Order Code IB93097
CRS Issue Brief for Congress
Received through the CRS Web
India-U.S. Relations
Updated July 15, 2005
K. Alan Kronstadt
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Context of the U.S.-India Relationship
Regional Rivalries
Pakistan
China
Political Setting
National Elections
The Congress Party
The Bharatiya Janata Party (BJP)
India-U.S. Relations and Bilateral Issues
Security Issues
The Kashmir Issue
Nuclear Weapons and Missile Proliferation
U.S. Nonproliferation Efforts and Congressional Action
U.S.-India Security Cooperation
Regional Dissidence and Human Rights
The Northeast
“Naxalites”
Gujarat
Human Rights
India’s Economy and U.S. Concerns
Overview
Trade
“Next Steps in Strategic Partnership” Issues
U.S. Assistance
Economic
Security
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India-U.S. Relations
SUMMARY
The end of the Cold War freed India-U.S.
The United States also has been con-
relations from the constraints of global bipo-
cerned with human rights issues related to
larity, but interactions continued for a decade
regional dissidence and separatistism in sev-
to be affected by the burden of history, most
eral Indian states. Strife in these areas has
notably the longstanding India-Pakistan ri-
resulted in the deaths of tens of thousands of
valry and nuclear weapons proliferation in the
civilians, militants, and security forces over
region. Recent years, however, have wit-
the past two decades. Communalism has been
nessed a sea change in bilateral relations, with
another matter of concern, with early 2002
more positive interactions becoming the norm.
rioting in the Gujarat state resulting in up to
India’s swift offer of full support for U.S.-led
2,000, mostly Muslim, deaths. The U.S.
counterterrorism operations after September
Congress, as well as the State Department and
2001 was widely viewed as reflective of such
international human rights groups, has criti-
change. Today, the Bush Administration
cized India for perceived human rights abuses
vows to “help India become a major world
in these areas.
power in the 21st century.”
The United States supports India’s efforts
Continuing U.S. interest in South Asia
to transform its once quasi-socialist economy
focuses on tension and conflict between India
through fiscal reform and market opening.
and Pakistan, a problem rooted in unfinished
Since 1991, India has been taking steps to
business from the 1947 Partition and compet-
reduce its budget deficit, privatize state-owned
ing claims to the former princely state of
industries, and reduce tariffs and licensing
Kashmir. The United States strongly encour-
controls. Coalition governments have kept
ages maintenance of a cease-fire in Kashmir
India on a general path of economic reform,
and continued, substantive dialogue between
although there is U.S. concern that movement
India and Pakistan.
remains slow and inconsistent. Plans to ex-
pand U.S.-India high-technology trade and
The United States seeks to curtail the
civilian space and civilian nuclear cooperation
proliferation of nuclear weapons and ballistic
have become key bilateral issues in recent
missiles in South Asia. Both India and Paki-
years. Along with dialogue on missile de-
stan have resisted external pressure to sign the
fense, these are addressed through the Next
major nonproliferation treaties. In May 1998,
Steps in Strategic Partnership initiative for-
India and Pakistan conducted unannounced
mally launched in January 2004.
nuclear tests that evoked international con-
demnation. Proliferation-related restrictions
A surprise resurgence of the Nehru-
on U.S. aid were triggered, then later lifted
Gandhi-led Congress Party in May 2004
through congressional-executive cooperation
elections brought to power a new coalition
from 1998 to 2000. Remaining sanctions on
government under Prime Minister Manmohan
India (and Pakistan) were removed in October
Singh, a former finance minister. A Bharatiya
2001. In recent years, the United States and
Janata Party (BJP)-led coalition had been
India have engaged in numerous and unprece-
headed by Atal Behari Vajpayee from 1998 to
dented joint military exercises. Discussions of
2004. See also CRS Report RL32259, Terror-
possible sales to India of major U.S.-built
ism in South Asia, and CRS Report RS21502,
weapons systems are ongoing.
India-U.S. Economic Relations.
Congressional Research Service ˜ The Library of Congress
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MOST RECENT DEVELOPMENTS
Prime Minister Manmohan Singh is set to be in Washington July 18-20, the first official
state visit by an Indian national leader since November 2001. Singh will address a joint
session of Congress, as well as meet with President Bush and other top Administration
officials. Dialogue is expected to focus upon economic ties, energy issues (especially
civilian nuclear cooperation), and security matters, including counterterrorism, among other
issues. During a June House International Relations Committee hearing on the United States
and South Asia, Assistant Secretary of State for South Asia Christina Rocca said, “With
India, this is a watershed year in U.S.-India relations. We’re accelerating and transforming
this relationship, which moved briskly over the past four years. We’re now ready to take it
to the next level.” Also in June, while visiting New Delhi, Under Secretary of State Burns
said the United States and India are achieving a partnership that is “truly historic,” adding,
“There is no question that developing a strategic partnership between the United States and
India is one of the highest priorities for our President and for [our] Secretary of State.” Later
in the month, Indian Defense Minister Mukherjee visited Washington, where he said India-
U.S. relations now “see an objective convergence on many issues” and he called for an end
to “anachronistic” restrictions on India’s access to civilian nuclear and other dual-use
technologies while requesting a “long-term commitment” in U.S.-India arms sales
arrangements. On June 28, the United States and India signed a ten-year defense framework
agreement that calls for collaboration in multilateral operations, expanded two-way defense
trade, increasing opportunities for technology transfers and co-production, expanded
collaboration related to missile defense, and establishment of a bilateral Defense
Procurement and Production Group. India’s Leftist parties, some Indian defense analysts,
and the government of Pakistan have criticized the pact.
The India-Pakistan peace initiative continues, most concretely with a cease-fire
agreement holding along the entire shared frontier and greatly increased cross-border and
people-to-people interactions. In April 2005, a new bus service was launched in the
disputed Kashmir region and the Indian and Pakistan leaders called the bilateral peace
process “irreversible.” However, since May, several substantive India-Pakistan talks on
numerous disputes have ended in deadlock. Morever, ongoing separatist-related violence in
India’s Jammu and Kashmir state has claimed scores of lives in recent weeks, and Indian
officials have renewed criticisms that Pakistan has not acted to eliminate the “terrorist
infrastructure” on Pakistani territory.
India, along with Germany, Brazil, and Japan, have engaged in an effort to expand the
U.N. Security Council and gain permanent membership in that body. After confirming that
India is a worthy candidate for such status, the United States on July 12 announced a
rejection of the “G4” proposal and urged U.N. member states against voting for changes.
Regionally, India appears to be moving forward with a gas pipeline project that, if completed,
could deliver Iranian gas through Pakistan to India as early as 2010. The United States has
expressed concerns that such a project would help to fund Iran’s nuclear program and
terrorism-sponsoring activities, but New Delhi thus far insists that the project is in its own
national interests. On July 13, talks between Indian and Pakistani officials ended with a
“serious commitment” to begin work on the proposed pipeline, and H.Res. 353, expressing
U.S. support for India-Pakistan cooperation on such projects, was introduced in the House.
