Order Code IB93097
CRS Issue Brief for Congress
Received through the CRS Web
India-U.S. Relations
Updated March 8, 2002
Peter R. Blood
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Context of the Relationship
U.S. and Congressional Interest
Background
Regional Rivalries with Pakistan and China
Political Setting
September-October 1999 Elections and Prospects for Political Stability
Bharatiya Janata Party (BJP)
The Opposition
India-U.S. Relations and Bilateral Issues
Security
Nuclear Weapons and Missile Proliferation
U.S. Nonproliferation Efforts
Congressional Action
U.S.-India Security Cooperation
Regional Dissidence and Human Rights
Punjab
Kashmir
Human Rights
India’s Economic Reforms and Market Opening
Trade Issues
Market Access Barriers
Intellectual Property Rights Protection
U.S. Aid
Narcotics


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India - U.S. Relations
SUMMARY
Although the end of the Cold War freed
Punjab, and India’s Northeast region. Strife in
U.S.-India relations from the constraints of a
these areas over the past decade has resulted in
bipolar world, bilateral relations continued for
the deaths of thousands of civilians, militants,
a decade to be affected by the burden of his-
and security forces. International human rights
tory, most notably the longstanding
groups, as well as Congress and the U.S. State
India-Pakistan regional rivalry. Recent years,
Department, have criticized India for alleged
however, have brought a sea change in U.S.-
human rights abuses by its security forces in
India relations, which was reflected in India’s
efforts to suppress these movements.
swift offer of full support for the U.S.-led war
on terrorism following the September 11,
The United States has been highly sup-
2001, terrorist attack on New York and
portive of India’s efforts to transform its
Washington.
formerly quasi-socialist economy through
fiscal reform and market opening, beginning
The continuing U.S. concern in South
under the Narasimha Rao government in 1991,
Asia, however, is the prevention of nuclear and
when India took steps to reduce inflation and
ballistic missile proliferation and the reduction
the budget deficit, privatize state-owned indus-
of tensions between India and Pakistan, which
tries, reduce tariffs and industrial licensing
center on their competing claims to the former
controls, and institute incentives to attract
princely state of Kashmir. India and Pakistan
foreign trade and investment. Successive
have so far ignored U.S. and international
coalition governments kept India generally on
pressure to sign the Nuclear Nonproliferation
the path of economic reform and market
Treaty or the Comprehensive Test Ban Treaty
opening. Rapidly expanding U.S.-India eco-
(CTBT).
nomic relations were a major focus of Presi-
dent Clinton’s March 2000 five-day visit to
On May 11 and 13, 1998, India con-
India.
ducted a total of five unannounced nuclear
tests, setting off worldwide condemnation.
The Bharatiya Janata Party (BJP) coali-
Following India’s lead, on May 28 and 30,
tion government led by Prime Minister Atal
Pakistan reported conducting six nuclear tests.
Behari Vajpayee, which came to power fol-
As a result of the tests, President Clinton
lowing the March 1998 parliamentary elec-
imposed wide-ranging sanctions on both
tions, supported a modest pace of economic
countries, mandated by the Arms Export
reform. In April 1999, the BJP government
Control Act. Many of these sanctions
resigned following the loss of a confidence
gradually were lifted through Congress-Exec-
vote, 270-269. In October 1999, the BJP
utive branch cooperation in 1998-2000. The
government regained power following national
remaining nuclear sanctions on India and
elections. A BJP-led multiparty alliance won
Pakistan were removed on September 22,
about 300 of 545 parliamentary seats, prompt-
2001.
ing analysts to forecast a period of more stable
government. In November 2001, Vajpayee met
Congress also has been concerned with
with President Bush in Washington to discuss
human rights issues related to regional dissi-
the outlines of expanding U.S.-India coopera-
dence and separatist movements in Kashmir,
tion.
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
Although tensions between India and Pakistan remain high in early March 2002 and
the threat of war has not altogether receded, the intensive diplomatic efforts of U.S. officials
appear to have had some impact in defusing a dangerous situation. The United States
communicated to Pakistan that it would have to rein in Muslim extremist groups within its
borders, and by the end of 2001, Indian Foreign Minister Jaswant Singh acknowledged for
the first time that Pakistan had taken “a step in the correct direction.” In early January
2002, Prime Minister Vajpayee and Pakistani President Musharraf shook hands at a South
Asian regional summit in Nepal, although they did not have a one-on-one discussion as
many had hoped. On January 12, Musharraf delivered a major televised address in which
he announced a crackdown on Islamic groups and his withdrawal of Pakistani support for
anti-Indian militants operating within Pakistan’s borders. India, however, has refused to
withdraw its troops from the border, stating that Pakistan must do “more,” including turning
over a number of alleged terrorists on a list compiled by India and renouncing “moral” as
well as material support for all groups – even non-Pakistan based groups – fighting Indian
control of Kashmir.

In late February, India’s ruling Bharatiya Janata Party (BJP) fared poorly in the state
elections, especially in its traditional power base of Uttar Pradesh, raising the question of
the party’s future dominance in Indian politics. Voters appeared to be less interested in the
BJP’s “play tough with Pakistan” platform than with bread and butter issues. At the same
time, religious and communal passions rose to a fever pitch after Muslims attacked a train
in India’s western Gujarat state, which was carrying members of a Hindu activist group just
returned from a vigil in Ayodhya, Uttar Pradesh, to support the construction of a Hindu
temple on the site of a demolished 16th century mosque. The attack, which killed 58 Hindus,
in turn incited massive retaliation against Muslims by Hindus in what has been described
as the worst religious strife in India in 10 years. At least 600 people, mostly Muslims, have
been killed in the aftermath. The situation has put the government of Prime Minister
Vajpayee in an awkward position. Most of the parties in the BJP’s ruling coalition are
secular and reject Hindu communalism as anathema to India’s secular credo. They have
warned Vajpayee that they may withdraw their support if he allows Hindu activists to
proceed with their plan to build the temple.

