
Srinivasan has been the GOI's main negotiator on the proposed
2,600-kilometer Iran-Pakistan-India natural gas pipeline, but the
MPNG has told us that they do not expect a final agreement to be
reached due to Iranian unreliability and Iran changing the terms of
the June 2005 agreement to sell India LNG from its South Pars field
for 25 years. The MPNG increasingly sees LNG from Qatar and
Australia as a more viable option than several proposed pipeline
projects. India obtained 12.6% of its crude oil imports from Iran in
2006.

¶14. (SBU) U.S. oil and gas companies interested in India have been
concerned about:
-- the lack of a level playing field in bidding for petroleum
exploration blocks, including the GOI not enforcing work programs;
-- the new Petroleum and Natural Gas Regulatory Board (PNGRB)'s lack
of sufficient independence from the GOI and MPNG;
-- price controls on petroleum projects, natural gas, and electricity
acting as a disincentive to marketing; and
-- the GOI's delay in paying $100 million owed to McDermott after the
Supreme Court's final ruling in October 2006.

¶15. (SBU) Secretary Srinivasan, as co-chair of the Energy Dialogue's
Oil and Gas Working Group, would like to see deeper bilateral
cooperation on:
-- CMB/CMM exploration and production;
-- natural gas hydrates;
-- oil & gas regulatory information exchanges between FERC and PNGRB;
-- in situ coal gasification;
-- petroleum refinery enhanced production;
-- hydrogen economy; and
-- world oil and gas outlook.

MEETING WITH MINISTER OF POWER SHINDE
-------------------------------------

¶16. (SBU) Power Minister Sushil Kumar Shinde -- a key figure on clean
coal technology and carbon emissions -- will update you on India's
ambitious plans for power capacity expansion at about 9% annually
through 2031, with coal-fired and hydropower as the mainstay, but
with rising shares of nuclear, gas-thermal, and wind. India burns 9%
of the world's coal today -- a figure that might rise to over 30% in
the next 25 years, with accompanying carbon dioxide emissions. To
achieve its GDP growth rates, the GOI aims to add over 67,000 MW in

NEW DELHI 00001218 004 OF 004

new capacity during 2007-2012 -- almost twice its past volume of
annual expansion. Controlled prices to residential consumers, theft,
non-payments, and transmission and distribution losses act as
deterrents to private investment. Coal-fired thermal power accounts
for 54% of India's power generation capacity.

¶17. (SBU) Shinde will discuss plans to build seven "Ultra-Mega Power
Projects," each of 4,000-Megawatts based on super-critical technology
and using either mine-site domestic coal or imported coal. Two
projects have been bid so far, with price terms per kilowatt-hour
considered unrealistically low by U.S. power production experts.
U.S. industry has been reluctant to bid on these projects, citing
many uncertainties about common carrier transmission access, revenue
streams, consent for coal mine related activities (coal mining is a
state monopoly in India), and conflict resolution mechanisms.

USAID and SARI: KEY ENERGY DIALOGUE PROGRAMS FACE CUTS
--------------------------------------------- ---------

¶18. (SBU) You will address USAID's South Asia Regional Initiative for
Energy (SARI/Energy)'s Conference on "Investment Opportunities in
South Asia's Power Section," on March 21. SARI/Energy is an
eight-country program that promotes regional energy security through
energy market development, cross-border energy trade, and increased
access to clean energy. SARI/Energy countries include: Afghanistan,
Pakistan, India, Nepal, Bhutan, Bangladesh, Sri Lanka and the
Maldives. Successes have included: an agreement for electricity
interconnections between Sri Lanka and India, Nepal and India; the
announcement of an India power exchange; and a pre-feasibility study
on the Bangladesh-India interconnection. USAID SARI/Energy has been
in operation since 2000 with annual funding levels averaging $8M.
However, recent severe budget cuts threaten our track record of
success, with FY08 funding at only $2.7M.

¶19. (SBU) USAID is playing a leadership role in the U.S.-India Energy
Dialogue -- particularly the Power and Energy Efficiency Working
Group, of which USAID/India is a U.S. co-chair -- aimed at increased
India-U.S. trade and investment in the Indian energy sector by
working with the public and private sectors to further identify areas
of cooperation and to build on the broad range of existing
cooperation between the two countries to mobilize secure, clean,
reliable and affordable sources of energy. USAID's demonstration
programs in clean coal-fired power generation and electricity
distribution reform are being widely replicated by Indian entities.
The U.S. Mission in India has had a long and successful history
working with DOE on clean coal technologies. USAID programs directly
support DOE objectives being pursued through the U.S.-India Energy
Dialogue working groups, as well as other Presidential Initiatives
such as the Asia Pacific Partnership for Clean Development and
Climate. Unfortunately, the bilateral resources which support these
successful USAID programs will be reduced to nearly zero in FY 2008.
This abrupt reduction in funding could eliminate the on-the-ground
management capacity that is critical to keeping the Energy Dialogue
moving forward.

PYATT

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Cable reference id: #06CHENNAI1200
“All of them, those in power, and those who want the power, would pamper us, if we agreed to overlook their crookedness by wilfully restricting our activities.” — “Refus Global“, Paul-Émile Borduas
Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #67384 ?
Subject St-cms Energy Plans To Pursue Arbitration In Its Dispute With Tamil Nadu Electricity Board
Origin Consulate Chennai (India)
Cable time Fri, 9 Jun 2006 11:36 UTC
Classification UNCLASSIFIED//FOR OFFICIAL USE ONLY
Source http://wikileaks.org/cable/2006/06/06CHENNAI1200.html
Referenced by 06CHENNAI2564
History
Time unknown: Original unredacted version, leaked to Wikileaks
Fri, 26 Aug 2011 02:34: First publication, unredacted, however non-text content differs
Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies
VZCZCXRO3496
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DE RUEHCG #1200/01 1601136
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TO RUEHC/SECSTATE WASHDC 8628
INFO RUEHNE/AMEMBASSY NEW DELHI 1738
RUEHBI/AMCONSUL MUMBAI 4785
RUEHCI/AMCONSUL CALCUTTA 0532
RUCPDOC/USDOC WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
Hide header
UNCLAS SECTION 01 OF 02 CHENNAI 001200

SIPDIS

SENSITIVE

SIPDIS

STATE FOR EB/CIP
USDOE FOR DAS DAVID PUMPHREY, TOM CUTLER
USDOC FOR MAC/ANESA/OSA/ASTERN/LDROKER
USDOC FOR USFCS/OIO/ANESA/JMATHESON/BORRE
USDOC FOR TD/AS/AC/BLOPP
DEPARTMENT OF ENERGY FOR TOM CUTLER, MIRIAM SALERNO

E.O. 12958: N/A
TAGS: EINV [Foreign Investments], ENRG [Energy and Power], ECON [Economic Conditions], PGOV [Internal Governmental Affairs], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]
SUBJECT: ST-CMS ENERGY PLANS TO PURSUE ARBITRATION IN ITS
DISPUTE WITH TAMIL NADU ELECTRICITY BOARD

REF: 05 CHENNAI 02705 AND PREVIOUS

¶1. (SBU) SUMMARY: U.S. company ST-CMS Energy plans to
immediately begin arbitration proceedings to seek to resolve
its dispute with the Tamil Nadu Electricity Board (TNEB)
over the final capital costs of its 250 megawatt power plant
in Neyaveli, Tamil Nadu. This case is an unresolved legacy
issue, which Embassy and Consulate General Chennai have
raised many times with the GOI and the Tamil Nadu state
government. ST-CMS's decision to resort to arbitration will
not help the GOI's recent efforts to attract new foreign
investment in its power generation sector. END SUMMARY

------------------------------------------
TNEB AND CEA CALCULATE LOWER CAPITAL COSTS
------------------------------------------

¶2. (SBU) Mr. C.K. Lakshminarayanan, CEO of ST-CMS Energy,
and Mr. K.M. Manoj, Director of Business Development for the
company, met with Post's Pol/Econ officer on June 2, 2006 to
discuss the company's planned next steps in its dispute with
the Tamil Nadu Electricity Board (TNEB). They began by
expressing their disappointment with the calculation of
final capital costs made by TNEB and also with the
calculation of final costs made by the Central Electricity
Authority (CEA). The CEA, a Government of India agency, had
been asked to review the TNEB calculation and provide their
independent recommendation on final capital costs. Final
capital cost as calculated by both TNEB and CEA were not
only significantly lower -- by $28.9 million and $31.2
million respectively, or about 10% -- than ST-CMS'
calculations, they were also lower than the provisional
capital cost that TNEB and ST-CMS had agreed upon in
November 2005. The provisional and final capital costs as
calculated by the three parties are as follows:

TNEB/ST-CMS Agreed Provisional - $281.6 million
TNEB Final Capital Costs - $268 million
CMS Final Capital Costs - $296.9 million
CEA Final Capital Costs - $265.7 million

--------------------------------------------- ----------
ST-CMS MOVES THE COURT TO PREVENT A REDUCTION IN TARIFF
--------------------------------------------- ----------

¶3. (SBU) Because the agreement on provisional capital costs
achieved in November 2005 had hiked tariffs paid by TNEB for
power supplied by ST-CMS from 0.05 cents to 0.07 cents per
kilowatt-hour unit, an immediate concern to ST-CMS was that
TNEB would seek to lower tariffs based on the new, lower,
final capital cost figure. Accordingly, on May 19, ST-CMS
filed with the Madras High Court to enjoin TNEB from
lowering tariff rates for power supplied by ST-CMS. ST-CMS'
presentation to the court was heard on May 23. TNEB has yet
to present to the High Court on the issue.

-----------------------
NEXT STEP - ARBITRATION
-----------------------

¶4. (SBU) Lakshminarayanan and Manoj shared with Post their
pessimism about achieving any positive results through
continued negotiation with TNEB. Lakshminarayanan said that
the project's sponsors had made the decision to pursue the
arbitration provisions that are included in the Power
Purchase Agreement (PPA). Lakshminarayanan described to
Post the arbitration procedures outlined in the PPA which
include two stages of arbitration. In the first phase, the
parties engage in an informal dispute resolution process.
Each party selects an official representative and the two
try to reach a voluntary agreement. If this informal phase
fails to produce an agreement, the process moves to binding
arbitration overseen by the International Chamber of
Commerce in London. There each party chooses a
representative and they jointly choose a third. The results
of this arbitration are binding. Enforcement of the result
is accomplished through a motion to the Madras High Court in
Chennai.

CHENNAI 00001200 002 OF 002

------------------------------------
ST-CMS FEELS THEY HAVE A STRONG CASE
------------------------------------

¶5. (SBU) Lakshminarayanan and Manoj told Post that ST-CMS
feels it has a very strong case and that it will prevail in
arbitration. They base that confidence on their belief that
both the TNEB and CEA calculations of final capital costs
were completed in direct violation of Clause 4 of Addendum
#3 of the PPA. That clause permits a more favorable
treatment of currency valuation fluctuations occurring
during construction of the project than the treatment TNEB
and CEA used in their calculations.

----------------------
BACKGROUND AND COMMENT
----------------------

¶6. (U) BACKGROUND: ST-CMS operates a 250 megawatt lignite-
fired power plant at Neyveli located 220 kilometers south of
Chennai, the capital of Tamil Nadu state in southern India.
The facility was built with an investment of US$ 300
million, with $100 million being held by the Michigan-based
CMS Energy and New Jersey based ABB Equity ventures. The
facility started operations in December 2002 supplying all
of its power ouput to Tamil Nadu Electricity Board (TNEB), a
state-run power utility with whom the investors entered into
a power purchase agreement. Differences with TNEB over the
computation of capital costs resulted in a backlog of
payments. After considerable advocacy by Consulate General
Chennai and Embassy in New Delhi, the payments dispute was
sorted out in September 2005, with agreement on Provisional
Capital Cost and with determination of Final Capital Costs
left pending.

¶7. (SBU) EMBASSY COMMENT: The USG has raised several times
with the GOI CMS's difficulties in its ST-CMS project and
its potential decision to seek arbitration, including most
recently:
-- Commerce Assistant Secretary Bohigian with India's
Ministry of Power Secretary Shahi in New Delhi, January 10-
12;
-- Embassy Economic Ministry Counselor Lee Brudvig Secretary
Shahi, March 26;
-- Energy Secretary Samuel Bodman with Power Ministry Shinde
(April 22); and
-- Ambassador Mulford with Planning Commission Deputy
Chairman Montek Ahluwalia (May 12).