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On July 5, six militants were killed in the midst of an unsuccessful attack on the site of
a controversial temple that is claimed by both Hindus and Muslims in the Uttar Pradesh city
of Ayodhya. Ensuing protests by Hindu activists led to thousands of arrests. For more
information, see CRS Report RS21589, India: Chronology of Recent Events.
BACKGROUND AND ANALYSIS
Context of the U.S.-India Relationship
In the wake of the September 2001 terrorist attacks on the United States, India took the
immediate and unprecedented step of offering to the United States full cooperation and the
use of India’s bases for counterterrorism operations. The offer reflected the sea change that
has occurred in recent years in the U.S.-India relationship, which for decades was mired in
the politics of the Cold War. The marked improvement of relations that began in the latter
months of the Clinton Administration — President Clinton spent six days in India in March
2000 — was accelerated after a November 2001 meeting between President Bush and Indian
Prime Minister Atal Bihari Vajpayee, when the two leaders agreed to greatly expand U.S.-
India cooperation on a wide range of issues, including counterterrorism, regional security,
space and scientific collaboration, civilian nuclear safety, and broadened economic ties.
Notable progress has come in the area of security cooperation, with an increasing focus on
counterterrorism, joint military exercises, and arms sales. In December 2001, the U.S.-India
Defense Policy Group met in New Delhi for the first time since India’s 1998 nuclear tests
and outlined a defense partnership based on regular and high-level policy dialogue. A U.S.-
India Joint Working Group on Counterterrorism meets regularly.
U.S. and congressional interests in
India cover a wide spectrum of issues,
INDIA IN BRIEF
Population: 1,080 million; growth rate: 1.4%
ranging from the militarized dispute with
(2005 est.)
Pakistan and weapons proliferation to
Area: 3,287,590 sq. km. (slightly more than one-
concerns about human rights, health, and
third the size of the United States)
trade and investment opportunities. In the
Capital: New Delhi
1990s, India-U.S. relations were particularly
Ethnic Groups: Indo-Aryan 72%; Dravidian
25%; other 3%
affected by the demise of the Soviet Union
Languages: 15 official, 13 of which are the
— India’s main trading partner and most
primary tongue of at least 10 million
reliable source of economic assistance and
people; Hindi is primary tongue of about
military equipment for most of the Cold
30%; English widely used
War — and New Delhi’s resulting need to
Religions: Hindu 81%; Muslim 12%; Christian
2%; Sikh 2% (2000 est.)
diversify its international relationships.
Life Expectancy at Birth: female 65.1 years;
Also significant were India’s adoption of
male 63.6 years (2005 est.)
sweeping economic policy reforms
Literacy: female 48%; male 70% (2003 est.)
beginning in 1991, a deepening bitterness
Gross Domestic Product (at PPP): $3.3 trillion;
per capita: $3,100; growth rate 6.2% (2004
between India and Pakistan over Kashmir,
est.)
and signs of a growing Indian preoccupation
Inflation: 4.2% (2004 est.)
with China as a potential long-term strategic
U.S. Trade: exports to U.S. $15.6 billion;
threat. With the fading of Cold War
imports from U.S. $6.1 billion (2004)
Sources: CIA World Factbook; U.S. Department of
constraints, the United States and India
Commerce
began exploring the possibilities for a more
normalized relationship between the world’s
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two largest democracies. A visit to the United States by Indian Prime Minister Narasimha
Rao in 1994 marked the onset of improved U.S.-India relations. Rao addressed a joint
session of 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 bilateral relations.
President Clinton’s 2000 visit to South Asia seemed a major U.S. initiative to improve
cooperation with India. During his subsequent visit to the United States later in 2000, Prime
Minister Vajpayee addressed a joint session of Congress and was received for a state dinner
at the White House, where he and President Clinton signed a joint statement agreeing to
cooperate on arms control, terrorism, and AIDS/HIV. During the Bush Administration, high-
level visits have continued at an accelerated pace, and it is possible that President Bush
himself will visit India in 2005. Today, the Bush Administration vows to “help India become
a major world power in the 21st century,” and U.S.-India relations are conducted under the
rubric of three major “dialogue” areas: strategic (including global issues and defense),
economic (including trade, finance, commerce, and environment), and energy.
Regional Rivalries
Pakistan. Three wars — in 1947-48, 1965, and 1971 — and a constant state of
military preparedness on both sides of the border have marked nearly six decades of bitter
rivalry between India and Pakistan. The bloody and acrimonious nature of the partition of
British India in 1947 and continuing in Kashmir remain major sources of interstate tension
and violence. Despite the existence of widespread poverty across South Asia, both India and
Pakistan have built large defense establishments — including nuclear weapons capability and
ballistic missile programs — at the cost of economic and social development. The nuclear
weapons capabilities of the two countries became overt in May 1998, magnifying greatly the
potential dangers of a fourth India-Pakistan war.
The Kashmir problem is itself rooted in claims by both countries to the former princely
state, now divided by a military Line of Control (LOC) into the Indian state of Jammu and
Kashmir and Pakistan-controlled Azad (Free) Kashmir. India blames Pakistan for supporting
“cross-border terrorism” and a separatist rebellion in the Muslim-majority Kashmir Valley
that has claimed at least 40,000 and perhaps as many as 90,000 lives since 1989. Pakistan
admits only to lending moral and political support to what it calls “freedom fighters”
operating mostly in and near the valley region around the city of Srinagar. Normal relations
between New Delhi and Islamabad were severed in December 2001 after a terrorist attack
on the Indian Parliament was blamed on Pakistan-supported Islamic militants. Other lethal
attacks on Indian civilians have been blamed on Pakistan-sponsored groups, including a May
2002 attack on an army base that killed 34, most of them women and children. This event
spurred Indian leaders to call for a “decisive war,” but intense international diplomatic
engagement, including multiple trips to the region by high-level U.S. officials, apparently
persuaded India to refrain from attacking. In October 2002, the two countries ended a tense,
ten-month military standoff at their shared border, but there was no high-level diplomatic
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dialogue between India and Pakistan since a July 2001 summit meeting in the city of Agra
failed to produce any movement toward a settlement of the bilateral dispute.
In April 2003, Prime Minister Vajpayee extended a symbolic “hand of friendship” to
Pakistan. The initiative resulted in slow, but perceptible progress in confidence-building,
and within months full diplomatic relations between the two countries were restored.
September 2003 saw an exchange of heated rhetoric by the Indian prime minister and the
Pakistani president at the U.N. General Assembly; some analysts concluded that the peace
initiative was moribund. Yet, in October 2003, New Delhi reinvigorated the process by
proposing confidence-building through people-to-people contacts. Islamabad responded
positively and, in November, took its own initiatives, most significantly the offer of a cease-
fire along the Kashmir LOC (as of this writing, a formal cease-fire agreement continues).