BACKGROUND AND ANALYSIS
Context of the Relationship
U.S. and Congressional Interest
In the immediate wake of the September 11, 2001 terrorist attacks on New York and
Washington, India took the unprecedented step of offering to the United States all
cooperation and the use of India’s bases for the war on terrorism. The offer reflected the sea
change that has occurred in recent years in the U.S.-India relationship, which for decades was
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mired in the politics of the Cold War. The marked improvement of relations with New Delhi
that began in the latter days of the Clinton Administration was accelerated by a major
commitment of the Bush Administration to strengthen U.S.-India security cooperation, with
a strong focus on counter-terrorism. In June 2001, the U.S.-India Counter-terrorism
Working Group held its third meeting, which focused, in part, on Taliban-fostered terrorism.
At the fourth meeting of the Joint Working Group held in January 2002, joint counter-
terrorism cooperation was expanded and a new Joint Initiative on Cyberterrorism was
launched. On November 9, 2001, President Bush hosted Prime Minister Vajpayee at a White
House working session, during which the two leaders agreed to greatly expand U.S.-India
cooperation on a wide range of issues, including counter-terrorism; regional security; space
and scientific collaboration; civilian nuclear safety; and broadened economic ties. In early
December, the U.S. Defense Policy Group met in New Delhi for the first time since India’s
1998 nuclear tests and outlined a defense partnership that includes high level policy dialogue,
joint exercises, and military sales.
Background. U.S. and congressional interests in India include a wide spectrum of
issues, ranging from nuclear and missile proliferation concerns through human rights issues
to trade and investment opportunities. In the 1990s, U.S.-India relations were particularly
affected by three developments: 1) the demise of the Soviet Union – India’s key trading
partner and most reliable source of economic assistance and military equipment – and New
Delhi’s resulting need to diversify its international relationships; 2) India’s adoption of
sweeping economic policy reforms, beginning in 1991; and 3) a deepening bitterness between
India and Pakistan over Kashmir, along with India’s preoccupation with China as a long-term
strategic threat.
With the fading of Cold War constraints, the United States and India began exploring
the possibilities of a more normal relationship between the world’s two largest democracies.
The 6-day visit to the United States by Indian Prime Minister Narasimha Rao, in May 1994,
marked the beginning of a significant improvement in U.S.-India relations. Rao addressed a
joint session of the Congress and met with President Clinton. Although discussions were held
on nuclear nonproliferation, human rights, and other issues, the main focus of the visit was
rapidly expanding U.S.-India economic relations. Throughout the 1990s, however, regional
rivalries, separatist tendencies, and sectarian tensions continued to divert India’s attention and
resources from economic and social development. Fallout from these unresolved problems
– particularly nuclear proliferation and human rights issues – presented serious irritants in
U.S.-India relations.
President Clinton’s March 19-26, 2000 visit to South Asia represented a major U.S.
initiative to improve cooperation across a broad spectrum, including: economic ties; regional
stability; nuclear proliferation concerns; security and counter-terrorism; environmental
protection; clean energy production; and disease control. Clinton and Indian Prime Minister
Atal Behari Vajpayee agreed in a vision statement to institutionalize dialogue between the two
countries through a range of high-level meetings and working groups on the various areas of
cooperation, capped by regular bilateral “summits” between the leaders of the two countries.
Economic ties were a major focus of Clinton’s visit, during which U.S. companies signed
agreements on $4 billion in projects with Indian and Bangladeshi firms. Clinton also
announced $2 billion in government financial support for U.S. exports to India through the
U.S. Export-Import Bank. To further expand bilateral economic cooperation, the United
States and India agreed to establish working groups on trade; clean energy and environment;
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and science and technology. U.S.-India agreements also were signed on environmental
protection, clean energy production, and combating global warming. The President also lifted
sanctions on some small U.S. assistance programs, including a U.S. Agency for International
Development initiative to provide technical assistance to strengthen Indian financial markets
and regulatory agencies. On the social welfare side, U.S.-India cooperation agreements were
signed on efforts to combat polio, tuberculosis, malaria, and HIV/AIDS, as well as the
trafficking of women and children in South Asia.
During his 10-day visit to the United States in September 2000, Indian Prime Minister
Vajpayee addressed a joint session of the U.S. Congress and was the guest of honor at a state
dinner at the White House. During the course of the prime minister’s visit to Washington,
U.S. officials announced $900 million in Export-Import Bank financing to help Indian
businesses purchase U.S. goods and services. U.S. companies also signed agreements to
construct three large power projects in India, valued at $6 billion, as part of increased energy
cooperation between the two countries. On September 15, President Clinton and Prime
Minister Vajpayee signed a joint statement agreeing to cooperate on arms control, terrorism,
and AIDS. When Vajpayee revisited the United States in early November 2001, he came at
a time of heightened tensions in South Asia but also during a time of warming Indo-U.S.
relations in spite of the close U.S.-Pakistani cooperation during the war in Afghanistan.
Vajpayee used the occasion to express his concerns that if the U.S. military effort in
Afghanistan were perceived as “slackening” then extremist forces in Pakistan could be
bolstered.
Regional Rivalries with Pakistan and China
Three wars – in1947-48, 1965, and 1971 – and a constant state of military preparedness
on both sides of the border have marked the half-century of bitter rivalry between India and
Pakistan. The acrimonious nature of the partition of British India in 1947 and the continuing
dispute over Kashmir have been major sources of tension. Both India and Pakistan have built
large building defense establishments – including nuclear weapons capability and ballistic
missile programs – at the cost of economic and social development. The Kashmir problem
is rooted in claims by both countries to the former princely state, divided by a military line of
control (LOC), since 1948, into the Indian state of Jammu and Kashmir and Paki-
stan-controlled Azad (Free) Kashmir. India blames Pakistan for supporting a separatist
rebellion in the Muslim-dominated Kashmir Valley that has claimed 30,000 lives since 1990.
Pakistan admits only to lending moral and political support. (See also pp. 8-9)
Adding to India’s bitterness toward Pakistan is the latter’s historically close ties with
China. India and China fought a short border war in 1962, and China since then has occupied
territory claimed by India. Although Sino-Indian relations have improved markedly in recent
years, the two countries have yet to reach a boundary agreement. Moreover, India remains
suspicious of China’s nuclear weapons capability as well as its long-time support for Pakistan.