¶8. (SBU) This case is one of the remaining "legacy issues"

that, as we have told the GOI, needs resolution in order to

improve foreign investors' perceptions of India's investment

climate, particularly in the electrical power sector, where

India's Ministry of Power has been conducting road shows to

promote its "Mega-Project" capacity construction plans. The

GOI Power Minister and Secretary have limited formal

jurisdiction in this matter and could only influence the

Tamil Nadu government and Central Electricity Authority.

END EMBASSY COMMENT.

HOPPER

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Cable reference id: #06NEWDELHI1395

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #54213 ?

Subject Ahluwalia: India Responsible Nuclear Power, Favors Civ-nuke Deal

Origin Embassy New Delhi (India)

Cable time Fri, 24 Feb 2006 14:13 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2006/02/06NEWDELHI1395.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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Hide header

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001395

SIPDIS

E.O. 12958: DECL: 02/22/2015

TAGS: MNUC [Military Nuclear Applications], PREL [External Political Relations], ENRG [Energy and Power], EPET [Petroleum and Natural Gas], OVIP [Visits and Travel of Prominent Individuals and Leaders], IR [Iran], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: AHLUWALIA: INDIA RESPONSIBLE NUCLEAR POWER, FAVORS

CIV-NUKE DEAL

NEW DELHI 00001395 001.2 OF 002

Classified By: DCM Robert O. Blake for Reasons 1.4 (B, D)

¶1. (C) Summary: The civil-nuclear deal continues to be a

political "hot-button," but Deputy Chairman of the Planning

Commission Montek Singh Ahluwalia stated to Congressman

Joseph Crowley (D-NY) on February 20 that the UPA Government

supports the July 18 agreement and hopes a viable separation

plan can be finalized prior to the POTUS visit. The CEO

Forum has been a success, Ahluwalia noted, and hoped that

over the next year its suggestions would be implemented.

Ahluwalia also maintained that while FDI regulations need to

be relaxed, and likely will be over time, political realities

have retarded deregulation. Ahluwalia concluded that

Bangladesh, while doing many things right, is on a dangerous

path and fundamentalist activity in the country is troubling.

End Summary.

Hopes for the Civil Nuclear Deal

--------------------------------

¶2. (C) Ahluwalia asserted to Congressman Crowley that India

has never been a proliferator of nuclear technology and needs

nuclear energy to avoid being a "chimney belching out smoke"

while meeting its growing energy needs. Noting that he is

fully in favor of the civil-nuclear deal, Ahluwalia

acknowledged that he is not directly involved in the decision

making process and that it appears to him to be a very

sensitive political issue. He explained that, domestically,

US demands that certain reactors be listed as civilian could

be interpreted as GOI giving in to USG control over Indian

military options. Ahluwalia noted that, while the BJP has

expressed doubt about the nuclear plan, if the Government

approves an agreement, it will pass through parliament.

¶3. (C) "The debate within the GOI on the nuclear deal has

been more informed in the last three months than over the

last ten years" Ahluwalia commented, indicating there is a

serious effort underway to finalize it before the March 1

POTUS visit. He opined that he hoped U/S Burn's February 24

visit would pave the way to a civil-nuclear deliverable for

the President's trip.

¶4. (C) Congressman Crowley noted that, while the July 18

agreement was "received in a surprised way" in Congress, he

hoped to support it when the GOI and USG formulate a viable

separation plan. He also suggested that, just as the USG

should understand Indian domestic concerns, the GOI should

not underestimate the ability of U.S. domestic politics to

influence the vote in the US. Ahluwalia concluded that,

while the BJP will "make noises and claim they could have

done better," they will not oppose the deal.

CEO Forum Progressing Nicely

----------------------------

¶5. (C) "A lot is happening on the economic agenda,"

Ahluwalia remarked, however, the role of governments is "less

than before." He stated that the CEO Forum is especially

important because, while governments still control policy

issues, it is the private entities that drive economic

progress. He noted that he is pleased with the work done by

the CEO Forum, and looks forward to the release on March 2 of

the group's report. He theorized that "if your President and

the Prime Minister could meet a year after the release of the

NEW DELHI 00001395 002.2 OF 002

report and state that its recommendations were met, we could

point to real economic successes."

FDI: Still Work to be Done

--------------------------

¶6. (C) Ahluwalia acknowledged that politics have, so far,

thwarted efforts to increase FDI from 26% to 49%. Opposition

from the left and "irresponsible behavior by the BJP" have

limited progress in this area. He suggested that banking

regulations need to be relaxed, allowing foreign banks to

take over "sick" banks in India, and that more transparency

is needed. He indicated that such banking issues will likely

be discussed in the CEO Forum. Ahluwalia opined that by

2009, foreign banks will be able to own 79% of domestic banks.

Bangladesh: Trouble on the Horizon

----------------------------------

¶7. (C) Congressman Crowley, stating that he would visit

Dhaka next, noted that he plans to share USG concerns

regarding corruption and fundamentalism with the Government

of Bangladesh (GOB). Ahluwalia asserted that the rise of

fundamentalism in Bangladesh was troubling. Acknowledging

that Bangladesh has "done a number of things well that many

Islamic countries fail to do," such as providing education

for women, he noted that the GOI remains concerned over

recent events. Ahluwalia indicated that the GOB would be

receptive to pressure from abroad, because they rely heavily

on donor aid. Crowley agreed, stating that he will tell the

GOB that if they continue down the current path, they could

become "unaidable."

¶8. (U) Visit New Delhi's Classified Website:

(http://www.state.sgov.gov/p/sa/newdelhi/)

MULFORD

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Cable reference id: #06NEWDELHI583

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #50866 ?

Subject Goi Promises Military Support To Sri Lanka And Debates Iranian Pipeline During U/s Burns Visit

Origin Embassy New Delhi (India)

Cable time Fri, 27 Jan 2006 08:41 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2006/01/06NEWDELHI583.html

References 06NEWDELHI27

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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Hide header

C O N F I D E N T I A L SECTION 01 OF 03 NEW DELHI 000583

SIPDIS

E.O. 12958: DECL: 01/25/2016

TAGS: PREL [External Political Relations], MASS [Military Assistance and Sales], MOPS [Military Operations], ENRG [Energy and Power], EPET [Petroleum and Natural Gas], IR [Iran], CE [Sri Lanka], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: GOI PROMISES MILITARY SUPPORT TO SRI LANKA AND

DEBATES IRANIAN PIPELINE DURING U/S BURNS VISIT

REF: A. NEWDELHI 000027

B. CHENNAI 000062

NEW DELHI 00000583 001.2 OF 003

Classified By: Ambassador David Mulford for Reasons 1.4 (B, D)

¶1. (C) Summary: During U/S Burns' January 21 consultations

on regional issues, the GOI relayed its concerns over the

increasingly possible return to war in Sri Lanka and the

conflict between the need for Iranian gas and the looming

crisis over Tehran's nuclear program. Indian Foreign

Secretary Shyam Saran emphasized that the GOI advised

SIPDIS

President Rajapakse during his December 27-30 trip to be

flexible on moving forward the peace process and to take all

possible steps to prevent a return to war. However, if

hostilities do break out, India has committed to a

"significant program of upgrading" the Sri Lankan military,

including training programs, air defense capability and

patrolling equipment. In a meeting later that day, Planning

Commission Deputy Chairman Montek Singh Ahluwalia told U/S

Burns that India is moving forward on the proposed

Iran-Pakistan-India pipeline, and the GOI faces strong public

pressure to resist any US influence on this issue. He

indicated that India's biggest obstacle is finding financial

backing for the risky and expensive project. Burns noted

that Tehran's recent decision to break the IAEA seals at the

Natanz enrichment facility reinforces US concern about Iran's

WMD plans and the proposed pipeline. End Summary.

GOI: Be Flexible and Stop Dissing Norway

----------------------------------------

¶2. (C) During a January 21 working lunch, Foreign Secretary

Saran told U/S Burns that the GOI counseled new Sri Lankan

President Mahinda Rajapakse to prevent greater violence by

maintaining flexibility towards the LTTE and supporting

Norway's role as facilitator in the peace process. The GOI

shared its concern with Rajapakse about the strain on the

ceasefire agreement and the possibility that hostilities

would break out soon in Sri Lanka. Saran shared his

assessment that the Sri Lankan Armed Forces were "not in good

shape" to meet the threat posed by Liberation Tigers of Tamil

Eelam (LTTE). Therefore, Saran told him, the best strategy

is to do everything within his power to prevent greater

violence. Saran emphasized that Rajapakse should be flexible

on holding talks with the LTTE, even if it meant politically

challenging compromises.

¶3. (C) Noting that there were no other countries which could

effectively facilitate the peace process, Saran said he also

advised Rajapakse to allow Norway to continue with its role

with the co-chairs. India has no contact with the LTTE since

PM Rajiv Gandhi's assassination, so it was unsuitable for the

facilitator role (Ref A). He acknowledged that Sinhalese

attitudes towards Norway were very negative, and offered to

talk to Oslo about Sri Lankan complaints. In response,

Rajapakse agreed to invite Norway to stay on and to tone down

public GSL complaints. Saran commented that he had also

spoken to Norway's Special Advisor on Sri Lanka, Eric

Solheim, ahead of his visit to Sri Lanka.

But If That Doesn't Work, We Are Here For You

NEW DELHI 00000583 002.2 OF 003

---------------------------------------------

¶4. (C) Saran explained that if hostilities do break out in

Sri Lanka, the GOI has privately committed to a "significant

program of upgrading the military's training, air defense and

patrolling capabilities." India also agreed to increased

economic aid, including funding for small economic assistance

programs to benefit Sri Lankan communities at the local

level. Saran stressed that much of this assistance would go

to the northeastern sections of the island in order to

highlight that India's opposition to the LTTE does not extend

to the Tamil people. He commented that the GOI is still

looking at a Comprehensive Economic Partnership Agreement

with Sri Lanka, but "needs to iron out the elements."

India's involvement in Sri Lanka is politically constrained

by the UPA government's Tamil coalition partners, Saran

added, particularly ahead of elections this spring in Tamil

Nadu (Ref B). However, he speculated that Rajapakse had

returned happy with New Delhi's military and economic

support.

Saran: "Rajapakse is a Different Type of Leader"

--------------------------------------------- ----

¶5. (C) Sharing his impressions from GOI meetings with the

new Sri Lankan president, Saran observed that Rajapakse is

much more "street savvy, direct and open" than the previous

Bandaranaike family. Both Kumaratunga and Wickremasinghe

came from the aristocratic elite, whereas Rajapakse comes

from a "grassroots" background. Despite his hardliner image,

Saran noted that the President was very worried about the

LTTE and the perception that he is a failed leader taking the

country back to war. Saran also mentioned that India was

encouraging other Sri Lankan party leaders to work with

Rajapakse for peace rather than portray him as an incompetent

president for their own political gain.

Pressure to Proceed on Iran, but No Financial Backing

--------------------------------------------- ---------

¶6. (C) In a meeting later that day, Deputy Chairman of the

Planning Commission Montek Singh Ahluwalia told U/S Burns

that the GOI remains intent on buying Iranian gas but still

needs financial backing for the proposed Iran-Pakistan-India

pipeline to proceed. In response to U/S Burns' question on a

timeline for the deal, Ahluwalia said there is strong public

pressure to resist any US influence on this issue. He added

that the GOI is not planning to make any investments in Iran

but is intent on buying Iranian gas if it makes commercial

sense. Despite ongoing talks, the GOI is still very

skeptical that commercial financing can be obtained for the

project given the risk and high project cost -- an issue that

has not been addressed in media reports.

¶7. (C) Ahluwalia reported that Indians are continually

asking the Government whether the US is asking the GOI to

turn its back on any economic dealings with Iran. Burns

stressed that the USG will oppose any gas pipeline deal with

Iran should it appear that India and Pakistan are going

through with the plan. Ahluwalia inquired whether the US

objected only to Indian investment in the pipeline or also to

NEW DELHI 00000583 003.2 OF 003

the purchase of Iranian gas. Burns responded that Iran's

support for international terrorism and effort to acquire

nuclear weapons means that there can be no business as usual.

"You would expect that from us," he added.