A major breakthrough in bilateral relations came at the close of a January 2004 summit
session of the South Asian Association for Regional Cooperation in Islamabad. After a
meeting between Vajpayee and Pakistani President Musharraf — their first since July 2001
— the two leaders agreed to re-engage a “composite dialogue” to bring about “peaceful
settlement of all bilateral issues, including Jammu and Kashmir, to the satisfaction of both
sides.” A May 2004 change of governments in New Delhi had no effect on the expressed
commitment of both sides to carry on the process of mid- and high-level discussions, and the
new Indian PM, Manmohan Singh, met with Musharraf in September 2004 in New York,
where the two leaders agreed to explore possible options for a “peaceful, negotiated
settlement” of the Kashmir issue “in a sincere manner and purposeful spirit.” After
Musharraf’s April 2005 visit to New Delhi, India and Pakistan released a joint statement
calling their bilateral peace process “irreversible.” Some analysts believe that increased
people-to-people contacts (“Track II diplomacy”) have significantly altered public
perceptions in both countries and may have acquired permanent momentum.
China. India and China fought a brief but intense border war in 1962 that left China
in control of large swaths of territory still claimed by India. The clash ended a previously
friendly relationship between the two leaders of the Cold War “nonaligned movement.”
Although Sino-Indian relations have warmed considerably in recent years, the two countries
have yet to reach a final boundary agreement. Adding to New Delhi’s sense of insecurity
have been suspicions regarding China’s long-term nuclear weapons capabilities and strategic
intentions in South and Southeast Asia. In fact, a strategic orientation focused on China
appears to have affected the course and scope of New Delhi’s own nuclear weapons and
ballistic missile programs. Beijing’s military and economic support for Pakistan — support
that is widely believed to have included WMD-related transfers — is a major and ongoing
source of friction; past Chinese support for Pakistan’s Kashmir position has added to the
discomfort of Indian leaders. New Delhi also has taken note of Beijing’s security relations
with neighboring Burma and the construction of military facilities on the Indian Ocean.
During a landmark visit to China in 1993, Prime Minister Rao signed an agreement to
reduce troops and maintain peace along the Line of Actual Control that divides the two
countries’ forces at the disputed border. Periodic working group meetings aimed at reaching
a final settlement continue; 20 have been held to date. Despite still unresolved issues, high-
level exchanges between New Delhi and Beijing regularly include statements from both sides
that there exists no fundamental conflict of interest between the two countries. A June 2003
visit to Beijing by Vajpayee was viewed as marking a period of much improved relations.
Military-to-military contacts have included a modest, but unprecedented November 2003
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joint naval exercise off the coast of Shanghai and small-scale joint army exercises in August
2004. In December 2004, India’s army chief visited Beijing to discuss deepening bilateral
defense cooperation, and a first-ever India-China strategic dialogue was held in New Delhi
in January 2005. In April 2005, Chinese Prime Minister Wen Jiabao visited New Delhi
where India and China agreed to launch a “strategic partnership” that will include broadened
defense links and efforts to expand economic relations. While outstanding territorial
disputes remain unresolved, China formally recognized Indian sovereignty over the former
kingdom of Sikkim and India reiterated its view that Tibet is a part of China.
Political Setting
National Elections. India, with a robust and working democratic system, is a federal
republic where the bulk of executive power rests with the prime minister and his or her
cabinet (the Indian president is a ceremonial chief of state with limited executive powers).
As a nation-state, India presents a vast mosaic of hundreds of different ethnic groups,
religious sects, and social castes. Most of India’s prime ministers have come from the
country’s Hindi-speaking northern regions and all but two have been upper-caste Hindus.
The 543-seat Lok Sabha (People’s House) is the locus of national power, with directly
elected representatives from each of the country’s 28 states and seven union territories. A
smaller upper house, the Rajya Sabha (Council of States), may review, but not veto, most
legislation, and has no power over the prime minister or the cabinet. National and state
legislators are elected to five-year terms. National elections in October 1999 had secured
ruling power for a Bharatiya Janata Party (BJP)-led coalition government headed by Prime
Minister Vajpayee. That outcome had decisively ended the historic dominance of the Nehru-
Gandhi-led Congress Party, which was relegated to sitting in opposition at the national level
(its members continued to lead many state governments). However, a surprise Congress
resurgence under Sonia Gandhi in May 2004 national elections brought to power a new left-
leaning coalition government led by former finance minister and Oxford-educated economist
Manmohan Singh, a Sikh and India’s first-ever non-Hindu prime minister. Many analysts
attributed Congress’s 2004 resurgence to the resentment of rural and poverty-stricken urban
voters who felt left out of the “India shining” perception of a BJP more associated with
urban, middle-class interests. Others saw in the results a rejection of the Hindu nationalism
associated with the BJP. (See CRS Report RL32465, India’s 2004 National Elections.)
The Congress Party. With only 110 parliamentary seats after 1999, Congress was
at its lowest national representation ever. Observers attributed the party’s poor showing to
a number of factors, including perceptions that party leader Sonia Gandhi lacked the
experience to lead the country and the failure of Congress to make strong pre-election
alliances (as had the BJP). Support for Congress had been in fairly steady decline following
the 1984 assassination of then-PM Indira Gandhi and the 1991 assassination of her son, then-
PM Rajiv Gandhi. Sonia Gandhi, Rajiv’s widow, refused to be drawn into active politics
until the 1998 elections. She later made efforts to revitalize the organization by phasing out
older leaders and attracting more women and lower castes — efforts that appear to have paid
off in 2004. Today, Congress again occupies more parliamentary seats (145) than any other
party and, through unprecedented alliances with powerful regional parties, it is again at the
head of India’s government. Congress maintained control of the populous Maharashtra state
in October 2004 elections there, solidifying its national standing and dealing another blow
to the BJP and its allies. However, February 2005 elections in Bihar unseated the key
Congress-allied Rashtriya Janata Dal and its prominent lower-caste leader, Lalu Yadav.
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The Bharatiya Janata Party (BJP). Riding a crest of rising Hindu nationalism, the
BJP increased its strength in Parliament from only two seats in 1984 to 181 seats in 1999.
In 1993, the party’s image was tarnished among some, burnished for others, by its alleged
complicity in outbreaks of serious communal violence in which a mosque was destroyed at
Ayodhya and up to 3,000 people were killed in anti-Muslim rioting in Bombay and
elsewhere. Some observers hold elements of the BJP, as the political arm of the extremist
Hindu nationalist organization Rashtriya Swayamsevak Sangh (RSS, or National Volunteer
Force), responsible for the incidents. While leading a national coalition, the BJP worked —
with only limited success — to change its image from right-wing Hindu fundamentalist to
conservative, secular, and moderate, although early 2002 riots in Gujarat again damaged the
party’s national and international credentials as a secular and moderate organization. In
1998, the BJP oversaw a fragile National Democratic Alliance (NDA) coalition under party
notable Atal Vajpayee, whose widespread personal popularity helped to keep the BJP in
power. The BJP has advocated “Hindutva,” or an India based on Hindu culture, and views
this as key to nation-building. Popular among upper caste groups, the party continued to be
looked upon with suspicion by lower-caste Indians, India’s 145 million Muslims, and non-
Hindi-speaking Hindus in southern India, who together comprise a majority of India’s voters.