During a visit by former Prime Minister Rao to China in September 1993, however, an
agreement was signed to reduce troops and maintain peace along the line of actual control
(LAC) that divides their forces, along with agreements on trade, environmental, and cultural
cooperation. In December 1995, after eight rounds of talks by an India-China joint working
group (JWG), both sides pulled back troops from four points along the eastern sector of the
border. A visit by Chinese President Jiang Zemin to India in late November 1996 concluded
with an agreement by India and China not to attack each other across their disputed border
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and to negotiate a partial withdrawal of troops from the border. Although border trade has
continued to expand, political relations suffered a setback as a result of statements by Indian
government officials that its May 1998 nuclear tests were prompted in large part by the China
threat. In May 2000, however, Indian President K.R. Narayanan made a 7-day state visit to
China and signed an agreement with China’s President Jiang Zemin to further bilateral ties,
including trade, currently totaling $2 billion. China’s parliamentary leader, Li Peng,
reciprocated with a 9-day visit to India in January 2001. In January 2002, Chinese Premier
Zhu Rongji became the first Chinese premier to visit India in 11 years. Zhu advocated
expanded relations with India as well as increased cooperation in combating international
terrorism.
Political Setting
September-October 1999 Elections and Prospects for Political Stability.
In the September-October 1999 parliamentary elections, India’s voters elected a Bharatiya
Janata Party (BJP) coalition government, led by Prime Minister Atal Bihari Vajpayee, with
a majority of about 300 of 545 parliamentary seats. (See CRS Report RS20320, India’s 1999
Parliamentary Elections.
) This is Vajpayee’s third time as prime minister – his previous
governments lasting 13 days in 1996 and 13 months in 1998-99. Until recently, the 22-
member National Democratic Alliance (NDA), which comprises the current BJP coalition
government, was viewed as reasonably stable, with a majority of about 30 votes. In mid-
March 2001, however, the government was rocked by a defense procurement scandal in
which the BJP president was caught on video allegedly accepting money from journalists
posing as arms dealers. The fall-out from the scandal saw the resignations of four
government ministers and the withdrawal of a member party from the coalition, bringing the
government’s majority down to about 20. Although the opposition was unsuccessful in
bringing a no-confidence motion, observers predict that the Vajpayee government will have
less leeway on major contentious issues, including economic reforms and market opening.
As a nation, India presents a vast mosaic of hundreds of different ethnic groups,
languages, religious sects, and social castes. Until the last decade or so, many of these
groups found representation within the diversity of the Congress Party, which ruled India for
45 of its 53 years since independence in 1947. Factors in the decline of support for the
Congress included neglect of its grassroots political organizations by the leadership; a
perceived lack of responsiveness to such major constituent groups as Muslims and lower
castes; the rise of regional parties and issue-based parties such as the BJP; allegations of
widespread corruption involving a number of party leaders; and the lack of charisma provided
by former Congress leaders, mostly members of the Nehru-Gandhi family. At the same time,
there has been a shift in power from upper caste Indians to the far more numerous lower caste
Indians, who have switched their allegiance from Congress and the smaller national parties
to regional and caste-based parties.
The Indian political system is viewed by some analysts as being in a transition period
from its years of dominance by the Congress Party to a two-party system, perhaps centered
on the BJP and the Congress. Many observers believe, however, that coalition politics will
be the order of the day for some time to come. In the 1999 election, there was little apparent
progress toward a two-party system, with the Congress losing ground and the BJP gaining
only about five seats over its previous total. The BJP alone won only about 183 seats to
about 113 for the Congress – both far short of the 273 needed for a majority in the 545-seat
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Parliament. Part of the BJP’s success in being returned to power resulted from its building
of the NDA coalition and reaching agreements on seat contesting with coalition partners
before the election. The Congress, which maintains a longstanding commitment to single-
party government, made only a few pre-election alliances with other parties.
Bharatiya Janata Party (BJP). Riding a crest of rising Hindu nationalism, the BJP
increased its strength in Parliament from two seats in 1984 to 119 seats in 1991. In 1992-93,
the party’s image was tarnished by its alleged complicity in serious outbreaks of communal
violence in which a mosque was destroyed at Ayodha and 2,500 people were killed in anti-
Muslim rioting in Bombay and elsewhere. Some observers view the BJP as the political arm
of the extremist Hindu nationalist organization Rashtriya Swayamsevak Sangh (National
Volunteer Force), allegedly responsible for the incidents. Since then, the BJP has worked –
with some success – to change its image from right-wing Hindu fundamentalist to
conservative, secular, and moderate. In the 1996 elections, the BJP won 160 seats. With the
support of allied parties it controlled 190 seats and was given the opportunity to form a
government with party leader Vajpayee as prime minister. Because of its Hindu nationalist
platform, the BJP was unable to attract sufficient coalition partners and resigned after 13
days.
Following the February-March 1998 elections, the BJP managed to cobble together a
shaky, 13-member National Democratic Alliance coalition, headed by Vajpayee, and pass a
confidence vote. Factors that kept the BJP government in power for a year included:
Vajpayee’s widespread personal popularity, early popular euphoria over India’s April 1998
nuclear tests, and the feeling that, after lackluster performances by Congress and United Front
governments, the BJP should be given its chance to lead the country. Vajpayee soon found
himself caught in a continuing round of internal bickering and favor-seeking by coalition
members. Such distractions delayed efforts at focusing on more urgent matters, including
the economy. The April 1999 no-confidence vote was precipitated by the withdrawal of
support for the BJP government by its largest coalition partner, a regional party based in the
southern state of Tamil Nadu.
The BJP advocates “Hindutva,” or an India based on Hindu culture. Although the BJP
claims to accept all forms of belief and worship, it views Hindutva as key to nation-building.
Much of its support comes from professionals and upper caste groups. It continues to be
looked on with suspicion by lower caste Indians, India’s 120 million Muslims, and non-Hindi-
speaking Hindus in southern India, who together comprise a majority of India’s voters. The
more controversial long-term goals of the BJP reportedly include: building a Hindu temple
on the site of a 16th century mosque in Ayodhya that was destroyed by Hindu mobs in 1992;
establishing a uniform code of law that would abolish separate Muslim laws on marriage,
divorce, and property rights; and abolishing the special status promised Jammu and Kashmir
state under Article 370 of the Indian Constitution. None of the issues are mentioned in the
NDA 1999 election manifesto and would be opposed by most NDA coalition members. The
BJP leadership would have liked to have put these goals on the back burner for the time being
but current tensions – the continuing military face-off between India and Pakistan as well as
a flare up of Muslim-Hindu communal passions in the western state of Gujarat – have put the
party in an awkward position.