Burns Highlights Possibility of Future Sanctions on Iran

--------------------------------------------- -----------

¶8. (C) Burns noted that Iran made a miscalculation last week

in breaking the IAEA seals and proceeding with nuclear

enrichment. He explained that he has spoken with Chinese and

Russian officials who are also worried about Iran's behavior.

Burns predicted that if Iran does not negotiate with Russia

and/or the EU, they may face sanctions sometime in 2006.

Ahluwalia conceded that UNSC sanctions would make it very

difficult to obtain financing for the gas pipeline. MEA

Joint Secretary (Americas) S. Jaishanker noted that India is

not yet in violation of any ILSA provisions (which require a

USD 14 million threshold investment in Iran). Ahluwalia

again stressed that India will buy gas and oil from any

possible seller to sustain the economy's growth here.

¶9. (U) U/S Burns cleared this cable.

¶10. (U) Visit New Delhi's Classified Website:

(http://www.state.sgov.gov/p/sa/newdelhi/)

MULFORD

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Cable reference id: #06NEWDELHI512

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #50573 ?

Subject Undersecretary Burns And Fs Saran Discuss Next Steps On Potus Deliverables

Origin Embassy New Delhi (India)

Cable time Wed, 25 Jan 2006 05:44 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2006/01/06NEWDELHI512.html

Referenced by 06NEWDELHI759

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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C O N F I D E N T I A L SECTION 01 OF 09 NEW DELHI 000512

SIPDIS

E.O. 12958: DECL: 01/25/2016

TAGS: PREL [External Political Relations], EAGR [Agriculture and Forestry], PGOV [Internal Governmental Affairs], PINR [Intelligence], ENRG [Energy and Power], PHUM [Human Rights], PTER [Terrorists and Terrorism], SCOI, IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands]

SUBJECT: UNDERSECRETARY BURNS AND FS SARAN DISCUSS NEXT

STEPS ON POTUS DELIVERABLES

Classified By: Ambassador David Mulford for Reasons 1.4 (B, D)

¶1. (C) Summary: Undersecretary Burns and Indian Foreign

Secretary Saran reviewed ten potential deliverables for the

SIPDIS

President's visit during a January 20 working lunch. In a

meeting later that day, U/S Burns stressed to Planning

Commission Deputy Chairman Montek Singh Ahluwalia that India

will be one of the President's most important visits this

year. FS Saran is particularly enthusiastic about

agriculture, science and technology and energy initiatives,

describing the Agricultural Knowledge Initiative one of the

GOI's top priorities for the visit. Given the breadth of

proposals, it is important that we prioritize our ideas,

particularly on our agriculture, democracy and energy

initiatives. End Summary.

POTUS Visit Should Highlight Agriculture Cooperation

--------------------------------------------- -------

¶2. (C) FS Saran emphasized the importance of the US-India

Knowledge Initiative on Agriculture contributing to the

development of rural areas, a high GOI priority, and promised

to send an Indian Workplan to the Embassy by Monday, January

¶23. In another January 20 meeting, U/S Burns told Planning

Commission Deputy Chairman Montek Singh Ahluwalia that the

Administration hoped to make agriculture a centerpiece of the

President's upcoming visit to India. Ahluwalia said

agriculture is of prime importance to the UPA Government,

since the rural population voted out the NDA regime for

neglecting this sector. Therefore, this Government is

prioritizing agriculture and the US association with "a new

green revolution." Ahluwalia noted that the bilateral board

reviewing the US India Agricultural Knowledge Initiative will

meet on February 12 to hopefully finalize a program for the

Initiative. He added that, if the two sides could close on a

program by February 12, the US and India could announce the

launch of the Initiative during the President's visit.

Ahluwalia said that the Indian paper will reflect something

new in the bilateral relationship, i.e., a genuine sharing of

technology without attendant aid requests. (Post comment:

The promised Agricultural Initiative paper was forwarded to

SA/INS on January 20. End comment).

¶3. (C) Dick Christenson, noting that no Indian private

sector representatives joined the inaugural Agricultural

Board meeting in December, suggested it would be useful if

they participate in the next board meeting on February 12.

MEA Director (Americas) Gaitri Kumar commented that the board

does have two private sector members who might attend on

February 12, but that the GOI was considering adding

representatives from irrigation companies. She hoped the

board can sign onto the Workplan at the February 12 meeting.

Christenson also suggested that the Workplan cover the four

key areas under the Knowledge Initiative on Agriculture,

including education, food processing, biotechnology and

water, and asked for a GOI estimate of the funding

requirement from the US side. MEA's Kumar predicted that the

GOI will be committing between USD 80-95 million over the

three year life of the Workplan. Until the Workplan was

NEW DELHI 00000512 002 OF 009

approved, Kumar was hesitant to give any final monetary

figure. MEA indicated that they would not require a similar

amount from the US side, and agreed to get back to us with a

minimum ballpark figure.

¶4. (C) Stressing the potential for growth in the food

processing sector, the Foreign Secretary noted that Indian

businesses want to learn about opportunities in this area.

Because so much food goes to waste in India, there is great

potential for greater efficiency and investment in food

processing. Christenson added that biotechnology is also an

area for growth. Kumar explained that the Workplan was an

Indian "wish list" of items, and requested that the US

provide feedback on how to make these ideas work.

¶5. (C) Saran raised the idea of hosting a public agriculture

project with a "farmer's rally" or "village fair" during the

POTUS visit to make the link between the new initiative and

assistance the US gave to India's Green Revolution in the

1960s. Noting that there is already a "foundation of public

memory" about the US role in India's agricultural sector,

Saran stated that some sort of "colorful event" would go over

very well with the Indian public.

¶6. (C) Given our history of involvement with Punjab

Agricultural University (launched 50 years ago with US

funding and technical support) Ahluwalia said he is

personally lobbying PM Singh to invite the President to lunch

at the College of Agriculture. The two Governments should

move away from the model of grand state dinners to a more

informal setting where the PM and President could engage much

more freely and give the President a better sense of India,

Ahluwalia argued. A visit to Punjab would be the perfect fit

to focus on agriculture: it is the PM's home state, it is

one of the most advanced and important agricultural states in

India, and it has a long history of American support and

commercial presence. Burns noted that the issue then is

whether to do two events in Hyderabad that focus on the new

US consulate and agriculture or a separate agricultural event

in Punjab. This issue will be decided by the White House.

India Pushing for Science and Technology Programs

--------------------------------------------- -----

¶7. (C) Foreign Secretary Saran told Undersecretary Burns

that India also views agreements for a Science and Technology

Binational Commission and the opening of an external office

of the National Science Foundation in India as priorities for

President Bush's upcoming visit. The Indian Ministry of

Science and Technology is currently working on a draft to

create a commission to award joint R&D grants to

public/private partnerships for basic science research.

Responding to PolCouns' comment that the US-Israel Binational

Industrial Research and Development (BIRD) Foundation is not

an appropriate model for this project, Saran agreed that it

was only a reference, and the Binational Commission would

involve more transparency and a broader range of scientific

projects with greater demonstrable value to local

NEW DELHI 00000512 003 OF 009

communities. Industrial research would be one component, and

our four ongoing S&T projects could be added to the

commission. FS Saran noted that the GOI is very interested

in exploring joint nanotechnology projects under the

Binational Commission or HTCG and views favorably the idea of

adding public and private sector partnerships to this

project.

¶8. (C) Dick Christenson described a funding proposal to

combine USD five million from an existing rupee fund, USD

three million from a jointly owned fund and another USD five

million from an Indian source. Saran indicated that if our

governments can work out a structure and find good projects,

then the GOI is committed to funding this commission. He

suggested that an Indian Cabinet Note on this project is

expected at the end of February. Christenson noted that the

Science and Technology Binational Commission and the proposed

Agricultural Knowledge Initiative would be competing for a

finite pool of USG resources.

¶9. (C) MEA Joint Secretary (Americas) S. Jaishankar raised

the possibility of opening up an external office of the

National Science Foundation (NSF) in India. The NSF

currently has offices in Paris and Tokyo, and approved an

office in Beijing as part of the President's recent visit to

China. The breadth of and potential for Indo-US cooperation

in science, Jaishankar emphasized, makes Delhi a natural

candidate for another field office. The Foreign Secretary

added that this deliverable would have a very positive impact

in India.

Saran: Energy Projects Will Have a Positive Impact

--------------------------------------------- ----

¶10. (C) Aside from the Civil Nuclear Agreement, FS Saran

expressed his hope that during the POTUS visit we could make

two additional energy announcements on the FutureGen Zero

Emission Project and the Integrated Ocean Drilling Program.

India is dependent upon fossil fuels, he continued, but is

worried about the negative environmental aspects. Therefore,

the GOI is working on clean coal technology, and would be

excited to join in the development of a FutureGen

zero-emissions coal fired power generation plan. He

predicted that a deliverable for a "US-India Zero-Emissions

Project in India" would have a big impact within the country.

He also requested Indian participation in the joint

US-China-EU-Japan Integrated Ocean Drilling Program to study

India's recent discovery of gas hydrates.

¶11. (C) Ahluwalia said India hoped that some of the topics

in the energy working groups would ripen in time to highlight

during the visit. India expects the energy dialogue will

lead to robust cooperation between US and Indian companies,

including the introduction of leading technologies. He added

that it would be helpful if the US could be responsive to

India,s trade concerns, such as the import ban on US imports

of Indian mangos, so that the dialogue on lifting trade

barriers would be seen by the Indian public as a two way

street and not just India responding to US requests to lift

NEW DELHI 00000512 004 OF 009

trade restrictions.

GOI Slow to Respond to Democracy Initiatives

---------------------------------------------

¶12. (C) Undersecretary Burns raised the notion of

highlighting American and Indian shared values by creating an

Indian equivalent to the National Endowment for Democracy

(NED). Burns reported that NED's Carl Gershman is willing to

come to New Delhi to discuss this proposal. Saran observed

that it would be difficult to set up a new institution and

asked how this would link to NED. He added that it would be

"easier to do if it were done as an NGO," (presumably

avoiding a GOI role) but agreed to look into the idea. He

suggested this could be fleshed out during the February visit

of U/S Paula Dobriansky.

¶13. (C) Christenson asked for Saran's views on establishing

a training program to educate Iraq's civil servants on

federalism and decentralization issues. Saran responded that

New Delhi was interested in training Iraqis in India, where

the country had expertise in training for civil servants and

Iraq diplomats on everything from accountant skills to

parliamentary procedures. Reflecting on his experience

during the kidnapping of several Indian truck drivers ("when

my whole life was Iraq"), Saran commented that it would be

very difficult to send Indian trainers to Iraq. The hostage

situation had created a national sensitivity about deployment

to these hot spots. However, he agreed "in principle" to

look into Christenson's idea of a hybrid program to host the

first half of the training in India and the second half in

Iraq.

¶14. (C) Christenson also requested feedback on our concept

paper on "The 21st Century Leadership Alliance, a joint

project, possibly to include Japan, to build the capacity of

Afghan government officials and civil servants. MEA's Kumar

stated that the GOI is discussing this paper with its embassy

in Kabul, and will get back to us with a response.

Weaving Together Defense Cooperation Ideas

-------------------------------------------

¶15. (C) FS Saran raised the issues of cooperation on

disaster relief and anti-piracy initiatives, and asked when

New Delhi might hear from the US on the sale of a Landing

Platform Dock (LPD) ship and possible participation in the

Multirole Maritime Aircraft (MMA) program. OSD's Claudio

Lilienfeld described a proposal for a Maritime Security

Statement of Principles or joint statement on maritime

security cooperation that would guide a wide range of

activities, including: a US-India anti-piracy initiative,

disaster relief cooperation, maritime interdiction

operations, naval exercises, and military exchanges. A broad

maritime security initiative could also provide the context

for transactions such as the LPD and maritime patrol

aircraft. If India is ready to sign on to the Proliferation

Security Initiative (PSI), this decision could also be

reflected in the joint statement. Responding to a question

NEW DELHI 00000512 005 OF 009

for U/S Burns, Saran stated that the GOI is "discussing PSI

seriously" and that he is "hopeful."

¶16. (C) Undersecretary Burns emphasized that we are "willing

to move on the military relationship." On military hardware,

he added that the US will need to make exceptions to national

disclosure policy to be able to grant India access to MMA

development technologies and the AESA radar, but that we were

speeding along decisions on these.