Some controversial long-term goals of the BJP have included building a Hindu temple on the
site of a 16th-century mosque in Ayodhya, establishing a uniform code of law to abolish
special status for Muslims, and abolishing the special status granted to Jammu and Kashmir
under Article 370 of the Indian Constitution. In 2005, leadership disputes, criticisms from
Hindu nationalist groups, and a June controversy involving party president and parliamentary
opposition leader Lal Advani have weakened the BJP.
India-U.S. Relations and Bilateral Issues
Security Issues
The Kashmir Issue. Although India suffers from several militant regional separatist
movements, the Kashmir issue has proven the most lethal and intractable. Conflict over
Kashmiri sovereignty also has brought global attention to a potential “flashpoint” for
interstate war between nuclear-armed powers. The problem is rooted in claims by both India
and Pakistan to the former princely state, divided since 1948 by a military Line of Control
(LOC) separating India’s Jammu and Kashmir and Pakistan-controlled Azad [Free] Kashmir.
Some Kashmiris seek independence from both countries. Spurred by a perception of rigged
state elections that unfairly favored pro-New Delhi candidates in 1989, an ongoing separatist
war between Islamic militants and their supporters and Indian security forces in Indian-held
Kashmir has claimed 40,000-90,000 lives. India blames Pakistan for fanning the rebellion,
as well as supplying arms, training, and fighters. Pakistan, for its part, claims to provide only
diplomatic and moral support to what it calls “freedom fighters” who resist Indian rule in the
Muslim-majority region. New Delhi insists that the dispute should not be “internationalized”
through involvement by third-party mediators. Islamabad has sought to bring external major
power persuasion to bear on India, especially from the United States. The longstanding U.S.
position on Kashmir is that the issue must be resolved through negotiations between India
and Pakistan while taking into account the wishes of the Kashmiri people. (See also CRS
Report RL32259, Terrorism in South Asia.)
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Some separatist groups, such as the Jammu and Kashmir Liberation Front (JKLF),
continue to seek an independent or autonomous Kashmir. Others, including the Hizbul
Mujahideen (HuM), 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. The Hurriyat membership of more than 20 political and religious groups includes
the JKLF (now a political group) and Jamaat-e-Islami (the political wing of the HuM). The
Hurriyat Conference, which states that it is committed to seeking dialogue with the Indian
government on a broad range of issues, calls for a tripartite conference on Kashmir, including
India, Pakistan, and representatives of the Kashmiri people. Hurriyat leaders demand
Kashmiri representation at any talks between India and Pakistan on Kashmir.
In 2001 and 2002, a series of violent incidents worsened the region’s security climate
and brought India and Pakistan to the brink of full-scale war. In October 2001, Islamic
militants attacked the state assembly building in Srinagar, killing 38, and a brazen December
attack on the Indian Parliament complex in New Delhi left 15 dead. Indian officials blamed
Pakistan-based militant groups for both attacks and initiated a military mobilization that
brought hundreds of thousands of Indian troops to the border with Pakistan. In May 2002,
in the midst of this armed showdown, militants attacked an Indian army base in the Jammu
town of Kaluchak, leaving 34 dead, most of them women and children. New Delhi leveled
accusations that Islamabad was sponsoring Kashmiri terrorism; Indian leaders talked of “pre-
emptive” military incursions against separatists’ training bases on Pakistani territory.
International pressure included numerous visits to the region by top U.S. diplomats. On
receiving assurances from Secretary of State Powell and others that Pakistan would terminate
support for infiltration and dismantle militant training camps, India began the slow process
of reducing tensions with Pakistan. In October 2002, after completion of state elections in
Jammu and Kashmir, New Delhi announced a redeployment of Indian troops to their
peacetime barracks. Islamabad responded with a stand-down order of its own, though the
Indian and Pakistani armies continued to exchange sporadic small arms, mortar, and artillery
fire along the LOC. An India-Pakistan peace initiative launched in the spring of 2003
produced a November 2003 bilateral cease-fire agreement for the entire LOC and shared
international border. In February 2005, a major confidence-building measure came with the
two countries agreeing to allow limited bus service across the LOC, a development that may
improve the quality of life for Kashmiris.
Nuclear Weapons and Missile Proliferation. Policy analysts consider the
apparent arms race between India and Pakistan as posing perhaps the most likely prospect
for the future use of nuclear weapons by states. In May 1998, India conducted five
underground nuclear tests, breaking a self-imposed, 24-year moratorium on such testing.
Despite international efforts to dissuade it, Pakistan quickly followed. The tests created a
global storm of criticism, and represented a serious setback for two decades of U.S. nuclear
nonproliferation efforts in South Asia. Following the tests, President Clinton imposed full
restrictions on non-humanitarian aid to both India and Pakistan as mandated under Section
102 of the Arms Export Control Act. 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 conventionally stronger India. India currently is believed to have
enough fissile material, mainly plutonium, for 55-115 nuclear weapons; Pakistan, with a
program focused on enriched uranium, may be capable of building a similar number. Both
countries have aircraft capable of delivering nuclear bombs. India’s military has inducted
short- and intermediate-range ballistic missiles, while Pakistan itself possesses short- and
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medium-range missiles (allegedly acquired from China and North Korea). All are assumed
to be capable of delivering nuclear warheads over significant distances. In August 1999, a
quasi-governmental Indian body released a Draft Nuclear Doctrine for India calling for a
“minimum credible deterrent” (MCD) based upon a triad of delivery systems and pledging
that India will not be the first to use nuclear weapons in a conflict. In January 2003, New
Delhi announced creation of a Nuclear Command Authority. After the body’s first session
in September 2003, participants vowed to “consolidate India’s nuclear deterrent.” As such,
India appears to be taking the next step toward operationalizing its nuclear weapons
capability. (See also CRS Report RL32115, Missile Proliferation and the Strategic Balance
in South Asia, and CRS Report RS21237, India and Pakistan Nuclear Weapons Status.)
