Order Code RL33529
India-U.S. Relations
Updated June 26, 2007
K. Alan Kronstadt
Specialist in Asian Affairs
Foreign Affairs, Defense, and Trade Division

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India-U.S. Relations
Summary
Long considered a “strategic backwater”from Washington’s perspective, South
Asia has emerged in the 21st century as increasingly vital to core U.S. foreign policy
interests. India, the region’s dominant actor with more than one billion citizens, is
now recognized as a nascent major power and “natural partner” of the United States,
one that many analysts view as a potential counterweight to China’s growing clout.
Washington and New Delhi have since 2004 been pursuing a “strategic partnership”
based on shared values such as democracy, pluralism, and rule of law. Numerous
economic, security, and global initiatives, including plans for “full civilian nuclear
energy cooperation,” are underway. This latter initiative, launched by President Bush
in July 2005 and provisionally endorsed by the 109th Congress in late 2006 (P.L. 109-
401, the “Hyde Act”), reverses three decades of U.S. nonproliferation policy. It
would require, among other steps, conclusion of a peaceful nuclear agreement
between the United States and India, which would itself enter into force only after a
Joint Resolution of Approval by Congress. Also in 2005, the United States and India
signed a ten-year defense framework agreement that calls for expanding bilateral
security cooperation. Since 2002, the two countries have engaged in numerous and
unprecedented combined military exercises. The issue of major U.S. arms sales to
India may come before the 110th Congress. The influence of a growing and relatively
wealthy Indian-American community of more than two million is reflected in
Congress’s largest country-specific caucus.
Further U.S. interest in South Asia focuses on ongoing tensions between India
and Pakistan, a problem rooted in unfinished business from the 1947 Partition,
competing claims to the Kashmir region, and, in more recent years, “cross-border
terrorism” in both Kashmir and major Indian cities. In the interests of regional
stability, the United States strongly encourages an ongoing India-Pakistan peace
initiative and remains concerned about the potential for conflict over Kashmiri
sovereignty to cause open hostilities between these two nuclear-armed countries. The
United States seeks to curtail the proliferation of nuclear weapons and ballistic
missiles in South Asia. Both India and Pakistan have resisted external pressure to
sign the major nonproliferation treaties. In 1998, the two countries conducted
nuclear tests that evoked international condemnation. Proliferation-related
restrictions on U.S. aid were triggered, then later lifted through congressional-
executive cooperation from 1998 to 2000. Remaining sanctions on India (and
Pakistan) were removed in October 2001.
India is in the midst of major and rapid economic expansion. Many U.S.
business interests view India as a lucrative market and candidate for foreign
investment. The United States supports India’s efforts to transform its once
quasi-socialist economy through fiscal reform and market opening. Since 1991, India
has taken steps in this direction, with coalition governments keeping the country on
a general path of reform. Yet there is U.S. concern that such movement remains slow
and inconsistent. Congress also continues to have concerns about abuses of human
rights, including caste- and gender-based discrimination, and religious freedoms in
India. Moreover, the spread of HIV/AIDS in India has attracted congressional
attention as a serious development. This report will be updated regularly.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Context of the U.S.-India Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current U.S.-India Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
India’s Regional Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
The “IPI” Pipeline Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Other Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Political Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
National Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Congress Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The Bharatiya Janata Party (BJP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Regional Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Left Front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Bilateral Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
“Next Steps in Strategic Partnership” and Beyond . . . . . . . . . . . . . . . . . . . 17
Civil Nuclear Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Civil Space Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
High-Technology Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
The Indian Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
U.S.-India Security Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Nuclear Weapons and Missile Proliferation . . . . . . . . . . . . . . . . . . . . 29
U.S. Nonproliferation Efforts and Congressional Action . . . . . . . . . . 30
India-Iran Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
India’s Economy and U.S. Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Barriers to Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Special Economic Zones (SEZs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Multilateral Trade Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Energy Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
The Kashmir Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Other Regional Dissidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
The Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Maoist Insurgency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Hindu-Muslim Tensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Human Rights Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Caste-Based Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
HIV/AIDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
U.S. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

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Relevant Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . 51
List of Figures
Figure 1. Deaths Related to Kashmiri Separatism, 1988-2006 . . . . . . . . . . . . . . 42
Figure 2. Map of India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
List of Tables
Table 1. U.S. Assistance to India, FY2000-FY2008 . . . . . . . . . . . . . . . . . . . . . . 52

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India-U.S. Relations
Most Recent Developments
U.S.-India Civil Nuclear Cooperation. As of late June, following four rounds
of formal negotiations, progress in negotiating a bilateral peaceful nuclear
cooperation (“123”) agreement has been much slower than hoped for by proponents:
U.S. officials have expressed frustration with what they describe as India’s lack of
seriousness and speed in engaging both the United States and the IAEA, and some
Indian officials have suggested that New Delhi’s right to reprocess spent fuel is “non-
negotiable.” Negotiators had resumed work in New Delhi in mid-March, with the
U.S. delegation being led by the director of the State Department’s Office of Nuclear
Energy, Safety, and Security, Richard Stratford. Under Secretary of State Nicholas
Burns, the overall lead U.S. negotiator in the process, subsequently expressed
frustration, saying “The United States has done its part. We’ve met every
commitment we said we would meet. ... Right now I would say the ball is in India’s
court.”
On June 2,Under Secretary Burns ended a two-day visit to New Delhi for the
fourth round of negotiations. A U.S. Embassy statement said “some progress” had
been made, but that “more work remains to be done.” Indian Foreign Secretary Shiv
Shankar Menon echoed the sentiment, saying the “intense, productive, and
constructive” discussions succeeded in “removing some issues from the table,” but
that more progress is needed. In late June, U.S. and Indian officials reportedly met
in Washington for informal talks on the sidelines of a major nongovernmental
nonproliferation conference (see also “Civil Nuclear Cooperation” section below).
India-Pakistan Relations. The India-Pakistan peace initiative continues, with
officials from both countries (and the United States) offering a generally positive
assessment of the ongoing dialogue, even as substantive progress remains elusive.
In early April, Indian and Pakistani officials reportedly agreed on a common map
upon which to base their negotiations of the Sir Creek territorial dispute. Days later,
the two governments completed two-day defense secretary-level talks on their
militarized territorial dispute over the Siachen Glacier. No progress was made, but
the two countries reaffirmed their commitment to a November 2003 cease-fire and
agreed to continue seeking peaceful resolution. In May, further talks were held on
the Sir Creek dispute. The two sides expressed approval of a joint survey, exchanged
maps/charts, and agreed to continue discussions toward amicable settlement. New
Delhi’s concerns about Pakistani links to terrorism have not abated: In mid-April,
Defense Minister A.K. Antony said there had been “no change in Pakistan’s support
for cross-border terrorism” in Kashmir.