On February 24, 2002, just days before a major flare up between Muslims and Hindus
in the western state of Gujarat, the BJP was rejected by a majority of voters in the critical
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state elections of Uttar Pradesh. This defeat, as well as setbacks in Punjab and Uttaranchal,
showed voters to be less interested in the BJP’s “tough on Pakistan” platform and more
interested in bread and butter issues. Two days after the state elections, religious fevor rose
to a fever pitch after Muslims attacked a train carrying members of the Vishwa Hindu
Parishad (VHP–World Hindu Council), a Hindu activist group that had participated in a vigil
supporting the construction of a Hindu temple over the ruins of a mosque in Ayodhya, Uttar
Pradesh. Fifty-eight Hindus were killed in the train attack and more than 600, mostly
Muslims, were killed by Hindus in retaliatory mob actions. In an atmosphere described as the
worst religious strife in a decade, many of the parties in the BJP’s ruling coalition threaten to
withdraw their support if Vajpayee lets Hindu activists proceed with their plans to build a
temple on the rubble of the Babri Mosque in Ayodhya. How Vajpayee – viewed as a
statesmanlike figure and the moderate face of the BJP – reacts to the crisis may very well
determine whether the coalition holds.
The Opposition. The post-election weakness of the opposition is a major factor in
the BJP coalition government hopes for completing its 5-year term. With just 113 seats
(about 135 counting allies) the Congress Party is at its lowest representation ever. Observers
attribute the party’s poor showing to a number of factors including: the perception that Sonia
Gandhi lacked the experience to lead the country; the failure of Congress to make strong pre-
election alliances, as had the BJP; and the splintering of Congress in Maharashtra state. In
May 1999, when Sharad Pawar and two other Maharashtra Congress leaders raised the issue
of Sonia Gandhi’s foreign (Italian) origins making her unsuitable for the prime ministership,
they were expelled from the party by Gandhi supporters. Pawar and his breakaway faction
formed the Nationalist Congress Party (NCP). Seat totals for the other opposition parties
(including leftists and regional parties) also declined from about 143 in the previous
parliament to about 107.
Congress Party Background. Support for the Congress Party declined following
the 1984 assassination of Prime Minister Indira Gandhi (daughter of India’s first prime
minister, Jawaharlal Nehru) and the 1991 assassination of her son, former Prime Minister
Rajiv Gandhi. Sonia Gandhi, Rajiv’s widow, refused to be drawn into active politics until
the1998 elections. With the party’s fortunes sagging, Sonia plunged into a flurry of cross-
country campaigning, accompanied by her daughter Priyanka and son Rahul (both in their
twenties). Although the “Sonia factor” wasn’t enough for a Congress win, it was viewed as
preventing a debacle for the party. As a result, Gandhi was elected both president of the
Congress Party and chairperson of the Congress Parliamentary Party. Sonia began belated
efforts to revitalize the moribund party by phasing out older leaders and attracting more
women and lower castes. In November 1998, signs of a resurgent Congress Party were
apparent in a series of state elections. By landslide margins, the Congress defeated BJP
governments in Rajasthan and Delhi and maintained its control of Madhya Pradesh.
However, inability of the Congress to form a new government after the fall of the BJP
coalition in April, plus defections led by Sharad Pawar, weakened the party in the 1999
parliamentary elections.
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India-U.S. Relations and Bilateral Issues
Security
Nuclear Weapons and Missile Proliferation. On May 11 and 13, 1998, India
conducted a total of five underground nuclear tests, breaking a 24-year self-imposed
moratorium on nuclear testing. Pakistan followed, claiming 5 tests on May 28, 1998, and
an additional test on May 30. The unannounced tests created a global storm of criticism, as
well as a serious setback for decades of U.S. nuclear nonproliferation efforts in South Asia.
On May 13, 1998, President Clinton imposed economic and military sanctions on India,
mandated by Section 102 of the Arms Export Control Act (AECA), and applied the same
sanctions to Pakistan on May 30. Some effects of the sanctions on India included:
termination of $21 million in FY1998 economic development assistance; postponement of
$1.7 billion in lending by the International Financial Institutions (IFI), as supported by the
Group of Eight (G-8) leading industrial nations; prohibition on loans or credit from U.S.
banks to the government of India; and termination of Foreign Military Sales under the Arms
Export Control Act. Humanitarian assistance, food, or other agricultural commodities are
excepted from sanctions under the law. (See CRS Report 98-570, India-Pakistan Nuclear
Tests and U.S. Response
and CRS Report RL30623, Nuclear Weapons and Ballistic Missile
Proliferation in India and Pakistan: Issues for Congress.
)
U.S. policy analysts consider the continuing arms race between India and Pakistan as
posing perhaps the most likely prospect for the future use of nuclear weapons. India
conducted its first, and only, previous nuclear test in May 1974, following which it maintained
ambiguity about the status of its nuclear program. Pakistan probably gained a nuclear
weapons capability sometime in the 1980s. India is believed to have enough plutonium for
75 or more nuclear weapons. Pakistan may have enough enriched uranium for 25 nuclear
weapons. Both countries have aircraft capable of delivering weapons. India has short-range
missiles (Prithvi) and is developing an intermediate-range ballistic missile (Agni) with enough
payload to carry a nuclear warhead. Pakistan reportedly has acquired technology for short-
range missiles (Shaheen) from China and medium-range missiles (Ghauri) from North Korea,
capable of carrying small nuclear warheads.
Proliferation in South Asia is part of a chain of rivalries – India seeking to achieve
deterrence against China, and Pakistan seeking to gain an “equalizer” against a larger and
conventionally stronger India. India began its nuclear program in the mid-1960s, after its
1962 defeat in a short border war with China and China’s first nuclear test in 1964. Despite
a 1993 Sino-Indian troop reduction agreement and some easing of tensions, both nations
continue to deploy forces along their border. Pakistan’s nuclear program was prompted by
India’s 1974 nuclear test and by Pakistan’s defeat by India in the 1971 war and consequent
loss of East Pakistan, now independent Bangladesh.
U.S. Nonproliferation Efforts. Neither India nor Pakistan are signatories of the
Nuclear Nonproliferation Treaty (NPT) or the Comprehensive Test Ban Treaty (CTBT).