U.S. Nonproliferation Efforts and Congressional Action. Soon after the May
1998 nuclear tests, Congress acted to ease sanctions. Through a series of legislative
measures, Congress lifted restrictions on both India and Pakistan.1 In September 2001,
President Bush waived remaining sanctions on India pursuant to P.L. 106-79. During the
1990s, the U.S. security focus in South Asia sought to minimize damage to the
nonproliferation regime, prevent escalation of an arms and/or missile race, and promote Indo-
Pakistani bilateral dialogue. In light of these goals, the Clinton Administration set forward
five key “benchmarks” for India and Pakistan based on the contents of U.N. Security Council
Resolution 1172 (June 1998) which condemned the two countries’ nuclear tests. These were:
1) signing and ratifying the Comprehensive Nuclear Test Ban Treaty (CTBT); 2) halting all
further production of fissile material and participating in Fissile Material Cutoff Treaty
negotiations; 3) limiting development and deployment of WMD delivery vehicles; 4)
implementing strict export controls on sensitive WMD materials and technologies; and 5)
establishing bilateral dialogue between India and Pakistan to resolve their mutual differences.
Progress in each of these areas has been limited, and the Bush Administration makes
no reference to the benchmark framework. Aside from security concerns, the governments
of both India and Pakistan are faced with the prestige factor attached to their nuclear
programs and the domestic unpopularity of relinquishing what are perceived to be potent
symbols of national power. Neither has signed the CTBT, and both appear to be producing
weapons-grade fissile materials. (India has consistently rejected the CTBT, as well as the
Nuclear Nonproliferation Treaty, as discriminatory, calling instead for a global nuclear
disarmament regime. 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. Senate’s rejection of the treaty in 1999.) The status of weaponization
and deployment is unclear, though there are indications that this is occurring at a slow, but
steady pace. Early optimism in the area of export controls waned and then vanished in
February 2004 when it became clear that Pakistanis were involved in the export of WMD
materials and technologies. In September 2004, two Indian scientists were sanctioned for
providing WMD-related equipment or technologies to Iran. Some observers have called for
a new U.S. approach that would provide technical assistance in enhancing the security of any
1 The India-Pakistan Relief Act of 1998 (in P.L. 105-277) authorized a one-year sanctions waiver
exercised by President Clinton in November 1998. The Department of Defense Appropriations Act,
2000 (P.L. 106-79) gave the President permanent authority after October 1999 to waive nuclear-test-
related sanctions applied against India and Pakistan. On October 27, 1999, President Clinton waived
economic sanctions on India (Pakistan remained under sanctions as a result of the October 1999
coup). (See CRS Report RS20995, India and Pakistan: Current U.S. Economic Sanctions.)
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WMD materials in South Asia (see CRS Report RL31589, Nuclear Threat Reduction
Measures for India and Pakistan). Section 1601 of P.L. 107-228 outlined nonproliferation
objectives for South Asia. Among concerns voiced by some Members of Congress was that
there continue to be “contradictions” in U.S. nonproliferation policy toward South Asia,
particularly as related to the Senate’s rejection of the CTBT and indications that the Defense
Department may continue to develop low-yield nuclear weapons.
U.S.-India Security Cooperation. Unlike U.S.-Pakistan military ties, which date
back to the 1950s, security cooperation between the United States and India is in the early
stages of development. Since September 2001, and despite a concurrent U.S. rapprochement
with Pakistan, U.S.-India security cooperation has flourished. Both countries acknowledge
a desire for greater bilateral security cooperation and a series of measures have been taken
to achieve this. In August 2004, a top U.S. diplomat in India claimed that “military
cooperation remains one of the most vibrant, visible, and proactive legs powering the
transformation of U.S.-India relations.” The India-U.S. Defense Policy Group (DPG) —
moribund since India’s 1998 nuclear tests and ensuing U.S. sanctions — was revived in late
2001 and meets annually. In June 2005, the United States and India signed a ten-year
defense pact calling for collaboration in multilateral operations, expanded two-way defense
trade, increasing opportunities for technology transfers and co-production, expanded
collaboration related to missile defense, and establishment of a bilateral Defense
Procurement and Production Group. India’s Leftist parties, some Indian defense analysts,
and the government of Pakistan have criticized the pact. Some analysts laud increased U.S.-
India security ties as providing counterbalance to growing Chinese influence in the region.
Since early 2002, the United States and India have held numerous and unprecedented
joint exercises involving all military branches. Advanced air combat exercises have provided
the U.S. military with its first look at the Russian-built Su-30MKI; in 2004, mock air combat
saw Indian pilots in late-model Russian-built fighters hold off American pilots flying older
F-15Cs. U.S. and Indian special forces soldiers have held joint exercises near the India-
China border, and annual “Malabar” joint naval exercises are held off the Indian coast. In
July 2004, an Indian Air Force contingent participated in the Cooperative Cope Thunder
exercises in Alaska. Despite these developments, there remain indications that the
perceptions and expectations of top U.S. and Indian military leaders are divergent on several
key issues, including India’s role in the Persian Gulf and Central Asia, approaches to
countering terrorism, and a potential U.S. role in resolving the India-Pakistan dispute.
Moreover, the existence of a nonproliferation constituency in the United States is seen as a
further hindrance to more fully developed military-to-military relations.
Along with increasing military-to-military ties, the issue of U.S. arms sales to India has
taken a higher profile. In February 2002, Congress was notified of the negotiated sale to
India of eight counter-battery radar sets (or “Firefinder” radars) and arrangements soon were
made for the sale of four additional sets in a deal worth a total of $190 million. India also
purchased $29 million worth of counterterrorism equipment for its special forces and has
received sophisticated U.S.-made electronic ground sensors to help stem the tide of militant
infiltration in the Kashmir region. In July 2004, Congress was notified of a possible sale to
India involving up to $40 million worth of aircraft self-protection systems to be mounted on
the Boeing 737s that carry the Indian head of state. The State Department has authorized
Israel to sell to India the jointly developed U.S.-Israeli Phalcon airborne early warning
system, an expensive asset that some analysts believe may tilt the regional strategic balance
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even further in India’s favor. The Indian government reportedly possesses an extensive list
of desired U.S.-made weapons, including P-3C Orion maritime patrol aircraft, PAC-3 anti-
missile systems, electronic warfare systems, and possibly even F-16 fighters. In March 2005,
the unveiling of the Bush Administration’s “new strategy for South Asia” included assertions
that the United States welcomes Indian requests for information on the possible purchase of
F-16 or F/A-18 multi-role fighters, and indicated that Washington is “ready to discuss the
sale of transformative systems in areas such as command and control, early warning, and
missile defense.” Still, some top Indian officials express concern that the United States is
a “fickle” partner that may not always be relied upon to provide the reciprocity, sensitivity,
and high-technology transfers sought by New Delhi.
In a controversial turn, the Indian government has sought to purchase a sophisticated
anti-missile platform, the Arrow Weapon System, from Israel. Because the United States
took the lead in the system’s development, the U.S. government has veto power over any
Israeli exports of the Arrow. Although U.S. Defense Department officials are seen to support
the sale as meshing with President Bush’s policy of cooperating with friendly countries on
missile defense, State Department officials are reported to opposed the transfer, believing
that it would send the wrong signal to other weapons-exporting states at a time when the U.S.
is seeking to discourage international weapons proliferation. Indications are that a U.S.
interest in maintaining a strategic balance on the subcontinent, along with U.S. obligations
under the Missile Technology Control Regime, may preclude any approval of the Arrow sale.