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CRS-2
In other developments:
! On June 25, the United States announced that the nuclear-powered
aircraft carrier USS Nimitz would make a port call at Chennai in
early July, the first-ever such visit by an American aircraft carrier.
India’s Leftist parties protested the plan, calling it part of a U.S. plan
to use India to counter the power of China and Iran.
! On June 18, S.Con.Res. 38, calling for the safeguarding of the
physical, political, and economic security of the Kashmiri pandits,
was introduced in the Senate.
! On June 15, the fifth U.S.-India Agricultural Knowledge
Initiative Board meeting ended in Washington.
! On June 14, Assistant Secretary of State for International
Security and Nonproliferation Rood ended a two-day visit to
New Delhi, where he met with top Indian leaders to discuss global
nonproliferation and regional security issues.
! On June 12, the U.S. State Department’s annual Trafficking in
Persons Report said, “India is a source, destination, and transit
country for men, women, and children trafficked for the purposes of
forced labor and commercial sexual exploitation” and it placed India
on the “Tier 2 Watch List” for the fourth consecutive year.
! On May 29, clashes between police and up to 20,000 villagers
seeking classification as lowest-caste (so as to enjoy government
hiring preferences) left at least 11 people, including 2 police officers,
dead in Jaipur, Rajasthan. Violent riots continued for weeks after.
! On May 28, landmines planted by Maoist rebels killed at least
nine police officers in Chhattisgarh.
! On May 26, a bomb exploded at a crowded market in the capital
of Assam, killing 8 people and injuring 19 others. The separatist
ULFA terrorist group is suspected of involvement in the attack.
! On May 25, the Pentagon notified Congress of a possible sale to
India of six C-130J military transport aircraft along with related
equipment, training, and services, in a deal that could be worth more
than $1 billion.
! On May 18, a remote-controlled bomb exploded at a Hyderabad
mosque, killing at least seven people and injuring several dozen
others. About six others were killed when police opened fire on a
crowd of protestors following the blast.
! On May 17, 16 experts, scholars, and former U.S. government
officials sent a letter urging Senators to hold the Bush

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CRS-3
Administration to the “set of core conditions and limitations” of the
Hyde Act.
! On May 11, the Bahujan Samaj Party (BSP) won an outright
majority in Uttar Pradesh’s state assembly elections, the first
time in 14 years that a single party secured such status in India’s
most populous state.
! On May 1, H.Con.Res. 139, expressing the sense of Congress that
the United States should address the ongoing problem of
untouchability in India, was introduced in the House.
! On April 30, the U.S. Trade Representative again named India
to its Special 301 Priority Watch List.
! Also on April 30, Foreign Secretary Menon arrived in Washington
for further talks on a peaceful U.S.-India nuclear cooperation
(“123”) agreement and for the fifth meeting of the U.S.-India
Global Issues Forum.
! Also on April 30, the State Department’s Country Reports on
Terrorism 2006 noted that India was again the setting for hundreds
of terrorist attacks in 2006 and that U.S.-India counterterrorism
cooperation continues to expand.
! On April 19, eight U.S. Senators sent a letter to Prime Minister
Singh praising increasingly warm U.S.-India relations and
requesting that New Delhi “suspend its military cooperation” with
Iran.
! On April 16, U.S., Indian, and Japanese naval vessels conducted
unprecedented combined exercises off Japan’s east coast.
! On April 12, the Energy Diplomacy and Security Act of 2007 (S.
193) was introduced in the Senate. The bill includes provisions for
establishing energy crisis response mechanisms in cooperation with
the governments of India and China.
! On April 11, U.S. Trade Representative Schwab visited New Delhi
for trade policy discussions with top India leaders, including the
sixth session of the U.S.-India Trade Policy Forum.
! On April 4, the 14th SAARC Summit was held in New Delhi, where
the organization was expanded for the first time with Afghanistan’s
induction as the eighth member, and leaders vowed to boost
counterterrorism cooperation and establish a $300 million
development fund.

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CRS-4
Context of the U.S.-India Relationship
Background
U.S. and congressional interests in India cover a wide spectrum of issues,
ranging from the militarized dispute with Pakistan and weapons proliferation to
concerns about regional security, terrorism, human rights, health, energy, and trade
and investment opportunities. In the 1990s, India-U.S. relations were particularly
affected by the demise of the Soviet Union — India’s main trading partner and most
reliable source of economic and military assistance for most of the Cold War — and
New Delhi’s resulting need to diversify its international relationships. Also
significant were India’s adoption of significant economic policy reforms beginning
in 1991, a deepening bitterness between India and Pakistan over Kashmir, and signs
of a growing Indian preoccupation with China as a potential long-term strategic rival.
With the fading of Cold War constraints, the United States and India began exploring
the possibilities for a more normalized relationship between the world’s two largest
democracies. 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 irritants in
bilateral relations.
India’s May 1998 nuclear tests
were an unwelcome surprise and seen
INDIA IN BRIEF
Population: 1.13 billion; growth rate: 1.6%
to be a policy failure in Washington,
(2007 est.)
and they spurred then-Deputy
Area: 3,287,590 sq. km. (slightly more than one-
Secretary of State Strobe Talbott to
third the size of the United States)
launch a series of meetings with
Capital: New Delhi
Indian External Affairs Minister
Head of Government: Prime Minister
Manmohan Singh (Congress Party)
Jaswant Singh in an effort to bring
Ethnic Groups: Indo-Aryan 72%; Dravidian
New Delhi more in line with U.S.
25%; other 3%
arms control and nonproliferation
Languages: 15 official, 13 of which are the
goals. While this proximate purpose
primary tongue of at least 10 million
went unfulfilled, the two officials
people; Hindi is primary tongue of about
30%; English widely used
soon engaged a broader agenda on
Religions: Hindu 81%; Muslim 13%; Christian
the entire scope of U.S.-India
2%; Sikh 2%, other 2% (2001 census)
relations, eventually meeting fourteen
Life Expectancy at Birth: female 71 years; male
times in seven different countries
66 years (2006 est.)
over a two-year period. The Talbott-
Literacy: female 48%; male 70% (2003 est.)
Gross Domestic Product (at PPP): $4.29
Singh talks were considered the most
trillion; per capita: $4,239; growth rate
extensive U.S.-India engagement up
9.4% (2006)
to that time and likely enabled
Currency: Rupee (100 = $2.39)
circumstances in which the United
Inflation: 5.8% (2006)
Military Expenditures: $21.7 billion (2.7% of
States could play a key role in
GDP; 2005)
defusing the 1999 Kargil crisis, as
U.S. Trade: exports to U.S. $21.8 billion;
well as laying the groundwork for a
imports from U.S. $10.1 billion (2006)
landmark U.S. presidential visit in
Sources: CIA World Factbook; U.S. Commerce Department;
Economist Intelligence Unit; Global Insight; Military
2000.
Balance