¶17. (C) On LPD, Lilienfeld commented that we are currently

awaiting Congressional notification for the LPD transfer,

something that the State Department was working on with the

hill. Although the LPD could not be delivered until the end

of 2006, we hoped to have enough process to enable some

announcement on LPD to be made during the POTUS visit. He

also relayed that the US Embassy's Office of Defense

Cooperation had heard from the Indian Navy Staff that the GOI

had decided not to lease the P-3C Orions and asked for

clarification on this issue.

¶18. (C) FS Saran commented that progress on the disaster

relief initiative should build off of the "good development"

of US-Indian post-tsunami cooperation. Saran asked that the

US and India agree to at least one near term (e.g. Spring

2006) disaster relief-related mil-mil exercise that could be

announced during the President's visit. He also stated that

the GOI is planning to create a Disaster Management Cell,

which he described as the counterpart of the US Federal

Management Emergency Agency (FEMA), but with a defense

component. Jaishankar added the possibility of creating

linkages between this new Indian agency with the US Pacific

Command (PACOM)'s Center of Excellence in Disaster Management

and Humanitarian Assistance in Hawaii. He suggested that we

weave together several connections and combine these

initiatives into a package for the POTUS visit.

¶19. (C) Lilienfeld brought up three additional defense

issues which the USG hoped could be concluded before the

President's visit, including a Logistics Support Agreement, a

Communication Interoperability and Secrity Memorandum of

Agreement (CISMOA) and a post-NSSP agreement for cooperation

in missile defense. He added that Washington and PACOM were

currently reviewing the recently-submitted GOI draft for a

Logistics Support Agreement, and waiting for the MOD's next

response to the draft CISMOA which had previously been

provided to the GOI, both of which would facilitate joint

military initiatives such as MMA. On missile defense,

Lilienfeld cited the conclusions of the November 2005

US-India Defense Policy Group in which there was general

agreement on the need for a new mechanism for continued

missile defense cooperation now that the NSSP is concluded.

He suggested a statement of principles that could create a

framework for regularized dialogue on missile defense and

pave the way for continued cooperation. The two delegations

agreed that DoD drafts of a maritime security/anti-piracy

statement and a Post-NSSP Missile Defense Cooperation

statement of principles would be provided soon in the hope

that they could be finalized by the time of the President's

NEW DELHI 00000512 006 OF 009

trip.

CLSA and Indian Astronaut Still Up in the Air

--------------------------------------------- --

¶20. (C) MEA Joint Secretary Jaishankar expressed

satisfaction at the US-India agreement for a space launch

technology safeguards agreement (TSA), but said that the GOI

had serious concerns about the US draft of the Commercial

Space Launch Agreement (CSLA). Noting that the US Trade

Representative (USTR) is the US lead negotiating agency on

this agreement, Jaishankar observed that trade in satellite

services provisions, which are extraneous to commercial

satellite launches, have been included in the US draft even

though they have never been part of US CSLAs with any other

countries, including non-market economies such as Russia. As

a market economy, India is entitled to an unencumbered CSLA

with the US. He offered two solutions. The Indian side can

return the American draft with a counter draft or paper

proposing a pared down launch agreement, excluding satellite

services, and the two sides can negotiate a final text on

this basis in time for the visit. The second solution was to

scrap a CSLA altogether. Since India already has access to

the US launch market through the just concluded TSA and India

is a market economy, Jaishankar questioned whether a CSLA

agreement was even technically necessary. Jaishankar said

that he would talk with the Indian space agencies and get

back to the American side with an answer. (Post comment: On

the margins Jaishankar agreed that a DVC in the coming week

between the negotiating teams might be the best course to map

out an action plan for CSLA. End comment.) MEA Deputy

Secretary (Americas) Santosh Jha later commented that the GOI

SIPDIS

hopes to convene another Space Cooperation Working Group

Meeting before the President's visit.

¶21. Underlining the importance of the President's offer to

include an Indian astronaut on a US space lunch,

Undersecretary Burns asked whether the GOI had made any

decision. Jaishankar explained that just when the GOI had

begun to engage on funding issues, NASA representatives told

their Indian counterparts at a meeting in Japan that because

the US had cut back on shuttle flights, the offer was no

longer valid. Upon hearing that the offer, which was part of

the July 18 Joint Statement, had not been withdrawn,

Jaishankar asked how much GOI funding will be required.

Undersecretary Burns estimated that India will need to commit

about USD one million per year, and told Jaishankar that he

would ask NASA to reengage and get back to the GOI with a

paper on this issue.

CEO Forum a GOI Priority for POTUS

----------------------------------

¶22. (C) The Foreign Secretary emphasized that the focus of

the investment and trade deliverable should be on the work of

the CEO Forum, and requested that we help ensure that the US

participants in the forum are all available to join the

President on his visit to India. Ahluwalia also argued that

the forum should play an important role in the economic

NEW DELHI 00000512 007 OF 009

elements of the President,s visit to India. Christenson put

out an idea from the Trade Policy Forum to create a training

initiative to help Indian law enforcement detect IPR

violations. Saran confessed that he did not know much about

this idea, and asked for a paper describing the program.

Noting US appreciation that the Dhabol case had been

resolved, Christenson said it would further improve the

business climate if we could resolve the remaining "legacy"

commercial issues such as the DiAmmonium Phosphate (DAP)

fertilizer issue. Kumar invited us to present a list of

legacy issues to work on before the POTUS visit.

Public Health: Common Interest but Different Ideas

--------------------------------------------- -----

¶23. (C) Christenson offered a US initiative to address

India's interest in building Schools of Public Health (SPH),

but Saran was more interested in a program to link health

care institutions to build on the medical outsourcing trends.

The Foreign Secretary described the large increase in the

number of Americans who are coming to India to receive

high-quality, low cost health care. MEA's Kumar commented

that the Indian Ministry of Health is working on a proposal

for a "health package," but it may not be ready in time for

the President's visit. (Post Comment: Mission staff is aware

of Indian Ministry of Health's interest in making SPH a topic

for the President's visit. It is likely that the Indian MOH

may not have communicated their views to counterparts in the

MEA. Mission recommends U/S Dobriansky meet with the

Minister or Secretary of Health to discuss SPH issues. End

Comment.)

¶24. (C) Stressing the President's commitment to fighting

Avian Flu, Christenson raised the notion of a cooperation

program to sharpen surveillance and detection of the disease.

He raised the example of compensation to farmers for

reporting incidents of the flu, noting that farmers were

otherwise reluctant to flag concerns that would destroy their

livelihood. Saran said this might be a productive area for

cooperation, and suggested that Under Secretary Dobriansky

bring an avian influenza expert and a pharmacy industry

representative with her when she visits India in February.

NSC Senior Director Rood emphasized that President Bush is

personally committed to a vigorous effort to combat avian

influenza. The Foreign Secretary asked that we arrange a

meeting on this topic during U/S Dobriansky's visit to India.

No Decision on Education Initiatives

--------------------------------------

¶25. (C) Christenson suggested that it might be the right

time for India to revise the 1950 Fulbright Agreement and

look towards contributing parity in funding. Saran, who

first asked whether India had a Fulbright Program, requested

more information about this topic. (Note: Ambassador

Mulford previously sent a letter to Saran pressing India to

make these changes, even indicating that lack of progress

could result in "funding cutbacks." It was clear that Saran

NEW DELHI 00000512 008 OF 009

had not previously focused on this idea as a Presidential

deliverable. End Note.) Christenson reported that the US

currently contributes USD 1.6 million annually to the

Fulbright program, which over the years has supported the

research of over 15,000 American and Indian scholars. He

asked the Foreign Secretary to consider revising the 1950

agreement to include GOI "parity funding," which would bring

India in line with the standard practice throughout the

world. P Advisor Ashley Tellis underlined USG priority in

this Fulbright idea. MEA Deputy Secretary (Americas) Santosh

Jha noted that this proposal was currently awaiting approval

from the Ministry of Human Resources Development.

¶26. (C) Saran raised the possibility of opening science and

technology branches of US universities in India. MEA later

commented that they expect the debate on educational market

openings to be very sensitive, particularly for schools

competing to teach social sciences. Therefore, they

suggested that we first work to allow less threatening

"technology" universities to offer courses in India, and

invited us to present a paper with our ideas on educational

market openings.

New Ideas for Wildlife Conservation

-----------------------------------

¶27. (C) Christenson suggested the GOI consider joining the

recently announced Coalition Against Wildlife Trafficking

(CAWT) to focus attention on wildlife trafficking and improve

cooperation on law enforcement, particularly for endangered

animals. He acknowledged that the GOI had not fully embraced

the earlier US proposal on tigers, and said we hoped the new

proposal would win full GOI support. FS Saran requested that

U/S Dobriansky bring a paper on this idea when she visits in

February.

Comment: Next Steps for Successful POTUS Deliverables

--------------------------------------------- ---------

¶28. (C) We are waiting for a formal GOI response on the S&T

Binational Commission, Commercial Space Agreement, CISMOA,

establishment of an Indian National Endowment for Democracy

counterpart, Iraqi training programs, The 21st Century

Leadership Alliance and parity in funding for the Fulbright

Program. The GOI delivered a paper on January 21 on the

Agricultural Initiative Workplan and has promised sometime

soon a package of health care linkages. We agreed to get

back to the GOI on a paper for Indian astronaut participation

on the International Space Station, a maritime

security/anti-piracy statement, a Post-NSSP Missile Defense

statement of principles, an IPR law enforcement training

program, a list of commercial legacy issues (delivered by

EconCouns on January 23), and details on the US-India

Partnership on Wildlife Trafficking. The GOI is willing to

work with us to set up a series of expert meetings on Avian

Flu, which could figure prominently on the agenda of Under

Secretary Dobriansky when she visits India in February. We

SIPDIS

are waiting for a decision on an exception for Indian access

to MMA development technologies and a decision on the LPD.

NEW DELHI 00000512 009 OF 009

The ball is in our court to finish reviewing Indian papers on

the Logistic Support Agreement, and check on the possibility

of opening an office of the National Science Foundation in

India, and Indian participation in the FutureGen Zero

Emission Project and the Integrated Ocean Drilling Program.

¶29. (SBU) List of Participants:

India

-----

Foreign Secretary Shyam Saran

MEA Joint Secretary (Americas) S. Jaishankar

MEA Director (Americas) Gaitri Kumar

Foreign Secretary's Office Director Rahul Chhabra

MEA Deputy Secretary (Americas) Santosh Jha

Department of Atomic Energy Director Dr. R. B. Grover

Atomic Energy Commision Head of International Division Dr. K.

Raghuraman

USA

----

Undersecretary for Political Affairs R. Nicholas Burns

Ambassador Mulford

NSC Senior Director John Rood

Senior Advisor to P Ashley Tellis

SA Dick Christenson

OSD Claudio Lilienfeld

Senior Advisor to T Jason Tellis

P Special Assistant Tobin Bradley

Political Counselor Geo Q?U) Visit New Delhi's Classified Website:

(http://www.state.sgov.gov/p/sa/newdelhi/)

MULFORD

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Cable reference id: #05NEWDELHI8397

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #43935 ?

Subject Scenesetter For Secretary Snow's Visit To India

Origin Embassy New Delhi (India)

Cable time Fri, 28 Oct 2005 13:32 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2005/10/05NEWDELHI8397.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

This record is a partial extract of the original cable. The full text of the original cable is not available.

Hide header

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 008397

SIPDIS

STATE FOR SA/INS

TREASURY FOR INTERNATIONAL -- ANDY BAUKOL

E.O. 12958: DECL: 10/27/2015

TAGS: EFIN [Financial and Monetary Affairs], ECON [Economic Conditions], BEXP [Trade Expansion and Promotion], PGOV [Internal Governmental Affairs], PREL [External Political Relations], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], Indo-US

SUBJECT: SCENESETTER FOR SECRETARY SNOW'S VISIT TO INDIA

Classified By: AMBASSADOR DAVID C. MULFORD, REASONS 1.4 B,D

¶1. (C) Mr. Secretary, I want to warmly welcome you to India,

a vibrant, diverse, multi-ethnic, multifaceted democracy --

much like our own in important respects -- that is emerging

as an economic powerhouse and has growing global ambitions.

Your visit will help set the stage for President Bush's trip

to India next year. It will advance the President's

directive to add depth and breadth to our bilateral

relations, which have strengthened on virtually every front

during the last four years. Your public message should be

that you have come engage in a conversation with the Indian

Government, Indian business and the Indian people about

India's role in the international economy at the onset of the

21st century.