Joint U.S.-India military exercises and arms sales negotiations have caused disquiet in
Pakistan, where there is concern that the developments could lead to “induction of advanced
weapons systems into the region” and “destabilize strategic balance” there. Islamabad is
concerned that its already disadvantageous conventional military status vis-à-vis New Delhi
will be further eroded by India’s acquisition of additional modern defense equipment such
as the Phalcon and Arrow. In fact, numerous observers now note what appears to be a pro-
India drift in the U.S. government’s strategic orientation in South Asia. Yet the United
States regularly lauds Pakistan’s role as a key ally in the U.S.-led counterterrorism coalition
and assures Islamabad that it will take no actions that disrupt strategic balance on the
subcontinent. (For further discussion, see CRS Report RL31644, U.S.-India Security
Relations, and CRS Report RS22148, Combat Aircraft Sales to South Asia.)
Regional Dissidence and Human Rights
As a vast mosaic of ethnicities, languages, cultures, and religions, India can be difficult
to govern. Internal instability resulting from diversity is further complicated by colonial
legacies such as international borders that separate members of the same ethnic groups,
creating flashpoints for regional dissidence and separatism. Separatist insurgents in remote
and underdeveloped northeast regions confound New Delhi and create international tensions
by operating out of neighboring Bangladesh, Burma, Bhutan, and Nepal. Maoist rebels
continue to operate in eastern states. India also has suffered outbreaks of serious communal
violence between Hindus and Muslims, especially in the western Gujarat state. (See also
CRS Report RL32259, Terrorism in South Asia.)
The Northeast. Since the time of India’s foundation, numerous separatist groups
have fought for ethnic autonomy or independence in the country’s northeast region. Some
of the tribal struggles in the small states known as the Seven Sisters are centuries old. It is
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estimated that more than 25,000 people have been killed in such fighting since 1948,
including some 2,000 in 2004. The United Liberation Front of Assam (ULFA), the National
Liberation Front of Tripura, the National Democratic Front of Bodoland (NDFB), and the
United National Liberation Front (seeking an independent Manipur) are among the groups
at war with the central government. In April 2005, the U.S. State Department named ULFA
in its list of “other selected terrorists organizations,” the first time an Indian separatist group
outside Kashmir was so named. New Delhi has at times blamed Bangladesh, Burma, Nepal,
and Bhutan for “sheltering” one or more of these groups beyond the reach of Indian security
forces, and India reportedly has launched joint counter-insurgency operations with some of
its neighbors. India also has accused Pakistan’s intelligence agency of training and equipping
militants. Bhutan launched major military operations against suspected rebel camps on
Bhutanese territory in December 2003 and appeared to have routed the ULFA and NDFB.
In April 2004, five leading separatist groups from the region rejected PM Vajpayee’s offer
of unconditional talks, saying talks can only take place under U.N. mediation and if the
sovereignty issue was on the table. Then, it what seemed a blow to the new Congress-led
government’s domestic security policies, an October 2004 spate of bombings and shootings
in Assam and Nagaland killed 73 and were blamed on ULFA and NDFB militants who may
have re-established their bases in Bhutan. Major Indian army operations in November 2004
may have overrun numerous Manipur separatist bases near the Burmese border.
“Naxalites”. Also operating in India are Naxalites — communist insurgents
ostensibly engaged in violent struggle on behalf of landless laborers and tribals. These
groups, most active in inland areas of east-central India, claim to be battling oppression and
exploitation in order to create a classless society. Their opponents call them terrorists and
extortionists. Related violence caused some 1,300 deaths in 2004. Most notable are the
People’s War Group (PWG), mainly active in the southern Andhra Pradesh state, and the
Maoist Communist Center of West Bengal and Bihar. In September 2004, the two groups
merged to form the Communist Party of India - Maoist. Both appear on the U.S. State
Department’s list of “other terrorist groups” and both are designated as terrorist groups by
New Delhi; each is believed to have about 2,000 cadres. PWG fighters were behind an
October 2003 landmine attack that nearly killed the chief minster of Andhra Pradesh. In July
2004, the Andhra Pradesh government lifted an 11-year-old ban on the PWG, but the Maoists
withdrew from ensuing peace talks in January 2005, accusing the state government of
breaking a cease-fire agreement. Violent attacks on government forces then escalated in the
spring of 2005. New Delhi has expressed concerns that indigenous Maoists are increasing
their links with Nepali communist rebels at war with the Kathmandu government.
Gujarat. In February 2002, a group of Hindu activists returning by train to the western
state of Gujarat from the city of Ayodhya — site of the razed 16th-century Babri Mosque and
a proposed Hindu temple — were attacked by a Muslim mob in the town of Godhra; 58
were killed. In the communal rioting that followed, some 2,000 people died, most of them
Muslims. Many observers criticized the BJP-led state and national governments for inaction;
some even saw evidence of state government complicity in anti-Muslim attacks. Human
rights groups have been harshly critical of the central government’s alleged inaction in
bringing those responsible to justice. Some of these criticisms were echoed by the Indian
Supreme Court in September 2003, when justices admonished Gujarati authorities for
mishandling attempts to prosecute some of those charged with riot-related crimes. In
September 2004, the U.S. Ambassador-at-Large for International Religious Freedom said the
2002 riots were carried out by mobs that “appear to have been aided by state or local
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government officials.” In March 2005, the State Department made a controversial decision
denying a U.S. visa to Gujarat Chief Minster Narendra Modi under a U.S. law that bars entry
for foreign government officials found to be complicit in severe violations of religious
freedom. The decision was widely criticized in India.
Human Rights. According to the U.S. State Department’s India: Country Report on
Human Rights Practices, 2004, the Indian government “generally respected the human rights
of its citizens; however, numerous serious problems remained.” These included extensive
societal violence against women; extrajudicial killings, including faked encounter killings;
excessive use of force by security forces, arbitrary arrests, and incommunicado detentions
in Kashmir and several northeastern states; torture and rape by agents of the government;
poor prison conditions and lengthy pretrial detentions without charge; forced prostitution;
child prostitution and female infanticide; human trafficking; and caste-based discrimination
and violence, among others. Terrorist attacks and kidnapings also remained grievous
problems, especially in Kashmir and the northeastern states. All of these same “serious
problems” were noted in the previous year’s report as well.