India has consistently rejected both treaties as discriminatory, calling instead for a global
nuclear disarmament regime. Pakistan traditionally has maintained that it will sign the NPT
and CTBT only when India does so. Aside from security concerns, the governments of both
countries are faced with the prestige factor attached to their nuclear programs and the
domestic unpopularity of giving them up. Following the 1998 tests, the United States set
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forth five steps India and Pakistan need to take in order to avoid a destabilizing nuclear and
missile competition. They include the following:
Halt further nuclear testing and sign and ratify the CTBT. U.S. and
international pressure after the 1998 nuclear tests produced resolutions by the UN Security
Council and the Group of Eight (G-8) urging India and Pakistan to sign the CTBT. Japan –
the largest bilateral aid donor for both countries – made resumption of its aid programs
contingent on signing the CTBT and assurances not to transfer nuclear technology or material
to any other country. In October 2001, however, Japan suspended sanctions against both
countries in recognition of their support for the U.S.-led war on terrorism. Although both
India and Pakistan currently observe self-imposed moratoria on nuclear testing, they continue
to resist signing the CTBT – a position made more tenable by U.S. failure to ratify the treaty
in 1999.
Halt fissile material production; cooperate in FMCT negotiations. Both
India and Pakistan have agreed to participate in negotiations on the fissile material control
Treaty. Both countries, however, have expressed unwillingness to halt fissile material
production at this stage in the development of their nuclear weapons programs.
Refrain from deploying or testing missiles or nuclear weapons. The United
States has urged India and Pakistan – with little success – to adopt constraints on
development, flight testing, and storage of missiles, and basing of nuclear-capable aircraft.
On April 11, 1999, India tested its intermediate-range Agni II missile, firing it a reported
distance of 1,250 miles. On April 14-15, Pakistan countered by firing its Ghauri II and
Shaheen missiles with reported ranges of 1,250 and 375 miles, respectively. India tested a
longer version of its short-range Prithvi missile in December 2001 and claims it successfully
tested a new, short-range version of the Agni on January 25, 2002.
In August 1999, India’s Bharatiya Janata Party (BJP) government released a draft report
by the National Security Advisory Board (NSAB) on India’s nuclear doctrine. The report,
although retaining India’s no-first-use policy, called for creation of a “credible nuclear
deterrence and adequate retaliatory capability should deterrence fail.” It proposed nuclear
weapons “based on a triad of aircraft, mobile land-based missiles and sea-based assets....”
The United States and other countries criticized the document as destabilizing, noting that,
if adopted, the proposed policy would rachet up nuclear arms racing in the region.
Maintain and formalize restraints on sharing sensitive goods and
technologies with other countries. Both India and Pakistan apparently have good
records on nonproliferation of sensitive technologies and have issued regulatory orders on
export controls. Since May 1998, both countries have continued to hold expert-level talks
with U.S. officials on export controls. U.S. concern was raised in late 2001 by disclosures
that two retired Pakistani nuclear scientists had briefed bin Laden and other al Qaeda officials
on several occasions. The war in Afghanistan also heightened fears of instability in Pakistan
that could lead to Islamabad’s nuclear assets being compromised in the event of a radical
Islamist military coup. This has resulted in renewed U.S. policy debate on transfers of nuclear
weapons safeguards technologies to Pakistan and/or India. India also continues to press for
ending of export controls on dual-use technologies that it needs for its civilian nuclear and
space programs, which has raised further U.S. policy debates on export controls and
technology transfer.
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Reduce bilateral tensions, including Kashmir. Beginning in 1990 – with the
increasing friction between India and Pakistan over Kashmir – the United States strongly
encouraged both governments to institute confidence-building measures in order to reduce
tensions. Measures agreed to so far include: agreement on advance notice of military
movements; establishment of a military commander “hotline”; an exchange of lists of nuclear
installations and facilities; agreement not to attack each other’s nuclear facilities; a joint ban
on use and production of chemical weapons; and measures to prevent air space violations.
In February 1999, Prime Minister Vajpayee took an historic bus ride to Lahore, Pakistan, to
hold talks with then Prime Minister Nawaz Sharif. The two leaders signed the Lahore
Declaration in which they agreed to intensify efforts to resolve all issues, including Jammu and
Kashmir and to take a number of steps to reduce tensions between their countries. The
promise of the Lahore Declaration was never realized, however, due to a series of subsequent
setbacks: a major skirmish near Kargil in Mary-July 1999; an inconclusive summit at Agra
in July 2001; and, most recently, the current military standoff sparked by a terrorist attack on
the Indian parliament by Pakistan-based Islamic militants. (See CRS Report RS20277, Recent
Developments in Kashmir and U.S. Concerns
, by Peter R. Blood.)
Congressional Action. Through a series of legislative measures, Congress has lifted
sanctions on India and Pakistan resulting from their 1998 nuclear tests. In October 1999,
Congress passed H.R. 2561, the Department of Defense Appropriations Act, 2000, and it was
signed by the President as P.L. 106-79 on October 29. Title IX of the act gives the President
authority to waive sanctions applied against India and Pakistan in response to the nuclear
tests. In a presidential determination on India and Pakistan issued on October 27, 1999, the
President waived economic sanctions on India. On September 22, 2001, President Bush
issued a final determination removing remaining sanctions on Pakistan and India resulting
from their 1998 nuclear tests. (For details, see CRS Report RS20995, India and Pakistan:
Current U.S. Economic Sanctions
, by Dianne E. Rennack.)
U.S.-India Security Cooperation. Unlike U.S.-Pakistan military ties, which date
back to the 1950s, military cooperation between the United States and India is in the early
stages of development. Joint Indo-U.S. steering committees – established in 1995 to
coordinate relations between the two countries’ armed services, including exchange visits,
technical assistance, and military exercises – were put on hold following India’s 1998 nuclear
tests. In 1997, the United States and India signed a bilateral treaty for the extradition of
fugitive offenders, an important step in joint efforts to combat the problems of international
terrorism and narcotics trafficking. In January 2000, a U.S.-India Joint Working Group on
Counter-Terrorism was established. India has been a leading country in supporting U.N.
peacekeeping efforts with troops and observers. In late January 2002, India had more than
2,800 U.N. peacekeeping forces, mainly serving in Sierra Leone, Lebanon, Kosovo, and
Bosnia.