A STRATEGIC PARTNERSHIP

-----------------------

¶2. (C) Your visit follows an extremely successful visit to

Washington by Prime Minister Manmohan Singh in July, when the

release of the Joint U.S.-India Statement signaled an

historic turning point in our bilateral relationship.

Although the civil nuclear component received the most public

attention, the Joint Statement goes far beyond that. In it,

the two countries pledge to a partnership to address global

and regional challenges for decades to come. We agreed to

work together to work for democracy and economic growth

around the world. We agreed to revitalize the Economic

Dialogue, cooperate in the fields of education, agriculture,

science and technology, and space launch. The Joint

Statement confirms our growing committment to work together

across the whole range of activities that comprise human

endeavor. We are now cooperating in the health sector,

particularly in HIV prevention. We have a new and promising

security relationship, in which topics such as

interoperability of our militaries and defense coproduction

are being openly discussed. In sum, we have a truly

comprehensive, across the board engagement, which promises to

be the foundation of one of our closest international

partnerships in the decades ahead.

¶3. (C) American interests and Indian interests converge on a

wide range of transnational issues -- terrorism,

proliferation of WMD, illicit drugs, trafficking, promoting

democracy in the world, and climate change. We have

determined that the world would benefit if the two nations

mobilize their military, political, and economic assets to

address these challenges together as India emerges as a major

power in the 21st century.

¶4. (C) India, too, has dramatically changed its policy

towards the United States. On economic and commercial

issues, the UPA government has moved incrementally on issues

of importance to us: it has concluded an Open Skies policy;

strengthened its IPR regime; taken steps to resolve our

bilateral irritants; it has raised foreign direct investment

limits in several sectors; and has lowered tariff rates in

sectors of importance to our industry. A symbolic FDI legacy

issue, the Dabhol dispute, which was complicated by the Enron

collapse, was resolved by the GOI this July just prior to the

Prime Minister's Washington visit. The state-controlled Air

India has selected Boeing to supply $9.5 billion worth of

commercial aircraft.

¶5. (C) On the political front, it is clear that the GOI

wants a closer relationship with us. From the early days of

this UPA government's tenure, it has sent us public and

private signals that it views its ties with the US as its

most important international relationship. Prime Minister

Manmohan Singh has taken considerable heat from his own

party, his coalition partners, and the opposition for his

decision to side with us against Iran at the IAEA last month.

Our close coordination in responding to the Tsunami last

year and to the ongoing Nepal crisis are other examples of

increasing trust and cooperation between us on regional and

international matters.

UNPRECEDENTED OPTIMISM

----------------------

¶6. (C) In this context, your visit comes at a time of

unprecedented optimism about the US-India relationship. Our

message to the Indian public that we want a strong and

prosperous India will get heavy press play. You should

highlight the benefits to be derived from a strategic

partnership with the US as India emerges from its cold war,

socialist past. You should underscore the U.S. commitment to

a comprehensive partnership with India and highlight

President Bush's directive to support India's efforts to

become a global power. On other topics, we suggest you press

the GOI to liberalize FDI in financial services sector,

remove internal and external trade barriers, and accelerate

economic reforms. In Delhi, you will be present at the

signing of a bilateral agreement that allows USTDA to

continue its activities to support Indian economic

development and US trade and investment.

THE ECONOMIC DIALOGUE

---------------------

¶7. (C) The U.S.-Indian economic partnership extends beyond

trade and investment. The intensifying and increasingly

complex economic links being forged between our two countries

are having a profound impact on our respective economic

outlooks in the 21st century. The principal tool we have

used to strengthen the economic relationship is the US-India

Economic Dialogue (ED). The ED is headed by Al Hubbard of

the White House and Deputy Planning Commissioner Montek

Ahluwalia, who is a close confidant of the Prime Minister.

The goal of the ED to advance the President's directive to

transform U.S.-Indian relations by revitalizing the

U.S.-India economic and commercial relations.

¶8. (C) You last met with Chidambaram at the G-20 meeting in

Beijing. We are pleased that you will be leading the

engagement of the Financial and Economic Forum as it will

enhance the effectiveness of the Economic Dialogue. In your

bilaterals, you should reaffirm the USG commitment to the

Dialogue and its Finance track, the Financial and Economic

Forum.

CEO FORUM

---------

¶9. (C) A new CEO Forum was established this July to advise

policy makers on what is required to remove structural

impediments to greater trade and investment ties. Both

governments recognized that input from the business community

is an integral component of a successful bilateral economic

dialogue and agreed to create this high-level private sector

forum to exchange business community views on key economic

priorities. The CEO Forum, which first convened at the White

House in the presence of President Bush and Prime Minister

Manmohan Singh on July 19, is composed of 10 chief executives

from each country. You will be meeting with the Indian CEOs

of this group in Mumbai, where you should underscore the

importance of the CEO forum and the USG commitment to take

its views seriously.

¶10. (C) The CEOs represent a cross-section of industrial

sectors, particularly those that have a stake in improving

the commercial climate between our two countries. The CEO's

collectively represent about a trillion dollars in capital.

As the contributors of capital and bearers of risk, who have

a global perspective, they have been tasked with identifying

key issues and recommending a handful of high priority issues

and measures that will enhance economic growth and employment

in India and accelerate bilateral trade and investment. The

CEOs Forum is working on a "CEO Forum's Key Policy Issues"

document which they will present to President Bush and PM

Singh during President Bush's planned visit to India next

year.

ECONOMIC REFORMS AND COALITION MAINTENANCE

------------------------------------------

¶11. (C) In the US-India economic relationship, our most

important priorities are continuation of economic reforms,

redirecting uneconomic subsidies, and promoting financial

market liberalization. Fifteen years of economic reforms

have raised India's GDP growth to the 7-8 percent range,

improved income levels, reduced poverty, and instilled

increasing confidence within the country about its present

and future international role. The quite visible benefits

accruing from these reforms have created growing public

support for more deregulation, liberalization and openness.

This includes a whole new generation that in unencumbered by

India's socialist decades. You should use your visit to

congratulate the Prime Minister on his reform accomplishments

to date and highlight our strong desire to use the U.S.-India

Economic Dialogue to: resolve commercial disputes, identify

and remove blockages to bilateral trade and investment, and

increase private and government technical and regulatory

exchanges.

¶12. (C) Successive Indian governments are moving these

reforms forward, albeit within the political constraints

imposed by India's vigorous and sometimes frustrating

democratic system. Analysts predict several decades of

sustained robust economic growth, thanks in part to India's

youthful population and its technical and scientific prowess.

As India's largest trading partner and foreign investor, the

Indians realize we are critical to their goals, which gives

us considerable leverage in shaping their regional and global

actions.

¶13. (C) Although the first generation of economic reforms

has yielded good benefits for the country and its people, the

second generation of reforms is encountering a stiff

headwind. Even in the best of times, economic reforms in

India are slow because they require a political consensus

across a wide political spectrum before they can be

implemented. Prime Minister Manmohan Singh and his economic

team are finding it particularly difficult to move. They

feel increasingly boxed in: on the left from their Communist

coalition partners who have made a cottage industry out of

opposing any reforms that the GOI proposes, including

privatization, labor reform, and easing restrictions on FDI;

on the right, from the BJP which never misses an opportunity

to attack, even if the GOI's proposals are reforms that the

BJP had originally proposed; and down its own middle, from

the populist politicians in the Congress party itself, who

are responsible for the budget-busting employment guarantee

bill, and having tasted blood, this group feels emboldened to

press for even more populist measures as it see the party's

electoral prospects stall or deteriorate in many key states.

¶14. (C) With this as a political backdrop, economic reforms

will be implemented on an ad hoc basis. Issues that do not

attract political flak, like opening up the civil aviation

sector, reducing bureaucratic red tape and lowering tariffs

and simplifying the tax code, will move forward.

Agricultural reform, privatization and labor reform will

encounter strong opposition, but to its credit, the GOI has

at least opened up a public debate about these measures.

ECONOMY IS GOING STRONG ...

---------------------------

¶15. (C) The economy, led by manufacturing and services

sector strength, started the fiscal year 2005-06 well,

beating out most forecasts when growth accelerated to 8.1

percent in the April-June quarter. Growth in the

agricultural sector, which accounts for 22 percent of GDP and

supports 65 percent of the population, remained tepid,

however. Projections are that growth for 2005-6 fiscal year

will be in the 7-7.5 percent range. Key indicators point to

continued economic growth and most analysts agree that over

the medium and longer terms, Indian economic growth will be

robust.

¶16. Inflation: Headline inflation seems subdued, currently

at about 4.4 percent this year as compared to 6.4 percent

last year. Inflation this year is expected to rise to the

5-5.5 percent range due to petroleum prices hikes which are

beginning to work themselves in the economy. The full impact

of the oil price increases has been cushioned on the backs of

the state-owned oil companies, which have not been allowed to

pass on more than a minimal portion of the increases to

consumers.

Interests Rates: After steadily declining for several years,

interest rates have bottomed out. On October 27 the RBI

hiked its repo and reverse rates by 0.25 percent to 6.25 and

5.25 percent, respectively, to address short-term

inflationary pressures emanating from higher international

oil prices and imports.

External Sector: Helped by the strong economy, Imports from

the US have surged 50 percent in the first quarter of 2005-6,

with aviation equipment, electronic goods, machinery,

transport equipment and scientific instruments among the

biggest sellers. India's trade with the rest of the world

has been increasing sharply as well. India could run up a

current account deficit of nearly 3 percent of GDP this year,

close to what many economists would regard as the 'danger

zone'.

Rupee: After a 6% appreciation in the last 12 months, the

rupee has begun to show distinct signs of weakening vis--vis

the dollar. The rupee now ranges between Rs 44.5-45.4 to the

dollar.

Foreign Exchange: India's foreign exchange reserves were

$143.3 billion on October 7 and have been steadily increasing

since the balance of payments crisis in 1991 when India

almost ran of foreign exchange.

Foreign Direct Investment: While India's ability to attract

FDI lags far behind China's, foreign investors are beginning

to discover India. Foreign institutional investment alone is

expected to top $5 billion in 2005-06. As a result of strong

FII inflows, FDI will likely exceed $7 billion during the

current fiscal year as compared to $3.8 billion for the

previous year.

... BUT CLOUDS HOVER

--------------------

¶17. (C) Fiscal Deficit: The chronic fiscal deficit

headlines the macro-economic trouble spots. The combined

federal-state deficit this year is expected to be 7.6 percent

of GDP. Interest payments on government debt, which is

estimated at 80 percent of GDP, consume nearly half the

revenue received from taxes. The recently enacted plan to

guarantee 100 days of work to every rural family will put an

even greater strain on the country's fiscal performance.

Fiscal Reform: In April, several states implemented a VAT

system to replace a complex web of indirect taxes. The VAT

experiment has been highly successful, with an average

increase of 16% in revenue collections by the VAT states.

More states, including those governed by the opposition BJP

are preparing to adopt VAT. While there is increasing debate

about tax reform, the GOI efforts to broaden the tax base

have not been very successful.

BANKING REFORM

--------------

¶18. (C) Earlier this year, the Reserve Bank of India (RBI)

published a long-awaited "road map" for foreign banks in

India. The rules place tight restrictions on the ability of

foreign banks to take stakes in private sector Indian banks

until at least 2009. Until then, foreign banks will only be

allowed in most cases to grow "organically" via wholly-owned

subsidiaries or a branch network, with severe restrictions on

expansion. The roadmap promises to open up the market to

large-scale foreign stakes in 2009. However, that horizon is

too far away and probably too uncertain to mean anything for

our contacts in the Indian banking sector. We and the CEOs

of several large US financial institutions in New York and in

India view the roadmap as a major step back and victory for

the Communists and the RBI, and in particular its

conservative Governor Y.V. Reddy and his "go-slow" to

"move-back" approach to further FDI in the Indian banking

sector. You should raise the issue in your meetings with

Chidambaram, Ahluwalia, and RBI Governor Reddy.