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CRS-5
President Bill Clinton’s March 2000 visit to South Asia seemed a major U.S.
initiative to improve relations with India. One outcome was a Joint Statement in
which the two countries pledged to “deepen the India-American partnership in
tangible ways.”1 A U.S.-India Joint Working Group on Counterterrorism was
established that year and continues to meet regularly. During his subsequent visit to
the United States later in 2000, Prime Minister Atal Bihari Vajpayee addressed a
joint session of Congress and issued a second Joint Statement with President Clinton
agreeing to cooperate on arms control, terrorism, and HIV/AIDS.2
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.
Engagement was accelerated after a November 2001 meeting between President Bush
and Prime Minister Vajpayee, when the two leaders agreed to greatly expand U.S.-
India cooperation on a wide range of issues, including regional security, space and
scientific collaboration, civilian nuclear safety, and broadened economic ties.3
Notable progress has come in the area of security cooperation, with an increasing
focus on counterterrorism, joint military exercises, and arms sales. In late 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.
Prime Minister Manmohan Singh paid a landmark July 2005 visit to
Washington, where what may be the most significant joint U.S.-India statement to
date was issued.4 In March 2006, President Bush spent three days in India, discussed
further strengthening a bilateral “global partnership,” and issued another Joint
Statement.5 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. President Bush’s 2002 National Security Strategy of the United States stated
that “U.S. interests require a strong relationship with India.” The 2006 version
claims that, “India now is poised to shoulder global obligations in cooperation with
the United States in a way befitting a major power.”6 In the course of an annual
assessment of global threats, Director of National Intelligence Mike McConnell said,
We expect India’s growing confidence on the world stage as a result of its
sustained high rates of economic growth will make New Delhi a more effective
1 See [http://www.usindiafriendship.net/archives/usindiavision/delhideclaration.htm].
2 See [http://clinton4.nara.gov/WH/new/html/Wed_Oct_4_105959_2000.html].
3 See [http://www.state.gov/p/sca/rls/rm/6057.htm].
4 [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html]
5 [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html]
6 See [http://www.comw.org/qdr/fulltext/nss2002.pdf] and [http://www.comw.org/-
qdr/fulltext/nss2006.pdf].

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CRS-6
partner of the United States but also a more formidable interlocutor in areas of
disagreement, particularly in the WTO.7
In April 2007, Under Secretary of State for Political Affairs Nicholas Burns, the lead
U.S. negotiator with India, published an opinion article in the Washington Post
lauding stronger U.S.-India relations and calling for “two more giant steps” that must
be taken “to achieve a global partnership”: greater bilateral counterterrorism
cooperation and a stronger military partnership that includes defense sales. (See also
CRS Report RL33072, U.S.-India Bilateral Agreements.)
Recognition of India’s increasing stature and importance — and of the growing
political influence some 2.3 million Indian-Americans — is found in the U.S.
Congress, where the India and Indian-American Caucus is now the largest of all
country-specific caucuses. Over the past six years, legal Indian immigrants have
come to the United States at a more rapid rate than any other group. In 2005 and
2006, the Indian-American community, relatively wealthy, geographically dispersed,
and well-entrenched in several U.S. business sectors, conducted a major (and
apparently successful) lobbying effort to encourage congressional passage of
legislation to enable U.S.-India civil nuclear cooperation.8
Current U.S.-India Engagement
Following President Bush’s March 2006 visit to New Delhi — the first such
trip by a U.S. President in six years — U.S. diplomatic engagement with India has
continued to be deep and multifaceted, including visits to India by U.S. Commerce
Secretary Carlos Gutierrez, Energy Secretary Sam Bodman, Agriculture Secretary
Michael Johannes, then-Chairman of the U.S. Joint Chiefs of Staff Gen. Peter Pace,
and U.S. Trade Representative Susan Schwab. Indian officials visiting the United
States in the past year include then-Defense Minister (and current Foreign Minister)
Pranab Mukherjee, Foreign Secretary Shiv Shankar Menon, Commerce Minister
Kamal Nath, Planning Commission Deputy Minister Montek Singh Ahluwalia, and
Power Minister Sushil Shinde. Among formal bilateral sessions over the past year
were the following:
! In August, the U.S.-India Financial and Economic Forum met in
Washington, where officials discussed Indian efforts to liberalize its
financial sector, among other issues.
! In October, a meeting of the U.S.-India CEO Forum was held in
New York City.
! In mid-November, U.S. Under Secretary of Defense Edelman met
with Defense Secretary Dutt in New Delhi for the eighth session of
the U.S.-India Defense Policy Group to discuss bolstering bilateral
cooperation in military security, technology, and trade.
7 [http://armed-services.senate.gov/statemnt/2007/February/McConnell%2002-27-07.pdf]
8 Walter Andersen, “The Indian-American Community Comes Into Its Political Own,” India
Abroad, September 1, 2006; “Indian Community Burgeoning in America,” Associated Press,
October 22, 2006.