The State Department has noted that “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.” Amnesty International, Human
Rights Watch, and the National Human Rights Commission of India have been critical of
India’s human rights record on these issues, especially with regard to sectarian violence in
Gujarat in the spring of 2002. Also, the March 2002 enactment of a new Prevention of
Terrorism Act (POTA) came under fire as providing the government a powerful tool with
which to arbitrarily target minorities and political opponents (POTA was repealed by the new
Congress-led government in September 2004). The 1958 Armed Forces Special Powers Act
has been called a facilitator of “grave human rights abuses” in Jammu and Kashmir and the
northeastern states. In general, India has denied international human rights groups official
access to Kashmir, Punjab, and other sensitive areas. The State Department’s 2004-2005
report on Supporting Human Rights and Democracy called India “a vibrant democracy with
strong constitutional human rights protections,” but asserted that “poor enforcement of laws,
especially at the local level, and the severely overburdened court system weaken the delivery
of justice.” In June 2005, a State Department report on trafficking in persons again placed
India on the “Tier 2 Watch List” for its “inability to show evidence of increased efforts to
address trafficking in persons, particularly its lack of progress in forming a national law
enforcement response to interstate and transnational trafficking crimes.”
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 some 150 million (14%). Christians,
Sikhs, Buddhists, Jains, and others each total less than 4%. Although freedom of religion
is protected by the Indian government, human rights groups have noted that India’s religious
tolerance is susceptible to attack by religious extremists. In its annual report on international
religious freedom released in September 2004, the State Department found that the Indian
government “sometimes did not act effectively to counter societal attacks against religious
minorities and attempts by state and local governments to limit religious freedom.” For the
sixth year in a row, the report singled out India for “state neglect of societal discrimination
against, or persecution of, minority religions.” However, it also noted “significant
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improvements” in religious freedom. A key shift from the 2003 report was recognition that
May 2004 national elections brought the seating of a new coalition that pledges to respect
India’s traditions of secular government and religious tolerance. In May 2005, the annual
report of the U.S. Commission on International Religious Freedom placed India on a “Watch
List” of countries requiring “close monitoring due to the nature and extent of violations of
religious freedom engaged in or tolerated by the governments.” However, as a result of
“marked improvement in conditions” since May 2004 elections, the Commission no longer
recommends that India be designated as a Country of Particular Concern.
India’s Economy and U.S. Concerns
Overview. Although there is widespread and serious poverty in India, many observers
believe that the country’s long-term economic potential is tremendous, and recent strides in
the technology sector have brought international attention to such high-tech centers as
Bangalore and Hyderabad. Many analysts — along with some U.S. government officials —
point to excessive regulatory and bureaucratic structures as a hindrance to the realization of
India’s full economic potential. The high cost of capital (rooted in large government budget
deficits) and an “abysmal” infrastructure also draw negative appraisals as obstacles to
growth. Constant comparisons with the progress of the Chinese economy show India lagging
in rates of growth and foreign investment, and in the removal of trade barriers. Despite
problems, the current growth rate of the Indian economy is amongst the highest in the world.
After enjoying an average growth rate above 6% for the 1990s, the Indian economy
cooled somewhat with the global economic downturn after 2000. Yet sluggish Cold War-era
“Hindu rates of growth” became a thing of the past. For FY2002/03 (ending March 2003),
real change in GDP was 4.3%. Robust growth in services and industry was countered by
drought-induced contraction in the agricultural sector. Analysts at first concluded that New
Delhi’s target of 8% growth for FY2003/04 was overly optimistic; the Indian government
apparently agreed, lowering its projection to 6%. Yet, in July 2004, an annual growth rate
of 8.2% was recorded, with monsoon rains driving strong recovery in the agricultural sector.
Middle-term estimates are encouraging, predicting growth near 7%. A major upswing in the
services sector is expected to lead; this sector now accounts for nearly half of India’s gross
domestic product. Inflation rates have been fairly low (4.4% in 2004), but rose slightly due
to higher energy costs. In May 2004, India’s foreign exchange reserves topped a record $120
billion. The benchmark Bombay Stock Exchange gained an impressive 80% in 2003 and
11% in 2004, with the Sensex index reaching record highs in December 2004.
A major U.S. concern with regard to India is the scope and pace of reforms in what has
been that country’s quasi-socialist economy. Economic reforms begun in 1991, under the
Congress-led government of then-Prime Minister Rao, boosted growth and led to huge
foreign investment to India in the mid-1990s. Reform efforts stagnated, however, under the
weak coalition governments of the mid-1990s. The Asian financial crisis and sanctions on
India (as a result of its May 1998 nuclear tests) further dampened the economic outlook.
Following the 1999 parliamentary election, the BJP-led government launched second-
generation economic reforms, including major deregulation, privatization, and tariff-reducing
measures. Once seen as favoring domestic business and diffident about foreign involvement,
the government appears to gradually be embracing globalization and has sought to reassure
foreign investors with promises of transparent and nondiscriminatory policies. In October
2004, the World Bank’s India country director lauded the country’s economic achievements,
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but called accelerating reforms “essential” for sustained growth and poverty reduction there,
and a top International Monetary Fund official said that “India remains a relatively closed
economy” and urged greater trade liberalization and regional economic integration.
Trade. 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 in 2004
were valued at $6.1 billion (up 22% over 2003), with machinery and transport equipment
(42%) and chemicals (18%) as leading categories. Imports from India in 2004 totaled $15.6
billion (up 19% over 2003). Leading imports include apparel, household goods, diamonds,
and jewelry. Annual foreign direct investment (FDI) to India rose from about $100 million
in 1990 to $2.4 billion by 1996. Net FDI in 2004 reached $6.5 billion and is estimated at
$7.4 billion for 2005. More than one-third of these investments was made by U.S.
companies. In March 2004, U.S. Ambassador to India David Mulford told an audience in
Delhi that “the U.S. is one of the world’s most open economies and India is one of the most
closed.” Despite significant tariff reductions and other measures taken by India to improve
market access, according to the 2005 report of the United States Trade Representative
(USTR), a number of foreign trade barriers remain, including “remarkably high” tariffs,
especially in the agricultural sector. The USTR asserts that “substantial expansion of U.S.-
India trade will be unlikely without significant Indian liberalization.”
India’s extensive trade and investment barriers have been criticized by U.S. government
officials and business leaders as an impediment to its own economic development, as well
as to stronger U.S.-India ties. For example, in September 2004, U.S. Under Secretary of
State Larson told a Bombay audience that “trade and investment flows between the U.S. and
India are far below where they should and can be,” adding that “the picture for U.S.
investment is also lackluster.” He identified the primary reason for the suboptimal situation
as “the slow pace of economic reform in India.” The Heritage Foundation’s 2005 Index of
Economic Freedom again rated India as being “mostly unfree,” highlighting an especially
restrictive set of trade policies, heavy government involvement in the banking and finance
sector, demanding regulatory structures, and a high level of black market activity.
Inadequate intellectual property rights protection has been a long-standing issue
between the United States and India. Major areas of irritation have included counterfeiting
of medicines and auto parts, and pirating of U.S. media. The USTR places India on its
Special 301 Priority Watch List for “weak” protection and enforcement of intellectual
property rights. The International Intellectual Property Alliance estimated U.S. losses of
$465 million due to trade piracy in 2004 — nearly half of this in the category of business
software — and noted “only minor progress in combating piracy.” (See also CRS Report
RS21502, India-U.S. Economic Relations.)