¶19. (C) FM Chidambaram appears for the moment to be

unwilling to take on Reddy. The institutional strength of

the RBI would be difficult to overcome, particularly with the

left on whom the government is dependent having openly

expressed their opposition to any more liberal FDI policy

toward foreign involvement in the banking sector or

consolidation within the domestic sector. We may not have

heard the last of the road map issue, although at this point

in time we are not optimistic that there will be forward

movement anytime soon. The tensions between the MOF and the

RBI are well known. The MOF scored two important victories

over the RBI in the past year: it pulled the RBI back from

its plans to reduce current FDI limits in banking to 5

percent, and the Finance Minister quickly put Governor Reddy

in his place after Reddy had suggested imposing a tax to

limit FII inflows.

INFRASTRUCTURE

--------------

¶20. (C) One factor that may stymie India's growth prospects

is its failure to develop a world class transportation

infrastructure. Indian airports, road, railways, and ports

are wholly inadequate to sustain the country's

competitiveness in the global market place and threaten to

thwart the country's aspirations of becoming a global

economic and political power. Successive governments have

recognized this but failed due to inadequate political

leadership. Ambitious plans have been drawn up in the past,

but they have languished due to failure to mobilize the

resources, lack of clarity of purpose, and poor

implementation. Nor is the problem just one of lack of

funds. The problem has been a culture that intrinsically

believes that it is the responsibility of government to plan,

build, and operate these projects.

¶21. (C) India's capital markets are not sophisticated enough

to channel or mobilize resources to fund large projects.

India also lacks a culture of private project finance. There

is no market for long term debt. The GOI needs to stimulate

the creation of such capital markets by allowing an increase

in the number and types of financial players. There are

signs that the UPA government has learned the lessons of the

past and will do things differently. Prime Minster Manmohan

Singh has made infrastructure one of his government's top

priorities, and announced the goal of attracting $150 billion

in foreign direct investment to the sector. A government run

by economists appears to understand the vital role of the

private sector in infrastructure development but needs help

in creating appropriate incentives. Singh's government has

signaled its intention to build public-private partnerships

in developing these projects. On the other hand, the

government's negative attitude on liberalization of FDI caps

for insurance companies and pension managers does not bode

well for development any time soon of markets for long term

financing or for large scale, long term public private

project. It is an open question whether India will be able

to break from the habits of the past and address what

everyone in the society, except the Left, believes is a

pressing need.

Conclusion

----------

¶22. (C) In sum, you will come to India at a time when the

President's goal of establishing a key strategic relationship

is becoming a reality. Your visit will move us forward in

building new habits of collaboration with one of the world's

rising giants. My team looks forward to welcoming you to

India and ensuring a successful visit.

MULFORD

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Cable reference id: #05NEWDELHI2719

Main • Full-text search • Private cart • Browse tags • Overview • History • Media • Crowdsource Central • Manning’s alleged chat logs diff • Donate

Reference id aka Wikileaks id #30515 ?

Subject Energy Minister Cancels Trip To U.s.

Origin Embassy New Delhi (India)

Cable time Mon, 11 Apr 2005 13:29 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2005/04/05NEWDELHI2719.html

History

Time unknown: Original unredacted version, leaked to Wikileaks

Thu, 1 Sep 2011 23:24: Original unredacted version published, with HTML goodies

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Hide header

C O N F I D E N T I A L NEW DELHI 002719

SIPDIS

FOR ENERGY SECRETARY BODMAN

E.O. 12958: DECL: 04/11/2014

TAGS: PREL [External Political Relations], EPET [Petroleum and Natural Gas], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], Energy

SUBJECT: ENERGY MINISTER CANCELS TRIP TO U.S.

Classified By: Deputy Chief of Mission Robert O. Blake for Reasons 1.5

(B,D)

¶1.(C) Energy Minister Mani Shankar Aiyar contacted the

Embassy on April 11 to convey his regret that he will not be

able to travel to the United States to meet with Energy

Secretary Bodman and address an energy symposium at Harvard.

SIPDIS

The Minister explained that the Emir of Qatar had scheduled a

short notice visit to India, for which he must be present

given India's important energy interests with Qatar. The

Minister asked that the Embassy convey his best wishes to

Secretary Bodman and his invitation for the Secretary to

SIPDIS

visit India at his earliest convenience. Qatar is presently

one of India's major suppliers of imported gas, with plans

for significant further expansion of capacity in the next few

years. This Qatar option is particularly important as a

potential alternative if a gas pipeline from Iran proves not

to be feasible.

¶2. (C) COMMENT: Despite talk of the Qatari visit, we

suspect that a major factor in the Minister's cancellation

was MEA's concern about protecting the Foreign Minister's

agenda in Washington this week and ensuring that Mani Shankar

Aiyar does not muddle the GOI's message to DOE. Aiyer is

widely rumored to be a contender for Congress Foreign

Minister if Natwar Singh ever moves on. When the Ambassador

spoke with Natwar on April 8, the Foreign Minister intimated

that he would make sure that Mani's agenda with Secretary

Bodman did not conflict with Montek Singh Ahluwalia's, who is

part of the MEA delegation.

MULFORD

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Subject Making Our South Asia Initiative A Reality

Origin Embassy New Delhi (India)

Cable time Wed, 30 Mar 2005 16:53 UTC

Classification SECRET

Source http://wikileaks.org/cable/2005/03/05NEWDELHI2380.html

References 05NEWDELHI1824, 05NEWDELHI2273, 05NEWDELHI2299

History

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301653Z Mar 05

Hide header

S E C R E T SECTION 01 OF 05 NEW DELHI 002380

SIPDIS

E.O. 12958: DECL: 03/30/2015

TAGS: PREL [External Political Relations], ENRG [Energy and Power], MASS [Military Assistance and Sales], KNNP [Nuclear Non-Proliferation], ETRD [Foreign Trade], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], PK [Pakistan], NSSP

SUBJECT: MAKING OUR SOUTH ASIA INITIATIVE A REALITY

REF: A. NEW DELHI 2299

B. NEW DELHI 2273

C. NEW DELHI 1824

Classified By: Ambassador David C. Mulford for Reasons 1.4 (B, D)

¶1. (S) Summary: We recommend capitalizing on Foreign

Minister Natwar Singh's April 13-14 meetings with the

Secretary and the President to make significant progress on

SIPDIS

strategic, energy and economic tracks the Secretary

highlighted in her March 15-16 visit to India. Specifically,

we suggest the Secretary:

-- make a forward leaning statement in the Secretary,s joint

press availability on India's UNSC aspirations (without

making a specific commitment), and announce a visit by Shirin

Tahir-Kheli to Delhi for further discussions on UNSC reform.

-- invite Secretary Bodman to attend the Rice/Singh meeting

so Secretary Rice can announce Secretary Bodman will lead the

US-India Energy Dialogue and a date or at least timeframe for

Secretary Bodman to visit India;

SIPDIS

-- cast her meeting with Natwar as the launch of the Indo-US

Strategic Dialogue and ask the President to express his

support for it;

-- seek Natwar,s agreement to establish a Defense Production

Cooperation Group under the Economic Dialogue to underline

our interest in expanding rapidly Indo-US defense trade;

-- announce a trip by the NASA Administrator to India to meet

with ISRO Chairman Nair to launch a Space Working Group;

-- seek Natwar,s agreement to constitute a Civil Nuclear

Working Group perhaps led by Counselor Zelikow to examine how

India and the US can expand civil nuclear cooperation;

-- tell Natwar that in order to respond to our promise to

spur clean energy cooperation, we are prepared to expand

USAID programs on rural electrification and clean coal

technologies;

-- invite Montek Singh Ahluwalia to Washington to discuss

with NEC Director Hubbard the future of the Economic

Dialogue, including White House backing of a CEO Forum;

-- announce the restoration of GSP benefits to India in

recognition of India,s passage of its IPR bill;

-- tell Natwar that the US is ready to propose now India,s

entry into the Proliferation Security Initiative Core Group

at the time of the G-8 summit provided India has agreed to

support the PSI principles and has a significant operational

proposal to table that underscores its capacity to be a

player in PSI; and

We recommend the President:

-- re-emphasize the US objective of helping India become a

world power in the 21st century;

-- tell Natwar that in return for what we expect will be a

promise by him that India will submit its export control

legislation as soon as Parliament reconvenes on April 18, we

will take the steps necessary to prepare to conclude Phase 2

of the NSSP once we have had a chance to review the draft

legislation.

End Summary.

Maintaining Momentum

--------------------

¶2. (S) The MEA has indicated to us that Natwar is willing to

visit Washington only if he can (1) show at least some

progress in India's quest for UNSC membership and (2) launch

a US-India Energy Dialogue. Progress on these two issues

would enable Natwar to tell Parliament when it reconvenes on

April 18 that the US-India Strategic Partnership is quickly

producing results. This will also lay the groundwork for

additional progress during PM Manmohan Singh's expected visit

to Washington in July. The following are the Embassy,s

explanations for these recommendations for progress.

UNSC Reform

-----------

¶3. (S) The GOI,s top foreign policy goal is to become a

permanent member at what is often referred to here as "The

High Table," the UNSC. The MEA is in the middle of a major

diplomatic campaign to achieve this objective. Despite our

attempts to persuade the GOI that much larger issues of UN

reform are at stake, the MEA considers some progress on this

issue the other most important objective of Natwar's visit.

If a forward leaning statement can be made by the Secretary

in her joint press appearance with Natwar, it is his opinion

that he can return to India as Parliament reconvenes with the

prospect of demonstrating that the Secretary,s initiatives

are genuine and worthy of active engagement by the

Government. If the Secretary also announces that Dr. Shirin

Tahir-Kheli will travel to Delhi for discussions on UNSC

reform, momentum will be strongly reinforced.

Energy Dialogue

---------------

¶4. (S) The MEA has made it clear that the launch of the

Energy Dialogue is one of Natwar's two highest priorities for

his visit. Although the energy dialogue has been the most

active track of the Economic Dialogue with numerous bilateral

activities across a broad spectrum (Refs A and C), greater

strategic focus is required. Increased and higher level USG

attention to the Energy Dialogue would be a sign that we want

to be part of the solution to India's energy needs. The four

areas that hold the greatest potential for cooperation are

energy security, civil nuclear activities, natural gas, and

cleaner/more efficient energy. India wants Cabinet-level

sponsorship for the Dialogue, and would also like to see a

timeline for action. We recommend that Secretary Bodman

chair the Energy Dialogue. If this is possible, we believe

Deputy Planning Commissioner Montek Singh Ahluwalia would

agree to anchor the Indian side. (Four Indian Ministers

divide up energy responsibilities making Montek the logical

choice to lead the Indian side.) We recommend Secretary Rice

invite Secretary Bodman to attend the Rice/Singh meeting so

Secretary Rice can announce Secretary Bodman will lead the

SIPDIS

US-India Energy Dialogue and a date or at least a tentative

timeframe for Secretary Bodman to visit India.

Strategic Dialogue

------------------

¶5. (C) We recommend the Secretary cast her meeting with

Natwar as the launch of the Indo-US Strategic Dialogue, and

ask the President to express his support for it during his

meeting. In terms of substance, we recommend the creation of

a Defense Production Cooperation Group (DPCG) under the

U.S.-India Economic Dialogue that would lay further

groundwork for our emerging strategic defense relationship.

Such a DPCG could streamline and subsume existing defense

industry dialogues under the High Technology Working Group

and Senior Technology Security Group.

¶6. (C) Establishing the DPCG would encourage direct

bilateral commercial interaction on the basis of corporate

partnerships for defense cooperation. The group,s

objectives would be to remove political and bureaucratic

barriers, and facilitate maximum private sector involvement.

Military sales as the platform for cooperation will propel

development of India's defense sector, spin off new

industries, spur economic growth, and create jobs.

Space Working Group

-------------------

¶7. (S) To invigorate US-Indian space cooperation, we propose

the implementation of a Space Working Group led by the NASA

Administrator and the Chairman of the Indian Space Research

Organization. We recommend the Secretary announce a trip by

the NASA Administrator to India to meet with ISRO Chairman

Nair to formally launch the Space Working Group.

Civil Nuclear

-------------

¶8. (S) In view of India,s critical energy needs, and the

highly sensitive nature of cooperation in this area with a

nuclear weapons state that is not party to the NPT, we

recommend the establishment of a Civil Nuclear Working Group

(CNWG) under the Energy Dialogue to discuss what steps India

must take to demonstrate its unequivocal support for the

principles of the NPT so that the US can then consider ways

to expand our cooperation in this area. This group could

look at broader ways the US could support nuclear safety of

Indian power plants, review our policy of blocking India's

efforts to acquire uranium for civil nuclear power from other

countries, and pursue additional US-India cooperation on

fusion research and safe reactor designs. By moving our

civil nuclear relationship forward within the constraints of

our NPT and NSG obligations, we believe we can move Indian

policy on other issues of importance to us, and fold civil

nuclear issues into the broader matrix of cooperative energy

and economic efforts. The GOI would welcome the naming of a

senior official such as Counselor Zelikow to anchor the US

side.