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CRS-7
! In February 2007, a fifth session of the U.S.-India High
Technology Working Group met in Washington, where
government and business leaders discussed deepening bilateral
commerce on aerospace, energy, environmental, and other
technologies.
! Also in February, a meeting of the U.S.-India Joint Working
Group on Counterterrorism ended in New Delhi.
! Later in February, a meeting of the U.S.-India Joint Working
Group on Civil Space Cooperation was held in Washington.
! In March, Energy Secretary Bodman was in New Delhi as part of the
ongoing U.S.-India Energy Dialogue.
! In April, the inaugural session of the U.S.-India Defense Joint
Working Group was held in New Delhi.
! Also in April, U.S. Trade Representative Schwab was in New Delhi
the sixth session of the U.S.-India Trade Policy Forum.
! In late April, Foreign Secretary Menon arrived in Washington for the
fifth meeting of the U.S.-India Global Issues Forum.
! In June, a fifth meeting of the U.S.-India Agricultural Knowledge
Initiative Board was held in Washington. (See also CRS Report
RL33072, U.S.-India Bilateral Agreements.)
India’s Regional Relations
India is geographically dominant in both South Asia and the Indian Ocean
region. While all of South Asia’s smaller continental states (Pakistan, Bangladesh,
Nepal, and Bhutan) share borders with India, none share borders with each other.
The country possesses the region’s largest economy and, with more than one billion
inhabitants, is by far the most populous on the Asian Subcontinent. The United
States has a keen interest in South Asian stability, perhaps especially with regard to
the India-Pakistan nuclear weapons dyad, and so closely monitors India’s regional
relationships.
Pakistan. Decades of militarized tensions and territorial disputes between
India and Pakistan have seriously hamstrung economic and social development in
both countries while also precluding establishment of effective regional economic or
security institutions. Seemingly incompatible national identities contributed to the
nuclearization of the Asian Subcontinent, with the nuclear weapons capabilities of
both countries becoming overt in 1998. Since that time, a central aspect of U.S.
policy in South Asia has been prevention of interstate conflict that could lead to
nuclear war. In 2004, New Delhi and Islamabad launched their most recent
comprehensive effort to reduce tensions and resolve outstanding disputes.
Current Status. The India-Pakistan peace initiative continues, with officials
from both countries (and the United States) offering a generally positive assessment
of the ongoing dialogue. In May 2006, India and Pakistan agreed to open a second
Kashmiri bus route and to allow new truck service to facilitate trade in Kashmir (the
new bus service began in June). Subsequent “Composite Dialogue” talks were held
to discuss militarized territorial disputes, terrorism and narcotics, and cultural
exchanges, but high hopes for a settlement of differences over the Siachen Glacier

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CRS-8
were dashed when a May session ended without progress. June talks on the Tubal
navigation project/Wullar barrage water dispute similarly ended without forward
movement.
Compounding tensions, separatist-related violence spiked in Indian Kashmir in
the spring and summer of 2006, and included a May massacre of 35 Hindu villagers
by suspected Islamic militants. Grenade attacks on tourist buses correlated with a
late May roundtable meeting of Prime Minister Singh and Kashmiri leaders, leaving
at least two dozen civilians dead and devastating the Valley’s recently revitalized
tourist industry. Significant incidents of attempted “cross-border infiltration” of
Islamic militants at the Kashmiri Line of Control continue and top Indian leaders
renewed their complaints that Islamabad is taking insufficient action to quell terrorist
activities on Pakistan-controlled territory.
The serial bombing of Bombay commuter trains on July 11, 2006, killed nearly
200 people and injured many hundreds more. With suspicions regarding the
involvement of Pakistan-based groups, New Delhi suspended talks with Islamabad
pending an investigation. However, at a September meeting on the sidelines of a
Nonaligned Movement summit in Cuba, Prime Minister Singh and Pakistani
President Musharraf announced a resumption of formal peace negotiations and also
decided to implement a joint anti-terrorism mechanism. Weeks later, Bombay’s top
police official said the 7/11 train bombings were planned by Pakistan’s intelligence
services and, in October, Prime Minister Singh himself said India had “credible
evidence” of Pakistani involvement.
To date, India is not known to have gone public with or shared with Pakistan
any incriminating evidence of Pakistani government involvement in the Bombay
bombings. In November 2006, Composite Dialogue resumed with its third round of
foreign secretary-level talks when Foreign Secretary Shiv Shankar Menon hosted a
New Delhi visit by his Pakistani counterpart, Riaz Khan. No progress was made on
outstanding territorial disputes, but the two officials did give shape to a joint anti-
terrorism mechanism proposed in September. Such a mechanism is controversial in
India, with some analysts skeptical about the efficacy of institutional engagement
with Pakistan in this issue-area even as Islamabad is suspected of complicity in anti-
India terrorism.
In January 2007, Indian Foreign Minister Pranab Mukherjee met with his
Pakistani counterpart, Kurshid Kasuri, in Islamabad for the first such visit in more
than a year. The two men reviewed past progress and planned for a new round of
talks in March. On February 18, two bombs exploded on an Indian segment of the
Samjhauta [Friendship] Express train linking Lahore, Pakistan, with Delhi. Resulting
fires killed 68 people, most of them Pakistanis. Days later, Mukherjee hosted Kasuri
in New Delhi, where the two men reaffirmed a bilateral commitment to the peace
process despite the apparent effort to subvert it. While India refused a Pakistani
request to undertake a joint investigation into that attack, the two countries did sign
an agreement to reduce the risk of accidental nuclear war.
The new joint India-Pakistan anti-terrorism mechanism met for the first time in
Islamabad in early March and produced a joint statement in which both governments
agreed to use the mechanism for exchanging information about investigations of