Regional Dissidence and Human Rights
A vastly diverse country in terms of ethnicity, language, culture, and religion, India can
be a problematic country to govern. Internal instability resulting from such diversity is further
complicated by colonial legacies – international borders divide ethnic groups, creating
flashpoints for regional dissidence and separatism. Kashmir and Punjab are two areas that
have witnessed separatist struggles in the past decade. On a lesser scale, there are similar
problems of incomplete national integration in other parts of India, particularly the Northeast,
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where a number of smaller dissident groups are fighting either for separate statehood,
autonomy, or independence. The remote and underdeveloped Northeast is populated by a
mosaic of ethnic and religious groups, both tribal and non-tribal. Migration of non-tribal
peoples into less populated tribal areas is at the root of many problems in that region.
Punjab. Between 1984 and 1994, a reported 20,000 people – civilians, militants, and
security forces – were killed in Punjab state as Sikh separatists sought to establish an
independent Khalistan (land of the pure community of Sikh believers). By the mid-1990s,
however, a security forces’ crackdown in the state had virtually halted terrorist and separatist
activity. Applying a carrot-and-stick approach, the Indian government deployed some
150,000 army troops to pacify the countryside before state assembly elections were held in
November 1991. Probably more effective was the beefing up – in size and weaponry – of the
Punjabi Sikh-dominated state police. Supporters of the crackdown say that peace and
freedom of movement have returned to the state. Detractors, however, call the crackdown
a reign of police terror and human rights violations and say that the Indian government has
yet to address Sikh economic, political, and social grievances.
Kashmir. The Kashmir problem is rooted in claims by both India and Pakistan to the
former princely state, divided by a military line of control since 1948, into the Indian state of
Jammu and Kashmir and Pakistan-controlled Azad (free) Kashmir. Since late 1989, a
separatist war, costing more than 30,000 lives, has been waged in the Indian-controlled
Kashmir Valley between Muslim separatists and their supporters and Indian security forces.
India blames Pakistan for fomenting rebellion, as well as supplying arms, training, and
fighters. Pakistan claims only to provide diplomatic and moral support. The longstanding
U.S. position on Kashmir is that the whole of the former princely state is disputed territory,
and the issue must be resolved through negotiations between India and Pakistan, taking into
account the wishes of the Kashmiri people.
A series of kidnapings and general strikes in the Kashmir Valley, beginning in 1989, led
India to impose President’s rule (rule by the central government) on the state in 1990, and to
send in troops to keep order. Following a number of incidents in which Indian troops fired
on demonstrators, Kashmiris flocked to support a proliferating number of militant separatist
groups. Some groups, such as the Jammu and Kashmir Liberation Front (JKLF), continue
to seek an independent or autonomous Kashmir. Other local groups, including the Hizbul
Mujahideen (HM), seek union with Pakistan. In 1993, the All Parties Hurriyat (Freedom)
Conference was formed as an umbrella organization for groups opposed to Indian rule in
Kashmir, Hurriyat membership includes about 22 political and religious groups, including:
JKLF (now a political group); Jamaat-e-Islami (political wing of the HM); Awami Action
Committee; People’s Conference; Muslim Conference; and People’s League. The Hurriyat
Conference, which states it is committed to seeking dialogue with the Indian government on
a broad range of issues, proposes convening a tripartite conference on Kashmir, including
India, Pakistan, and representatives of the Kashmiri people. Hurriyat leaders also have
demanded Kashmiri representation at any talks between India and Pakistan on Kashmir.
In 1995, the government of then-Prime Minister Narasimaha Rao began efforts to restart
the political process in Kashmir, where state elections had last been held in 1987. In May
1996, elections to fill the six seats for Jammu and Kashmir State were held as part of the
general parliamentary elections called by the Rao government. Voter turnout in the state was
about 40%, with some reports of voters being herded to polling stations by security forces.
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The elections served as a rehearsal for Jammu and Kashmir state assembly elections, which
were held in September 1996. The National Conference (NC), the longstanding mainstream
Kashmiri party led by Farooq Abdullah, along with other national and local parties, took part
in the elections. The Hurriyat Conference, calling the polls a sham, refused to contest. The
NC won 57 of 87 seats, and Farooq Abdullah became chief minister of the state in early
October. The polling, according to unofficial observers, fell somewhere between the Indian
government’s description of “a free and fair election” and the Hurriyat characterization of “a
military operation.” In March-April 1998, Jammu and Kashmir State again took part in
general parliamentary elections. Pre-election violence and a boycott by the Hurriyat kept
voter turnout in the state at an estimated 35%-40%. Voter turnout in the state declined even
further in the 1999 parliamentary elections.
Human Rights. According to the U.S. State Department India Country Report on
Human Rights Practices for 2001 (March 2002), there continued to be significant human
rights abuses, despite extensive constitutional and statutory safeguards. “Many of these
abuses are generated by a traditionally hierarchical social structure, deeply rooted tensions
among the country’s many ethnic and religious communities, violent secessionist movements
and the authorities’ attempts to repress them, and deficient police methods and training.
These problems are acute in Jammu and Kashmir, where judicial tolerance of the
Government’s heavy handed anti-militant tactics, the refusal of security forces to obey court
orders, and terrorist threats have disrupted the judicial system.” Some 350,000-450,000
Indian security forces remained in Jammu and Kashmir in 2001. Insurgency-related deaths
in the state – civilians, militants, and security forces – totaled more than 2,700 in 2000, and
human rights abuses by both security forces and militants continued to be a serious problem.
In dealing with regional dissidence, the Indian government has employed a wide range
of security legislation, including laws that permit authorities to search and arrest without
warrant and detain persons for a year without charge or bail. Other security laws prescribe
sentences of not less than 5 years for disruptive speech or actions. Special courts have been
established that meet in secret and are immune from the usual laws of evidence. In some
cases, security forces are given permission to shoot to kill. A reported 5,000 Kashmiris
currently are in jail under anti-terrorist laws. In general, India has denied international human
rights groups, including Amnesty International and Human Rights Watch, official access to
Kashmir, Punjab, and other sensitive areas. In 1995, however, the Indian government allowed
the International Committee of the Red Cross (ICRC) permission to begin a program of
prison visits in Jammu and Kashmir. ICRC representatives also continued training police and
border security personnel in international humanitarian law.