Rural electrification and clean coal technologies

--------------------------------------------- ----

¶9. (U) With a large portion of India's rural population

lacking access to electric power, and a political imperative

to spur rural development, the GOI has evinced strong

interest in the US experience in electrifying America during

the early/mid 20th century through the USDA Rural Utilities

Service (RUS). An innovative partnership program that

USAID/India has established pairs RUS with the GOI Rural

Electrification Corporation (REC). The travel of senior REC

staff and GOI power sector officials to the US in April and

May to learn about possibilities for developing cooperatives

in Indian conditions provides an opportunity to increase our

attention on this area.

¶10. (U) Clean Coal: India is one of the world's largest

users of coal and a major emitter of greenhouse gases. DOE,

USAID and EPA have a robust set of cooperative activities

with India to encourage the use of clean, efficient,

renewable energy. Although these activities have been

generally successful, we need to raise their profile and

broaden and deepen our efforts in energy efficiency,

demand-side management, and distribution reform. Announcing

a Clean Coal Initiative in conjunction with DOE, USAID, and

EPA would signal that we are upgrading energy and environment

activities already underway.

Economic Dialogue

-----------------

¶11. (C) We have agreed with the GOI that the existing track

structure of the Economic Dialogue should remain (trade,

commerce, finance, environment, energy). We have not yet

discussed with India our idea to break the energy dialogue

out into a free- tanding Energy Dialogue, but we expect the

GOI would agree given the importance India attaches to

enhanced energy cooperation with the U.S. We have also

agreed on the need for high-level involvement by US and

Indian CEOs in priority sectors. This would involve the

convening of an informal group of CEOs from both countries

which would meet once or twice to identify the most important

impediments that require high level attention at the PM or

White House level. The Embassy is now prepared to begin

contacting US CEOs who would act as counterparts for India,s

Investment Commission. Announcement of White House support

for this initiative during the Foreign Minister's visit would

assure robust participation by US CEOs and the high level

attention we require on the Indian side to gain traction on

key issues, push forward structural economic reforms, and

resolve remaining "legacy" issues.

Restoring GSP Benefits

----------------------

¶12. (SBU) In recognition of recent significant improvements

in India's patent system, which will have a resoundingly

positive impact on US interests, we believe the time is ripe

to reconsider India's status under the GSP. Despite some

shortcomings in the law passed by the Indian Parliament on

March 23, we believe the step India took merits recognition,

and that the pharmaceutical product benefits suspended in

1992 because of India's weak IPR protection should be

restored. With tariffs on most of those products now near or

at the zero level, the economic importance of such a step

would be limited, but an announcement would have political

significance and carry with it a message of encouragement for

further Indian efforts to strengthen its IPR regime. In the

past, amendment of the Indian Patent Law has been considered

the defining moment to review the GSP issue, so the timing

could not be more appropriate.

PSI

---

¶14. (C) In order to anchor India,s participation in the

international non-proliferation enforcement regime, we must

resolve the long-running impasse over India,s participation

in the Proliferation Security Initiative (PSI) Core Group.

India,s exclusion from the Core Group has led to the GOI

refusing to join the PSI initiative. We recommend the

Secretary tell Natwar that the US will propose that India be

SIPDIS

incorporated into the PSI Core Group provided India has

agreed to support the PSI principles and has a significant

operational proposal to table that underscores its capacity

to be a player in PSI. Formal entry could be recognized at

the time of the G-8 Summit.

Natwar,s Meeting with the President

-----------------------------------

¶15. (C) We recommend the President use his meeting with FM

Singh first to re-emphasize the US objective of helping India

become a world power in the 21st century. We also understand

from the MEA that Natwar hopes to be able to tell the

President that the GOI will submit its export control

legislation early in the session of Parliament that begins on

April 18. In return, the President should tell Natwar the

USG will take the steps necessary to prepare to conclude

Phase 2 of the NSSP once we have had a chance to review the

draft legislation.

MULFORD

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Cable reference id: #05NEWDELHI2299

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Reference id aka Wikileaks id #29616 ?

Subject Defense Sales To India: The Economic Dimension

Origin Embassy New Delhi (India)

Cable time Mon, 28 Mar 2005 13:01 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2005/03/05NEWDELHI2299.html

Referenced by 05NEWDELHI2380, 05NEWDELHI7436

History

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C O N F I D E N T I A L NEW DELHI 002299

SIPDIS

FOR DEPUTY SECRETARY ZOELLICK FROM AMBASSADOR MULFORD;

WHITE HOUSE FOR NEC DIRECTOR AL HUBBARD;

SECDEF WASHINGTON DC//USDP:DSCA//

E.O. 12958: DECL: 03/28/2015

TAGS: PGOV [Internal Governmental Affairs], PARM [Arms Controls and Disarmament], ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], AA [Aruba], NSSP

SUBJECT: DEFENSE SALES TO INDIA: THE ECONOMIC DIMENSION

Classified By: AMBASSADOR DAVID C MULFORD FOR REASONS 1.4 (B,D)

¶1. (C) Secretary Rice's visit to India, the announcement that

U.S. companies will enter the competition to supply

multi-role combat aircraft to India, and India's already

articulated interest in P-3C aircraft, have raised the

economic dimension of our defense relationship with India to

a new level. (Historically, the U.S. has been a minor

defense equipment supplier to India, the world's third

largest market, which imports approximately 3 billion USD

annually.) At this juncture, it is critical that we devise a

strategy to strengthen appreciation in the Indian bureaucracy

of the economic benefits derived from a long-term strategic

partnership with the U.S. Our strongest advocates will be

the economists who are running the government, not the

traditional military establishment. Our message is simple:

the U.S. is a reliable strategic partner for defense

co-production, technology sharing, and joint research. Using

military sales as the platform for cooperation will catalyze

development of India's defense sector, spin off new

industries, catalyze economic growth, and create jobs. The

U.S. is an essential partner in India's economic

transformation that will, in turn, enable India to achieve

its aspiration of greater strategic autonomy and a larger

space in the region.

¶2. (C) I believe the best way to reinforce the economic

dimension of our emerging strategic defense relationship is

by creating a Defense Production Cooperation Group (DPCG)

under the U.S.-India Economic Dialogue. This new working

group could potentially subsume under it the defense industry

dialogue now under the High Technology Cooperation Group and

the Senior Technology Security Group (STSG). The DPCG would

be convened by NEC Director Al Hubbard and Deputy Planning

Commissioner Montek Ahluwalia. This would assure that our

discussion of defense sales and the crafting of joint

programs would feed the aspiration India's economic

leadership to make defense cooperation in armaments a driving

force behind our broader economic partnership. The potential

for mutual benefit is huge if the Indian bureaucracy and

quasi-independent agencies such as ISRO, DRDO, Ordnance

Factories, and Defense Public Sector Undertakings (HAL, BEL,

etc.) are able to jettison the political baggage they carry

from the past and transcend narrow industrial agendas to

enable real long-term cooperation. Success would drive down

costs of production, catalyze technical innovation, and allow

economic specialization on both sides.

¶3. (C) In order to achieve this win-win outcome, we will need

to bring to bear a level of political oversight on each side

that breaks down political barriers, removes bureaucratic

speed bumps, and facilitates maximum private sector

involvement. This is precisely what we have agreed should be

the guiding principals of the Economic Dialogue. Defense

cooperation should be treated as a vital element of our

economic relationship that requires special attention at the

political level to catalyze rapid evolution.

¶4. (C) I recommend that Secretary Rice propose during FM

Singh's expected visit to Washington in April or May the

establishment of a Defense Production Cooperation Group under

the Economic Dialogue to be chaired by our respective

Coordinators and Deputy Coordinators and supported on each

side at the Deputy Secretary level in defense. This should

lay the foundation for direct interaction among Indian and

U.S. business leaders aimed at creating corporate structures

as the basis for defense cooperation, beginning with a few

discreet projects.

MULFORD

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Reference id aka Wikileaks id #28417 ?

Subject Revitalizing The Us-india Energy Relationship

Origin Embassy New Delhi (India)

Cable time Wed, 9 Mar 2005 12:36 UTC

Classification CONFIDENTIAL

Source http://wikileaks.org/cable/2005/03/05NEWDELHI1824.html

References 05NEWDELHI1175, 05NEWDELHI1261, 05NEWDELHI750

Referenced by 05NEWDELHI2273, 05NEWDELHI2380, 05NEWDELHI4679

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C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 001824

SIPDIS

FOR SECRETARY BODMAN FROM AMBASSADOR MULFORD

E.O. 12958: DECL: 02/14/2015

TAGS: ENRG [Energy and Power], EPET [Petroleum and Natural Gas], ECON [Economic Conditions], ETTC [Trade and Technology Controls], PREL [External Political Relations], KNNP [Nuclear Non-Proliferation], TRGY [Energy Technology], IN [India; Andaman Islands; Lakshadweep Islands; Nicobar Islands], Indo-US, NSSP

SUBJECT: REVITALIZING THE US-INDIA ENERGY RELATIONSHIP

REF: A. NEW DELHI 1707

B. NEW DELHI 1261/1263/1264

C. NEW DELHI 1175

D. NEW DELHI 750

Classified By: Ambassador David C. Mulford, Reasons 1.4 b,d

¶1. (C) Secretary Bodman, now that you have had a few weeks

to settle into your new role, I want to share with you some

thoughts and ideas on our relationship with India. You

already know from our meeting last November my views on the

emerging India, a vibrant, multi-faceted democracy that is a

growing and increasingly confident regional power with

legitimate global ambitions. A decade of economic reforms

has raised GDP growth to the 7-8 percent range and has

created growing public support for continuing reforms.

Successive governments are moving these reforms forward,

albeit within the political constraints imposed by India's

vigorous and sometimes frustrating democratic system. Most

big players here predict several decades of sustained robust

economic growth, thanks in part to India's youthful

population, which will lift India into the top ranks of

global economic and political powers. Energy is at the heart

of the Indian agenda because there is consensus that India

will not be able to achieve its aspirations without secure

and reliable energy supplies. The Indians realize that we

are critical to their energy agenda, which gives us

considerable leverage in influencing their developing energy

policies.

A Comprehensive Relationship

----------------------------

¶2. (C) President Bush's 2001 directive to transform the

strategic agenda with India has borne good results in the

last four years. The bilateral relationship has strengthened

on virtually every front. Today we consult regularly at the

highest levels on political, economic, security, and global

issues. Secretary Rumsfeld visited Delhi in January.

Secretary Rice is expected next week. She will be followed

SIPDIS

by Secretary Mineta in April and Secretary Snow in the fall.

Foreign Minister Natwar Singh is scheduled to be in

Washington in April. We hope there will be other cabinet

visits this year, including by you. We also expect the

President to visit India sometime later this year.

¶3. (C) These high-level exchanges are a sign of how far our

relationship has changed. Where once there was doubt and

suspicion, today there is greater candor and cooperation.

Our close coordination in responding to the December Tsunami

and the ongoing Nepal crisis are cases in point. Even when

we disagree, as we did over Iraq, we are generally able to

deal constructively with our differences, and move on. The

announcement of the "Next Steps in Strategic Partnership

(NSSP)" last year was an important signal that both sides

want the relationship to grow closer in the years ahead and

to leave behind the sanctions-focused era of US-India

diplomacy.

¶4. (C) The bilateral economic relationship, which once was

a laggard, is beginning to expand. In the 9 months it has

been in power, the United Progressive Alliance (UPA)

government has moved on several issues of importance to us:

it has finalized an Open Skies policy with us; it has

strengthened its IPR regime; it has raised foreign direct

investment limits in several areas; and it has lowered tariff

rates in sectors of importance to our industry. Another

highly symbolic FDI legacy issue, the Dabhol dispute, which

was complicated by the Enron collapse, is moving closer to

resolution. We hope Boeing will soon be awarded a $8.5

billion contract for sale of commercial aircraft to Air

India, which has not bought new planes since the 1980s. The

United States is India's biggest export market and its

largest foreign investor. Although a large trade imbalance

remains, India is becoming an increasingly important

destination for U.S. exports. Last year our exports grew by

21 percent, with prospects of a similar increase this year.