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CRS-9
and/or efforts to prevent terrorist acts on either side of the shared border, and to meet
quarterly while immediately conveying urgent information. Hopes that the February
train bombing would provide a fitting “test case” apparently were dashed, however,
when India declined to share relevant investigative information with Pakistan.
Moreover, Indian officials were unhappy with Islamabad’s insistence that the
“freedom struggle” underway in Kashmir should not be treated as terrorism under
this framework. Still, the continuing engagement even after a major terrorist attack
was widely viewed as evidence that the bilateral peace process had gained a sturdy
momentum.
A fourth round of the Composite Dialogue was launched in mid-March, when
the two foreign ministers met again in Islamabad. No new agreements were reached,
but both officials lauded improved bilateral relations and held “the most sustained
and intensive dialogue” ever on the Kashmir problem.9 Since that time, a political
crisis in Islamabad is widely seen as having put temporary brakes on the India-
Pakistan peace process, and has also brought into question the efficacy of India’s
seeking to strike agreements with a Pakistani military leader whose legitimacy and
longevity in office is in doubt.
Background. Three wars — in 1947-48, 1965, and 1971 — and a constant
state of military preparedness on both sides of the border have marked six decades
of bitter rivalry between India and Pakistan. The bloody and acrimonious nature of
the 1947 partition of British India and continuing violence in Kashmir remain major
sources of interstate tensions. 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. Although a bilateral peace process has been underway for
nearly three years, little substantive progress has been made toward resolving the
Kashmir issue, and New Delhi continues to be rankled by what it calls Islamabad’s
insufficient effort to end Islamic militancy that affects India.
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 (see “The
Kashmir Issue,” below). 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 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.10 In October 2002, the
two countries ended a tense, ten-month military standoff at their shared border, but
there remained no high-level diplomatic dialogue between India and Pakistan (a July
9 See Pakistan Foreign Ministry Press Release No. 81/2007 at [http://www.mofa.gov.pk/
Press_Releases/2007/March/PR_81_07.htm].
10 See Polly Nayak and Michael Krepon, “US Crisis Management in South Asia’s Twin
Peaks Crisis” at [http://www.stimson.org/southasia/pdf/USCrisisManagement.pdf].

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CRS-10
2001 summit meeting in the Indian city of Agra had 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 New Delhi
soon 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. 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 Prime Minister, Manmohan Singh, met with
President 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 have significantly altered public perceptions in both countries and may have
acquired permanent momentum. Others are less optimistic about the respective
governments’ long-term commitment to dispute resolution. Moreover, an apparent
new U.S. embrace of India has fueled Pakistan’s anxieties about the regional balance
of power.
China. India and China together account for one-third of the world’s
population, and are seen to be rising 21st century powers and potential strategic rivals.
The two countries fought a brief but intense border war in 1962 that left China in
control of large swaths of territory still claimed by India. Today, India accuses China
of illegitimately occupying nearly 15,000 square miles of Indian territory in Kashmir,
while China lays claim to 35,000 square miles in the northeastern Indian state of
Arunachal Pradesh. The 1962 clash ended a previously friendly relationship between
the two leaders of the Cold War “nonaligned movement” and left many Indians
feeling shocked and betrayed. While 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 understood to have included WMD-related transfers — is a
major and ongoing source of friction; past Chinese support for Pakistan’s Kashmir

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CRS-11
position has added to the discomfort of Indian leaders. New Delhi takes note of
Beijing’s security relations with neighboring Burma and the construction of military
facilities on the Indian Ocean. The two countries also have competed for energy
resources to feed their rapidly growing economies; India’s relative poverty puts New
Delhi at a significant disadvantage in such competition.
Analysts taking a realist perspective view China as an external balancer in the
South Asian subsystem, with Beijing’s material support for Islamabad allowing
Pakistan to challenge the aspiring regional hegemony of a more powerful India.
Many observers, especially in India, see Chinese support for Pakistan as a key aspect
of Beijing’s perceived policy of “encirclement” or constraint of India as a means of
preventing or delaying New Delhi’s ability to challenge Beijing’s region-wide
influence.
Despite historic and strategic frictions, high-level exchanges between India and
China regularly include statements that there exists no fundamental conflict of
interest between the two countries. During a landmark 1993 visit to Beijing, Prime
Minister Narasimha 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. A total of 32 rounds of border talks and joint working group meetings aimed
at reaching a final settlement have been held since 1981 — 10 of these since both
countries appointed special representatives in 2003 — with New Delhi and Beijing
agreeing to move forward in other issue-areas even as territorial claims remain
unresolved.
A 2003 visit to Beijing by Prime Minister Vajpayee was viewed as marking a
period of much improved relations. In late 2004, India’s army chief visited Beijing
to discuss deepening bilateral defense cooperation and a first-ever India-China
strategic dialogue was later held in New Delhi. Military-to-military contacts have
included modest but unprecedented combined naval and army exercises. During
Chinese Prime Minister Wen Jiabao’s April 2005 visit to New Delhi, India and China
inked 11 new agreements and vowed to launch a “strategic partnership” that will
include broadened defense links and efforts to expand economic relations.11 In a
move that eased border tensions, China formally recognized Indian sovereignty over
the former kingdom of Sikkim, and India reiterated its view that Tibet is a part of
China. Moreover, in 2006, dubbed the “Year of India-China Friendship,” the two
countries formally agreed to cooperate in securing overseas oil resources. In July of
that year, India and China reopened the Nathu La border crossing for local trade. The
Himalayan pass had been closed since the 1962 war. Sino-India trade relations are
blossoming — bilateral commerce was worth nearly $19 billion in 2005, almost an
eight-fold increase over the 1999 value. In fact, China may soon supplant the United
States as India’s largest trading partner.
Indo-Chinese relations further warmed in November 2006, when Chinese
President Hu Jintao made a trip to India, the first such visit by a Chinese president
11 See John Lancaster, “India, China Hoping to ‘Reshape the World Order’ Together,”
Washington Post, April 12, 2005, at [http://www.washingtonpost.com/wp-dyn/articles/
A43053-2005Apr11.html].