Both Amnesty International and Human Rights Watch have expressed grave concern
over serious human rights abuses by militant groups in Kashmir and Punjab, including
kidnaping, extortion, and killing of civilians. In July 1995, four Western tourists, including
American Donald Hutchings, were kidnaped in Jammu and Kashmir state by Al-Faran,
allegedly part of a Pakistan-based militant group, Harakat ul-Ansar (HUA). Since 1997, the
HUA – which later renamed itself the Harakat ul-Mujahideen – has been on the U.S. State
Department list of foreign terrorist organizations. In August 2001, a little-known militant
group, Lashkar-e-Jabbar, issued an edict that all Kashmiri women must wear a burqa – a
gown that covers them from head to foot, similar to what the Taliban government in
Afghanistan forced women to wear – “or be dealt with sternly.” Kashmiri women
traditionally have not worn the burqa. The Lashkar-e-Jabbar reportedly have since claimed
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credit for throwing acid in the faces of several women teachers and students not wearing
burqas in Srinagar. In the backdrop of the current military standoff between India and
Pakistan which began after Islamic militants attacked the Indian parliament in December 2001,
American journalist Daniel Pearl was abducted in January 2002 and then killed one month
later by extremists believed directly or indirectly connected with Pakistan-based Kashmir
jihadi groups.
A secular nation, India has a long tradition of religious tolerance (with occasional
lapses), which is protected under its constitution. India’s population includes a Hindu
majority of 82% as well as a large Muslim minority of more than 120 million (12%).
Christians, Sikhs, Buddhists, Jains, and others each total less than 3%. Although freedom of
religion is protected by the Indian government, human rights observers have noted that India’s
religious tolerance is susceptible to attack by religious extremists. Government policy does
not favor any group, but some fears have been raised by the coming to power of the Hindu
nationalist Bharatiya Janata Party (BJP) since 1998. In 1999-2000, the BJP government came
under increasing criticism, both domestically and internationally, as a result of a number of
incidents in which Indian Christians were attacked or killed and their places of worship
destroyed, particularly in Gujarat, Orissa, and Tamil Nadu states. According to Indian press
reports, most of the attacks allegedly were carried out by Hindu nationalist organizations
associated with the BJP. Other incidents of violence and intolerance toward religious groups
– Muslim, Sikh, Christian, and Hindu – continue to occur in many parts of the country,
including Jammu and Kashmir, Punjab, Bihar, and the Northeast.
Child labor is a serious human rights problem for India, as well as other South Asian
countries. According to the State Department’s Human Rights Report, enforcement of child
labor laws in India is weak, and estimates of child laborers range as high as 55 million. A
major factor is India’s lack of a compulsory education law requiring even primary education.
As a result, an estimated 87 million out of 203 million Indian children between the ages of 5
and 14 do not attend school. Many of those not in school are sent to toil as agricultural
workers, domestic workers, or restaurant helpers. Many others work long hours under cruel
conditions in cottage industries making carpets, firecrackers, brassware, and handicrafts to
help supplement family income, with no opportunity for education.
A National Human Rights Commission (established in 1993) has investigated abuses in
Punjab, Kashmir, and the Northeast; supported training programs for security forces; and
made recommendations to the central and state governments. Seriously understaffed, the
NHRC received an estimated 40,700 complaints in 1998-99. The Supreme Court also has
become more active in combating the custodial excesses of the police by placing stringent
requirements on arrest procedures and granting compensation for police abuse victims. In
1997, the Supreme Court ordered prison reforms addressing overcrowding, torture, and
neglect of health and hygiene of prisoners. In 1997, India signed the U.N. Convention
Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment.
India’s Economic Reforms and Market Opening
Economic reforms begun in 1991, under the Congress-led government of then Prime
Minister Narasimaha Rao and his finance minister Manmohan Singh, brought a growth spurt
and flood of foreign investment to India in the mid-1990s. Annual direct foreign investment
rose from about $100 million in 1990 to $2.4 billion by 1996. More than one-third of these
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investments were by U.S. companies, including IBM, Motorola, Enron, Coca Cola, Pepsico,
Merrill Lynch, AT&T, Raytheon, Kellogg, Procter & Gamble, and Ford. Reform efforts
stagnated, however, under the weak coalition governments of the mid-1990s. The Asian
financial crisis and economic sanctions on India, as a result of its May 1998 nuclear tests,
further dampened the economic outlook. Although the closed nature of India’s economy
shielded it from the worst of the financial crisis, dwindling East Asian imports and foreign
investment took their toll.
Following the 1999 parliamentary election, the Vajpayee government kicked off a
second-generation of economic reforms – including removing foreign exchange controls,
opening the insurance industry to foreign investment, privatizing internet services, and cutting
tariffs – with the goal of attracting $10 billion annually in foreign direct investment. Once seen
as favoring domestic business and diffident about foreign involvement, the BJP appears to be
gradually embracing globalization. Finance Minister Yashwant Sinha and Prime Minister
Vajpayee have sought to reassure foreign investors with promises of transparent and
nondiscriminatory policies governing foreign direct investment. Indian state governments also
have begun to provide investment-friendly environments – particularly at the hi-tech centers
of Bangalore (Karnataka) and Hyderabad (Andhra Pradesh) – attracting an array of U.S.
investors, including Microsoft, General Electric, Oracle, IBM, and Intel.
In sectors other than infrastructure or technology, however, investors still can find the
road blocked by endless red tape, including lengthy permit procedures and restrictive land and
labor regulations. Political considerations also continue to hamper economic reform and
market-opening policy for the BJP government, when populist-oriented coalition partners
fight cuts in expensive subsidies, or the more nationalist wing of the BJP opposes tariff
reduction and other investment-friendly strategies. Although New Delhi began economic
reforms a decade ago, much remains to be done before the Indian economy can begin to fulfill
its potential. India’s road to sustainable development is lined with many pitfalls, including a
rapidly expanding population, serious health and environmental problems, inadequate
infrastructure, and a fiscal deficit in excess of 6% of GDP.