The growing Indian market offers extraordinary potential for

U.S. exports and investment in the decades ahead.

The Economic Dialogue

---------------------

¶5. (C) The principal tool we have used to strengthen the

economic relationship is the US-India Economic Dialogue (ED).

Last October, following the Prime Minister's visit to New

York, we agreed that the ED, which had yielded uneven

results, needed to be revitalized. The leadership of the ED

has been elevated so that key issues can be lifted to the

White House/Prime Minister's Office level. National Economic

Advisor Al Hubbard and the Prime Minister's principal

economic advisor Montek Singh Ahluwalia will serve as overall

coordinators. The five existing tracks of the ED -- Finance,

Environment, Trade, Energy, and Commerce -- will remain

because they are useful. A new CEO's forum will be added to

advise policy makers on what is required to remove structural

impediments to greater trade and investment ties. I believe

American energy companies should be represented at this

forum.

¶6. (C) For the five tracks of the ED to yield tangible

results, it is essential that there be support from the

relevant Departments in Washington and Ministries in Delhi.

The Energy track of the ED has historically been its most

active track, with numerous cooperative activities across a

broad spectrum of energy-related areas ranging from clean

energy and energy efficiency to cooperative activities on

natural gas and coal. These activities, however, have

drifted somewhat in recent times. The Foreign Ministry has

told us that launching a revived energy dialogue -- similar

to what India has with the EU -- will be a priority for

Foreign Minister Natwar Singh's April 5 visit to Washington.

I hope you will give your personal attention to revitalizing

the energy pillar because of its great potential to move our

broader economic relationship forward. The four areas that I

believe hold the greatest potential are cooperation on energy

security, civil nuclear activities, natural gas, and clean

and efficient energy.

Energy Security

---------------

¶7. (C) India imports about 70 percent of its oil and gas

needs, primarily from the Middle East. It is among the

fastest growing importers of oil and gas in teh world. In

the decades ahead, India (along with China) could be

competing with the United States for access to limited

supplies. For this UPA government, as with the previous

National Democratic Alliance (NDA) government, energy

security is a high national security priority -- in many ways

it is the tail that is driving Indian foreign policy.

Petroleum and Natural Gas Minister Mani Shankar Aiyar is

widely regarded as the brightest and most successful of the

UPA ministers. He has significantly raised his Ministry's

profile, usurping the international role that the Foreign

Ministry earlier monopolized. The state-controlled oil and

gas companies have been directed to aggressively seek out oil

and gas properties offshore and overseas. India has

transformed its position on participating in trans-Pakistan

gas pipelines to take advantage of energy supplies in Iran

and Turkmenistan.

¶8. (C) It is important for these reasons that we engage in

an energy security dialogue. We could influence Indian

energy policy such that it follows a path conducive to U.S.

economic, political, security, and global environmental

interests. We have reported on India's growing oil and gas

relationship with Iran (Ref C). A renewed and invigorated

high level exchange could allow us to exert some influence on

this Indo-Iran energy relationship and to encourage forays in

other directions, such as the burgeoning India-Qatar ties.

It will also make the Indians more attentive to resolving

investment disputes some of our companies face (Dabhol, Tamil

Nadu), and yield significant opportunities for U.S. business.

The idea of an energy security exchange was first broached

by us in 2002, when Under Secretary of State Al Larson

suggested to the GOI that discussion could move along two

tracks: fuel and supply diversification; and energy

preparedness in the event of a major supply disruption. The

GOI was enthusiastically receptive to this proposal, in part

because it resonates well politically within this highly

energy import-dependent economy. The GOI, which was in the

process of creating its own strategic stockpile, also felt it

could benefit from American expertise in this area.

Subsequently, DOE hosted several visits by GOI officials,

including one by then-Indian Petroleum and Natural Gas

Minister Ram Naik, to share our experience in creating the

National Petroleum Reserve. The GOI participated in DOE's

Strategic Oil Stockpiling Conference in November 2004.

¶9. (C) We believe that our energy security exchanges should

be revitalized and broadened beyond an occasional meeting or

site visit at the margins of some event. The process should

get high level (i.e., Secretarial and Ministerial) support.

We should institutionalize meetings at regular intervals

between experts in areas such as alternative strategic

petroleum reserve storage methods, tripwires for tapping the

reserve, agriculture-based fuel additives, alternative fuels

and reductions in oil intensity. As we have done previously,

we should support the Indian road shows, such as Minister

Aiyar's January presentation in Houston, which are designed

to elicit interest in India's exploration and production

leasing program. An MOU on information exchange between the

Energy Information Agency and the GOI, which has taken eight

years for us to finalize, should be signed immediately.

Civil Nuclear Cooperation

-------------------------

¶10. (C) India has established an ambitious civil nuclear

power program, which will be a small but increasingly

important part of the country's energy mix. Its efforts,

however, are being stymied because it is now encountering a

critical shortage of natural uranium fuel. The GOI seeks

more collaboration with the United States in the civil

nuclear area, but believes that U.S. policy does not

accommodate realities on the ground. Foreign Secretary Saran

has suggested there should be a comprehensive review of the

US-India civil nuclear relationship and a need to move the

nuclear relationship forward even within the constraints

imposed by our NPT and NSG obligations. This presents us an

opportunity where we can leverage flexibility on our part to

move Indian policy in other issues of importance to us, and

fold civil nuclear issues into the broader matrix of

cooperative efforts with an emerging economy as important as

India.

¶11. (C) We have been impressed, as was NRC Commissioner

Jeffrey Merrifield during his February 8-11 visits to various

nuclear power stations in India (Ref B), at the maturity and

sophistication that the Indian civil nuclear establishment

has achieved as a power generating utility. There ought to

be activities that DOE and its labs could conduct which would

be comply fully with current law and with NSG obligations but

still respond positively to Indian requests for a broader

civil nuclear power relationship. We should explore

cooperative activities that encourage the Indian civil

nuclear sector to pursue responsible policies that are

consistent with international best practices. India's

current nuclear fuel crunch is pushing the GOI to move in

unproven and potentially dangerous directions, such as use of

MOX fuel in their boiling water reactors and developing a

complex fast breeder reactor. We should use this

cooperation to assure that U.S. interests are clearly

understood and recognized as the Indian civil nuclear

industry comes of age.

¶12. (C) For example, the United States could support nuclear

safety at the aging Indian reactors by permitting the plants

to acquire U.S. safety-related equipment under the NSG's

safety exception. We could consider reviewing our policy of

blocking India's efforts to acquire uranium for civil nuclear

power from other countries, as long as it is consistent with

NSG obligations. Both these steps could be used to leverage

placement of additional Indian facilities under IAEA

safeguards. We could also pursue additional US-India

cooperation on fusion research and safe reactor designs. We

could support Indian participation in events sponsored by the

nuclear power industry within the United States. Although

there are may be difficulties with responding positively to

the GOI's interest in becoming a member of the International

Tokomak Engineering Reactor (ITER), DOE could make a

concerted effort to bring Indian plasma physicists on board

U.S. plasma physics efforts just as they are on board high

energy physics collaborations (Ref B and D). We could

continue to support Indian participation in the World

Association of Nuclear Operators peer review process where

members benchmark safety practices and conduct peer reviews

of power plant operations. We could also support Indian

participation in INPRO, a forum for exploring the next

generation of proliferations resistant reactors (Ref A).

Natural Gas

-----------

¶13. (C) The natural gas market in India is expected to grow

robustly in the years ahead as its share in India's energy

mix increases from 8 percent to over 20 percent by 2020. The

Indian Petroleum and Natural Gas Minister told the Ambassador

(Ref B) that current Indian supplies of 90 million cubic

meters per day (mmcmd) is about ten times higher than in the

1980s. It falls far short of demand, however, which is

estimated at 150 mmcmd and projected to increase to 400 mcmd

in 20 years. The 2003 discovery by Reliance in the

Krishna-Godavari basin and subsequent discoveries by Cairns

and ONGC further have induced aggressive exploration in the

Bay of Bengal. Meanwhile, India has begun to lock in long

term supplies of LNG. There are at least half a dozen

proposals for building LNG terminals along India's coasts.

It is also exploring ideas for pipelined gas from Iran,

Turkmenistan, Burma, and Bangladesh.

¶14. (C) We recognized the potential growth of the Indian

natural gas market early. In 2002, DOE co-sponsored with the

GOI a "Building Natural Gas Markets" conference in Delhi.

And we have funded through the U.S. Trade and Development

Agency a feasibility study for a national gas grid. We need

to do more. We should follow up this year with another

natural gas conference and related seminars and workshops on

regulation, pricing, transportation, LNG, transparency and

competition. As it is doing in other sectors, the GOI wants

to establish an independent regulatory body for the

hydrocarbon sector. We should share our experience and

knowledge about regulatory best practices with them. At the

conference, we should help secure the attendance of

recognized international experts on such regulatory

practices. We should seek out opportunities to help upgrade

the office of Indian Director General of Hydrocarbons, the

primary GOI technical agency for the oil and gas sector.

Engaging early in this sector could yield signficant

commercial opportunities for U.S. business.

Clean/Efficient/Renewable Energy

--------------------------------

¶14. (SBU) India is one of the world largest users of coal

and a major emitter of greenhouse gases. The country has

embarked on an ambitious reform program in the power sector

in an effort to help achieve its Power on Demand plan by

2012. This translates to expanding rural power access to

over 100,000 villages and connection to 10 million

households. Through DOE, USAID and EPA, we have in place a

robust set of cooperative activities that can be loosely

grouped together under the clean, efficient, renewable energy

heading. These activities have generally been quite

successful, although we need support to raise the profile and

broaden and deepen our efforts in such areas as energy

efficiency, demand-side management, and distribution reform.

We seek support in Washington to enhance the funding levels

of these programs. We would use high-level interest in these

programs to showcase their success and build support for

them.

¶15. (SBU) Such activities include the Coal Advisory Group,

which has been a successful forum for sharing experiences and

discussing science and economic issues relating to coal.

India is a one of the 14 founding members of the

International Partnership for the Hydrogen Economy. It is

also a charter member of the 2004 "Methane to Markets"

initiative. The EPA and U.S. Trade and Development Agency

have proposed funding a Coal Bed Methane clearing house

project. USAID has a number of ongoing energy-related

programs, some in collaboration with DOE. These programs

provide an excellent foundation for DOE to contribute its

impressive technical, advisory and policy expertise. DOE and

USAID have a long-term relationship under the Greenhouse Gas

Pollution Prevention project. At $39 million, this is

USAID's largest climate change initiative.

¶16. (SBU) USAID is implementing a very effective $25 million

Energy Conservation and Commercialization project aimed at

building institutional capacity among Indian utilities and

state and local governments to promote energy efficiency and

demand-side management. USAID also has a multi-year $20

million Distribution Reforms Upgrades and Management (DRUM)

program, designed to promote power distribution reforms at

the state and local level and efficiency improvements in

India's creaking last mile distribution networks. USAID's

$10 million Water-Energy Nexus Activity aims enhances

cross-sectoral solutions and investment opportunities. For

the past two years, USAID has been assisting the GOI is

assessing the relevance of key US-developed Integrated Coal

Gasification Combined Cycle (IGCC) technology operating on

high ash content India coal. Since 2001, India has been

participating in USAID's South Asia Regional Initiative on

Energy (SARI/E), which seeks to promote mutually beneficial

energy linkages among the South Asian countries.

Conclusion

----------

¶17. (C) I hope this conveys the fertile menu of existing and

potential cooperative energy-related activities that have

great promise. I would like to suggest that you personally

take charge of our Energy relationship with India and in

doing so make an early visit here. It is important we engage

at high levels with a country that will play an important

role in the global energy markets in the future. In my

recent meeting with Petroleum and Natural Gas Minister Aiyar

(Ref B), it was clear that he wants to greatly expand

cooperation with the U.S. public and private sector. A visit

by you would move our relationship firmly in a direction

conducive to U.S. interests and the strengthening of our

bilateral relations. It would also inject momentum into the

rich palette of ongoing activities and help launch new ones.

I plan to be in Washington in late April and, if your

schedule permits, hope to have the opportunity to discuss how

we might advance our agenda.

MULFORD

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Montek Singh Ahluwalia - An American spy and economic hit-man

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