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CRS-12
since 1996. There India and China issued a Joint Declaration outlining a “ten-
pronged strategy” to boost bilateral socio-economic ties and defense cooperation, and
to “reinforce their strategic partnership.” The two countries, which declared
themselves “partners for mutual benefit” rather than rivals or competitors, also signed
13 new pacts on a variety of bilateral initiatives. The Joint Declaration notably
contained an agreement to “promote cooperation in the field of nuclear energy,”
although no details have been provided on what form such cooperation might take.
Prime Minister Singh intends to visit China during the second half of 2007. India’s
Army Chief spent a week in China in May 2007, providing fresh impetus to bilateral
defense cooperation.
The “IPI” Pipeline Project. New Delhi insists it is going ahead with a
proposed joint pipeline project to deliver Iranian natural gas to Pakistan and on to
India. In January 2007, officials from the three countries resolved a long-running
price-mechanism dispute, opening the way for further progress. In February, the
fourth meeting of the India-Pakistan Joint Working Group on the IPI (Iran-Pakistan-
India) Pipeline was held in Islamabad, where the two countries agreed to split equally
expected gas supplies. Indian leaders consistently describe the pipeline project as
being in the nation’s interest for greater energy security. Some independent analysts
and Members of Congress assert that completion of an IPI pipeline would represent
a major confidence-building measure in the region and could bolster regional energy
security while facilitating friendlier Pakistan-India ties (see, for example H.Res. 353
in the 109th Congress). As part of its efforts to isolate Iran economically, the Bush
Administration actively seeks to dissuade New Delhi from participation in this
project, and a State Department official has suggested that current U.S. law dictates
American opposition. In May 2007, India’s oil minister assured concerned Left Front
parties that India “will not be cowed down by any threat” regarding its relations with
Iran, saying that India’s participation in the IPI pipeline project “is not the business
of the United States.”12 (See also “India-Iran Relations” section below; and CRS
Report RS20871, The Iran Sanctions Act (ISA)).
Other Countries. India takes an active role in assisting reconstruction efforts
in Afghanistan, having committed $750 million to this cause, as well as contributing
personnel and opening numerous consulates there (much to the dismay of Pakistan,
which fears strategic encirclement and takes note of India’s past support for Afghan
Tajik and Uzbek militias). Among Indian assistance to Afghanistan are funding for
a new $111 million power station, an $84 million road-building project, a $77
million dam project, and construction of Kabul’s new $67 Parliament building, to be
completed in 2010. In January 2007, External Affairs Minister Mukherjee met with
top Afghan officials in Kabul, where he announced a $100 million increase in Indian
aid to Afghanistan. There are reported to be several hundred Indian commandos
stationed in Afghanistan to provide protection for Indian reconstruction workers.
The United States has welcomed India’s role in Afghanistan.
Looking to the north, New Delhi supports early completion of Nepal’s halting
peace process and implementation of an agreement between Nepali political parties
and Maoist rebels (in 2006, the Maoists — who had been at war with the Kathmandu
12 “India Won’t Be Cowed Down: Deora” Hindu (Chennai), May 9, 2007.

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CRS-13
government for a decade — agreed to join in power-sharing from the center
following King Gyanendra’s repression of pro-democracy forces and ensuing fall
from power). India remains seriously concerned about further political instability in
Nepal and the continuing cross-border infiltration of Maoist militants into India. The
United States urges continued Indian attention to the need for a restoration of
democracy in Nepal.
To the east, and despite India’s key role in the 1971 creation of neighboring
Bangladesh, New Delhi’s relations with Dhaka have been fraught with tensions
related mainly to the cross-border infiltration of Islamic and separatist militants, and
huge numbers of illegal migrants into India. New Delhi is undertaking a $1.2 billion
project to fence India’s entire 2,000-mile shared border with Bangladesh. The two
countries’ border forces engage in periodic gunbattles. Still, New Delhi and Dhaka
have cooperated on counterterrorism efforts and talks on energy cooperation
continue. There are indications that Bangladesh’s military-backed interim
government, which took power in early 2007, may benefit India by reducing anti-
India rhetoric and by addressing the apparently growing influence of Islamist forces
that are seen to be a threat to Indian interests.
Further to the east, India is pursuing closer relations with the repressive regime
in neighboring Burma, with an interest in energy cooperation and to counterbalance
China’s influence there. Such engagement seeks to achieve economic integration of
India’s northeast region and western Burma, as well as bolstering energy security.
The Bush Administration urges India to be more active in pressing for democracy in
Burma; however, New Delhi calls democracy and human rights internal Burmese
issues. In January 2007, External Affairs Minister Mukherjee said New Delhi had
to deal with other governments “as they exist. ... We are not interested in exporting
our own ideology.” Months later the Indian defense minister reportedly discussed the
transfer to Burma of defense equipment — including armor and other heavy weapons
— in exchange for Rangoon’s counterterrorism cooperation and assistance in
neutralizing Indian separatists operating near their shared border. Such transfers
reportedly are underway.13 International human rights groups have criticized New
Delhi’s military interactions with Rangoon. In a sign of still difficult relations,
Rangoon announced in March 2007 that it will exclude India from natural gas
exports and build a new pipeline to supply only China.
In the island nation of Sri Lanka off India’s southeastern coast, a Tamil Hindu
minority has been fighting a separatist war against the Sinhalese Buddhist majority
since 1983. A Norwegian-brokered cease-fire mostly held after 2002, but the violent
conflict again became serious in 2006, causing some three thousand deaths, and by
2007 it was clear that full-blown civil war was again underway. More than 60
million Indian Tamils live in southern India and tens of thousands of Sri Lankan
Tamils have fled to India in recent months and years. India’s armed 1987
intervention to assist in enforcing a peace accord resulted in the deaths of more than
1,200 Indian troops and led to the 1991 assassination of former Indian Prime Minister
13 Siddharth Varadarajan, “India Not Interested in Exporting Ideology: Pranab,” Hindu
(Chennai), January 20, 2007; “India Boosts Military Aid to Myanmar,” Times of India
(Delhi), May 20, 2007.