“Next Steps in Strategic Partnership” Issues
The Next Steps in Strategic Partnership (NSSP) initiative encompasses several major
issues in India-U.S. relations. Since 2001, the Indian government has pressed the United
States to ease restrictions on the export to India of dual-use high-technology goods, as well
as to increase civilian nuclear and civilian space cooperation. These three key issues came
to be known as the “trinity,” and top Indian officials have stated that progress in these areas
was necessary to provide tangible evidence of a changed U.S.-India relationship. There were
later references to a “quartet” when the issue of missile defense was included. In late 2003,
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Secretary of State Powell asserted that progress was being made on the “glide path” toward
agreement on the “trinity” issues. In January 2004, President Bush and the Indian prime
minister issued a joint statement indicating that the U.S.-India “strategic partnership”
includes expanding cooperation in these areas, as well as expanding dialogue on missile
defense. The “glide path” itself was re-dubbed the NSSP. Some nongovernmental U.S.
experts believe that, although India is not regarded as a proliferator of sensitive technologies,
U.S. obligations under existing law may limit significantly the scope of NSSP engagement,
and some Indian analysts fear that the NSSP may become moribund due to U.S.
“bureaucratic obstacles.” Despite these considerations, many observers see in the NSSP
evidence of a major and positive shift in the U.S. strategic orientation toward India.
Former Under Secretary of Commerce for Industry and Security Ken Juster — who took
the lead in U.S.-India trade negotiations — sought to dispel “trade-deterring myths” about
limits on dual-use trade by noting that less than one-half of 1% of total U.S. trade with India
in FY2002 was subject to licensing requirements and that 90% of all dual-use licensing
applications for India were approved in FY2003. In July 2003, some 150 representatives of
private industries in both countries met in Washington to share their interests and concerns
with governmental leaders. Panel topics included investment, information technology,
defense trade, life sciences, and nanotechnology. That month also saw the inaugural session
of the U.S.-India High-Technology Cooperation Group (HTCG), where officials discussed
a wide range of issues relevant to creating the conditions for more robust bilateral high
technology commerce, including market access, tariff and non-tariff barriers, and export
controls (the fourth public-private event held under HTCG auspices was in Washington in
November 2004). In February 2005, the inaugural session of the U.S.-India High-
Technology Defense Working Group was held under HTCG auspices. Some Members of
Congress have expressed concern that dual-use technology trade with India might allow that
country to advance its military nuclear and/or missile projects, but the Commerce
Department insists that future civil nuclear and civil space cooperation with India will take
place only within the limits set by multilateral nonproliferation regimes. Commerce’s
Bureau of Industry and Security may create a permanent New Delhi post for a U.S. official
to oversee export control compliance.
In 2003, the Chairman of the U.S. Nuclear Regulatory Commission (NRC) visited India
for the first time since before the 1998 nuclear tests, reportedly to discuss issues of safety and
emergency operating procedures for India’s civilian nuclear program. In February 2005, an
NRC commissioner led a U.S. delegation for further technical discussions and visits to
selected Indian nuclear facilities. New Delhi has not requested U.S. assistance in building
new nuclear power plants, but several safety-related initiatives are said to be underway. In
April 2005, Secretary of State Rice indicated that, given international legal obligations and
existing U.S. law, the United States is not currently in a position to sell civilian nuclear
technology to India. A June 2004 conference on India-U.S. space science and commerce was
held in Bangalore, where it was announced that the Bush Administration had approved a
license authorizing Boeing Satellite Systems to work with the Indian Space Research
Organization (ISRO) on possible joint development and marketing of communication
satellites. Other cooperative efforts in space technology reportedly include applications for
sustainable development and weather research. Since 1998, a number of Indian entities have
been subjected to case-by-case licensing requirements and appear on the U.S. export control
“Entity List” of foreign end users involved in weapons proliferation activities. These include
the ISRO, seven of its subordinate entities, four Department of Atomic Energy entities, four
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subordinates of the Defense Research and Development Organization, and Bharat Dynamics
Limited, a missile production agency. In September 2004, as part of the implementation of
Phase I of the NSSP, the United States modified some export licensing policies and removed
the ISRO headquarters from the Entity List.
U.S. Assistance
Economic. According to the U.S. Agency for International Development (USAID),
India has more people living in abject poverty (some 350 million) than do Latin America
and Africa combined. From 1947 through 2004, the United States provided more than $14
billion in economic loans and grants to India. USAID programs in India, budgeted at $90
million in FY2005, concentrate on five areas: 1) economic growth (increased transparency
and efficiency in the mobilization and allocation of resources); 2) health (improved overall
health with a greater integration of food assistance, reproductive services, and the prevention
of HIV/AIDS and other infectious diseases); 3) disaster management; 4) environmental
protection (improved access to clean energy and water; the reduction of public subsidies
through improved cost recovery; promoting more efficient technology and management); and
5) education (improved access to elementary education, and justice and other social and
economic services for vulnerable groups, especially women and children).
Security. The United States has provided $157 million in military assistance to India
since 1947, more than 90% of it distributed from 1962-1966. Security-related assistance for
FY2003 military training and nonproliferation export control enhancements was $2 million,
with greater emphasis on training in FY2004 and FY2005. Bush Administration requests for
FMF in 2002 and 2003 were later withdrawn, and the United States and India have since
agreed to pursue commercial sales programs, with the Pentagon reporting Indian military
sales agreements worth $138 million in FY2002 and $63 million in FY2003.
Table 1. U.S. Assistance to India, FY2001-FY2006
(in millions of dollars)
Program or
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
Account
Actual
Actual
Actual
Actual
Estimate
Request
CSH
24.6
41.7
47.4
47.8
51.0
48.8
DA
28.8
29.2
34.5
22.5
24.0
29.6
ESF
5.0
7.0
10.5
14.9
14.9
14.0
IMET
0.5
1.0
1.0
1.4
1.4
1.2
NADR-EXBS
0.9
0.9
1.0
0.7
0.7
0.6
Subtotal
$59.8
$79.8
$94.4
$106.2
$92.0
$94.2
P.L.480 Title II*
78.3
93.7
44.8
30.8
37.4
28.4
Section 416(b)*
-.-
12.0
-.-
-.-
-.-
-.-
Total
$138.1
$185.5
$139.2
$137.0
$129.4
$122.6
Sources: U.S. Departments of State and Agriculture; U.S. Agency for International Development.
Abbreviations:
CSH:
Child Survival and Health
DA:
Development Assistance
ESF:
Economic Support Fund
IMET:
International Military Education and Training
NADR-EXBS:
Nonproliferation, Anti-Terrorism, Demining, and Related - Export Control and Related Border
Security Assistance
P.L.480 Title II: Emergency and Private Assistance food aid (grants)
Section 416(b):
The Agricultural Act of 1949, as amended (surplus agricultural commodity donations)
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