Trade Issues
Market Access Barriers. As India’s largest trading and investment partner, the
United States strongly supports New Delhi’s continuing economic reform policies. U.S.
exports to India for 2000 were $3.7 billion, while U.S. imports from India for 2000 totaled
$10.7 billion. Despite significant tariff reductions and other measures taken by India to
improve market access, according to the report of the United States Trade Representative
(USTR) for 2000, a number of foreign trade barriers remain. U.S. exports that reportedly
would benefit from lower Indian tariffs include fertilizers, wood products, computers, medical
equipment, scrap metals, and agricultural products. The import of consumer goods is
restricted, and other items, such as agricultural commodities and petroleum products, may
only be imported by government trading monopolies. The USTR also cited barriers that
continue to exist in India’s financial services sector. Almost all insurance companies are
government owned, as are most banks. In December 1999, however, both houses of the
Parliament passed the long-awaited Insurance Regulatory and Development Authority Bill,
1999, which will open India’s insurance industry to domestic and foreign private insurers.
Foreign firms will be able to participate through joint ventures with domestic firms, although
their stakes will be capped at 26%. Largely dominated by the state, India’s banking industry
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has been widely criticized for its inefficiency and poor service and regarded as a stumbling
block in India’s efforts to open up the economy. Public sector banks, which include 90% of
India’s bank branches, handle 85% of the country’s banking business. Beginning in 1999,
however, foreign banks are allowed to open 12 new branches annually. Five U.S. banks now
have a total of 16 branches in India.
Intellectual Property Rights Protection. Inadequate intellectual property rights
protection, by means of patents, trademarks and copyrights, has been a long-standing issue
between the United States and India. Major areas of irritation have included pirating of U.S.
pharmaceuticals, books, tapes, and videos. U.S. motion picture industry representatives
estimated their annual losses due to audiovisual piracy to be $66 million. In May 1991, the
USTR cited India as a “priority foreign country” under the Special 301 provision of the 1988
Trade Act for its lack of protection and enforcement of intellectual property rights. After a
9-month investigation, the USTR further determined that, although India had strengthened
its trademark and copyright laws, patent protection remained weak. In 1992 the United
States suspended duty-free privileges under the Generalized System of Preferences (GSP) for
about $80 million in Indian exports of pharmaceutical and related products. In April 2001,
the USTR again named India to the Special 301 Priority Watch List.
In May 1994, the Indian Parliament passed amendments to the country’s copyright law
designed to strengthen intellectual property rights protection. In view of the new copyright
laws and proposed legislation on trademarks, the USTR in June 1994 moved India from the
priority foreign country list to the less stringent “priority watch list,” while continuing to urge
India’s adoption of patent protection legislation. India remained on the priority watch list in
1999. In December 1999, the Indian Parliament passed the Copyright (Amendment) Bill
1999, which provides added protection to the rights of performing artists. In March 1999, the
Indian Parliament passed the patent legislation to allow exclusive marketing rights (EMRs)
for foreign pharmaceuticals and agro-chemical firms. In passing the legislation, India was
responding, in part, to a commitment to the World Trade Organization that it would amend
its patent law, following a trade dispute with the United States. The new legislation will lay
the groundwork for introduction of product patents; Indian law currently recognizes patents
only on manufacturing processes.
U.S. Aid
Sometime in 1999, the population of India crossed the 1 billion mark and is projected
to exceed that of China by 2035. One-third of India’s people live below the poverty line –
India has more poor people than Africa and Latin America combined – and half its children
are malnourished. India has more HIV-infected people (4 million) than any other country.
The already low country-wide female literacy rate of 39% dips to 30% in some regions and
rural areas. Nearly 40% of India’s urban population live in slums with no access to clean
water and sanitation services..
The U.S. foreign aid appropriation for India for FY2002 will devote $70.9 million in
Development Assistance/Child Survival and Health Programs (DA/CSH); $7 million in
Economic Support Funds (ESF); $86.4 million in P.L. 480 food assistance; $1 million in
IMET; and $900,000 in Nonproliferation, Anti-terrorism, Demining, and Related Programs
(NADR-ECA). The major USAID goals in India for FY2002 include: encouraging
broad-based economic growth; stabilizing population growth; enhancing food security and
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nutrition; protecting the environment; reducing transmission of AIDS/HIV and other
infectious diseases; and expanding the role and participation of women in decision-making.
P.L. 480 funds go to providing food assistance, largely through private voluntary agencies.
In 2001, the Office of U.S. Foreign Disaster Assistance (USAID/OFDA) gave $3.6 million
in disaster assistance for flood relief in West Bengal, $ 1 million for floods in Orissa, $12.8
million for earthquakes, and $1.2 million for drought relief. The United States is the third
largest bilateral aid donor to India, after Japan and the United Kingdom. The FY2003 aid
request includes $75.2 million for DA/CSH; $25 million for ESF; $ 1 million for IMET; and
$50 million for Foreign Military Financing (FMF).
Narcotics
India is the world’s largest producer of legal opium for pharmaceutical purposes, some
of which reportedly is diverted illegally to heroin production. Opium is produced legally in
the states of Madhya Pradesh, Rajasthan, and Uttar Pradesh. India serves as a major transit
route for drugs originating in Afghanistan, Pakistan, and Burma, and also is a major supplier
to those countries of the chemical used in manufacturing heroin. Thousands of gallons of
acetic anhydride reportedly are smuggled by camel through Rajasthan state to Pakistan, where
some of it is passed on to drug manufacturers in Afghanistan. Smaller amounts of the
chemical, which is produced mainly for the tanning industry, are also smuggled through
India’s Northeast to heroin producers in Burma. Most of the heroin transiting India is bound
for Europe. India itself has an estimated 1.2 million heroin addicts and 4.5 million who are
addicted to opium. In the Northeastern state of Manipur, needle-sharing by heroin users has
contributed to the spread of the AIDS virus, with 70% of drug users in that state reportedly
infected with AIDS.
India’s counter-narcotics efforts are hampered by lack of political and budgetary support,
lack of infrastructure in drug-producing areas, and corruption among police, government
officials, and local politicians. Major counter-narcotics efforts by the Indian government in
2000 included continued cooperation with Pakistan and Burma on counter-narcotics efforts
and implementation of new policies aimed at reducing the diversion of legally produced opium
to the illegal market. Although India is becoming more concerned about the drug problem,
observers note a need for increased political support and resources for counter-narcotics
efforts. U.S. counter-narcotics assistance to India funds training programs for enforcement
personnel and the Indian Coast Guard. In March 2001, President Bush submitted to Congress
his annual list of major illicit drug producing and transiting countries eligible to receive U.S.
foreign aid and other economic and trade benefits. India was among the countries certified
as fully cooperating and deserving U.S. assistance.
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