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CRS-14
Rajiv Gandhi by Tamil militants. Since that time, New Delhi has maintained friendly
relations with Colombo while refraining from any deep engagement in third-party
peace efforts. New Delhi resists Colombo’s push for more direct Indian involvement
and insists there can be “no military solution” to the island’s ethnic troubles. The
Indian Navy played a key role in providing disaster relief to Sri Lanka following the
catastrophic December 2004 Indian Ocean tsunami.
Moscow was New Delhi’s main benefactor for the first four decades of Indian
independence. Russia continues to be “indispensable to India’s foreign policy
interests,” according to Prime Minister Singh, who calls energy cooperation the core
of the two countries’ “strategic partnership.14 (India’s single largest foreign
investment is a $1 billion stake in a joint oil and gas venture on Russia’s Sakhalin
Island.) Moreover, and despite some post-Cold War diversification of its defense
suppliers, India continues to obtain the bulk of its imported military hardware from
Russian firms. In January 2007, Russian President Putin made a visit to New Delhi
— his fourth since taking office — where he met with top Indian officials; signed
several bilateral agreements on energy, science, and space cooperation; and offered
to sell four new 1,000-megawatt nuclear reactors to India.
India’s relations with Japan only began to blossom in the new century. Today,
leaders from both countries acknowledge numerous common values and interests.
They are engaging a “strategic dialogue” formally launched at the ministerial level
with a March 2007 visit to Tokyo by Indian Foreign Minister Pranab Mukherjee, who
spoke of Japan as a “natural partner in the quest to create an arc of advantage and
prosperity” in Asia. Mukherjee emphasized India’s desire for economic integration
in Asia and cooperative efforts to secure vital sea lanes, especially in the Indian
Ocean. Japan’s support for the latter initiative has included plans for unprecedented
joint naval exercises. New Delhi and Tokyo also share a keen interest in seeing
membership of the U.N. Security Council expanded. India seeks Japan’s
endorsement of the U.S.-India civil nuclear deal, which has not been forthcoming to
date. Moreover, the United States and Japan reportedly seek India’s participation in
a prospective quadrilateral “axis of democracy” that would include Australia and
could conceivably have a security alliance dimension (Australian officials are
reported to be skeptical of such a pact for fear of alienating China). In April 2007,
U.S., Indian, and Japanese naval vessels conducted unprecedented combined
exercises off Japan’s east coast. Officials stressed that the exercises, which involved
two U.S. destroyers, were not prompted by China’s growing military strength.
Political Setting
India is the world’s most populous democracy and remains firmly committed
to representative government and rule of law. U.S. policymakers commonly identify
in the Indian political system shared core values, and this has facilitated increasingly
friendly relations between the U.S. and Indian governments.
14 Vladimir Isachenkov, “Russia, India Cement Nuclear Ties With Offer of 4 New
Reactors,” Associated Press, January 25, 2007.

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CRS-15
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 7 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 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”
campaign 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 current Congress-led United Progressive Alliance (UPA) ruling coalition
has marked three years in power, exceeding the expectations of some observers.
Opinion polls indicate that both Prime Minister Singh and party chief Gandhi remain
fairly popular figures. However, February 2007 state elections in Punjab and
Uttaranchal saw Congress candidates decisively defeated by the BJP and its allies,
causing some pundits to suggest that national economic policies and rising inflation
may be damaging the ruling coalition’s standing. Such analyses were further
bolstered when the Bahujan Samaj Party (BSP) won an outright majority in Uttar
Pradesh’s state assembly elections. Congress lost several seats in the election. Prime
Minister Singh, though widely admired as an honest and intelligent figure, has been
unable to succeed in pushing through most of the UPA agenda, and his party’s state-
level electoral setbacks have most analysts predicting no bold policy initiatives
before the next national election expected in 2009.15
The Congress Party. Congress’s electoral strength reached a nadir in 1999,
when the party won only 110 Lok Sabha seats. Observers attributed the 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
15 Y.P. Rajesh, “Three Years On, Indian PM Struggles to Break Shackles,” Reuters, May 19,
2007; “Unfinished Progressive Agenda,” India Today (Delhi), June 11, 2007.

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CRS-16
steady decline following the 1984 assassination of Prime Minister Indira Gandhi and
the 1991 assassination of her son, Prime Minister Rajiv Gandhi. Sonia Gandhi,
Rajiv’s Italian-born, Catholic widow, refrained from active politics until the 1998
elections. She later made efforts to revitalize the party 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
again leads India’s government under the UPA coalition. As party chief and UPA
chair, Sonia Gandhi is believed to wield considerable influence over the ruling
coalition’s policy decision-making process.16
The Bharatiya Janata Party (BJP). With the rise of Hindu nationalism, the
BJP rapidly increased its parliamentary strength during the 1980s. In 1993, the
party’s image was tarnished among some, burnished for others, by its alleged
complicity in serious communal violence in Bombay and elsewhere. Some hold
elements of the BJP, as the political arm of extremist Hindu groups, responsible for
the incidents (the party has advocated “Hindutva,” or an India based on Hindu
culture, and views this as key to nation-building). While leading a national coalition
from 1998-2004, the BJP worked — with only limited success — to change its image
from right-wing Hindu fundamentalist to conservative and secular, although 2002
communal rioting in Gujarat again damaged the party’s credentials as a moderate
organization. The BJP-led National Democratic Alliance was overseen by party
notable Prime Minister Atal Vajpayee, whose widespread personal popularity helped
to keep the BJP in power. Since 2004, the BJP has been weakened by leadership
disputes, criticism from Hindu nationalists, and controversy involving party president
Lal Advani (in December 2005, Advani ceded his leadership post and Vajpayee
announced his retirement from politics). In 2006, senior BJP leader Pramod Mahajan
was shot and killed in a family dispute.17
Regional Parties. The influence of regional and caste-based parties has
become an increasingly important variable in Indian politics; the May 2004 national
elections saw such parties receiving nearly half of all votes cast. Never before 2004
had the Congress Party entered into pre-poll alliances at the national level, and
numerous analysts attributed Congress’s success to precisely this new tack, especially
thorough arrangements with the Bihar-based Rashtriya Janata Dal and Tamil Nadu’s
Dravida Munnetra Kazhagam. The newfound power of both large and smaller
regional parties, alike, is seen to be reflected in the UPA’s ministerial appointments,
and in the Congress-led coalition’s professed attention to rural issues and center-state
relations.
Two significant regional parties currently independent of both the ruling
coalition and the BJP-led opposition are the Samajwadi Party, a largely Muslim- and
lower caste-based organization highly influential in Uttar Pradesh, and the Bahujan
Samaj Party (BSP) of Bihar, which also represents mainly lower-caste constituents.
State assembly elections in Uttar Pradesh — home to more than 170 million Indians
and one of only four states where the Congress Party is not in power — concluded
16 See Indian National Congress at [http://www.congress.org.in].
17 See Bharatiya Janata Party at [http://www.bjp.org].

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CRS-17
in May 2007 and saw a major victory for the BSP and its lower-caste, female leader
Mayawati, who reached out to upper-caste and other groups to secure an outright
majority, the first time in 14 years that a single party secured such status. The
outcome may be an important indicator of national political trends, especially in
gauging satisfaction with the current center coalition. In June, eight regional parties
formally launched a new “Third Front” that might emerge as a national alternative
to the UPA and NDA. Well-known Tamil Nadu leader Jayalalithaa is likely to lead.18
The Left Front. Although the Communist Party of India (Marxist) seated the
third largest number of parliamentarians in 2004, its vote bank is almost wholly
limited to West Bengal and Kerala (the Left Front coalition holds about 11% of all
Lok Sabha seats). Communist parties have in the past been bitter rivals of the
Congress in these states, but a mutual commitment to secularism appears to have
motivated their cooperation against the BJP in 2004. Early alarm was sounded that
the new influence of communists in New Delhi might derail India’s economic reform
efforts; Indian industrial leaders sought to assure foreign investors that Left Front
members are not “Cuba-style communists,” but could be expected to support the
UPA reform agenda. The communist Chief Minister of West Bengal, Buddhadeb
Bhattacharya, has himself actively sought corporate investment in his state.
However, since coming to power, the Congress-led coalition has slowed certain
aspects of its economic reform program, including suspending major disinvestment
and special economic zone initiatives. These moves are widely viewed as gestures
to the strongly opposed communists. The Left Front also has been vocal in criticisms
of closer India-U.S. relations, taking particular aim at proposed civil nuclear
cooperation and any signs that the United States seeks to make India a “junior
partner” in efforts to counter China.
Bilateral Issues
“Next Steps in Strategic Partnership” and Beyond
The now-concluded Next Steps in Strategic Partnership (NSSP) initiative
encompassed several major issues in India-U.S. relations. The Indian government
has long pressed the United States to ease restrictions on the export to India of dual-
use high-technology goods (those with military applications), 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 insisted 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 January 2004, President Bush and Prime Minister Vajpayee issued a
joint statement declaring that the U.S.-India “strategic partnership” included
expanding cooperation in the “trinity” areas, as well as expanding dialogue on missile
18 The new front includes such regional powerhouses as the Telugu Desam of Andhra
Pradesh, the AIADMK of Tamil Nadu, and the Samajwadi of Uttar Pradesh.

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CRS-18
defense.19 This initiative was dubbed as the NSSP and involved a series of reciprocal
steps.
In July 2005, the State Department announced successful completion of the
NSSP, allowing for expanded bilateral commercial satellite cooperation,
removal/revision of some U.S. export license requirements for certain dual-use and
civil nuclear items. Taken together, the July 2005 U.S.-India Joint Statement and a
June 2005 U.S.-India Defense Framework Agreement include provisions for moving
forward in all four NSSP issue-areas.20 Many observers saw in the NSSP evidence
of a major and positive shift in the U.S. strategic orientation toward India, a shift later
illuminated more starkly with the Bush Administration’s intention to initiate full civil
nuclear cooperation with India. (See also CRS Report RL33072, U.S.-India Bilateral
Agreements and ‘Global Partnership.’)
Civil Nuclear Cooperation. India’s status as a non-signatory to the 1968
Nuclear Nonproliferation Treaty (NPT) has kept it from accessing most nuclear-
related materials and fuels on the international market for more than three decades.
New Delhi’s 1974 “peaceful nuclear explosion” spurred the U.S.-led creation of the
Nuclear Suppliers Group (NSG) — an international export control regime for
nuclear-related trade — and the U.S. government further tightened its own export
laws with the Nuclear Nonproliferation Act of 1978. New Delhi has long railed at
a “nuclear apartheid” created by apparent double standards inherent in the NPT,
which allows certain states to legitimately employ nuclear deterrents while other
states cannot. (See CRS Report RL33016, U.S. Nuclear Cooperation With India.)
The Bush Administration Policy Shift. Differences over nuclear policy
bedeviled U.S.-India ties for decades and — given New Delhi’s lingering
resentments — have presented a serious psychological obstacle to more expansive
bilateral relations. In a major policy shift, the July 2005 U.S.-India Joint Statement
notably asserted that, “as a responsible state with advanced nuclear technology, India
should acquire the same benefits and advantages as other such states,” and President
Bush vowed to work on achieving “full civilian nuclear energy cooperation with
India.” As a reversal of three decades of U.S. nonproliferation policy, such proposed
cooperation stirred controversy and required changes in both U.S. law and in NSG
guidelines. India reciprocally agreed to take its own steps, including identifying and
separating its civilian and military nuclear facilities in a phased manner and placing
the former under international safeguards. Some in Congress express concern that
civil nuclear cooperation with India might allow that country to advance its military
nuclear projects and be harmful to broader U.S. nonproliferation efforts. While the
Bush Administration previously had insisted that such cooperation would take place
only within the limits set by multilateral nonproliferation regimes, the Administration
later actively sought adjustments to U.S. laws and policies, and has approached the
NSG in an effort to adjust that regime’s guidelines, which are set by member
consensus.
19 See [http://www.whitehouse.gov/news/releases/2004/01/20040112-1.html].
20 See [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html] and
[http://www.indianembassy.org/press_release/2005/June/31.htm].

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CRS-19
In March 2006, President Bush and Prime Minister Singh issued a Joint
Statement that included an announcement of “successful completion of India’s
[nuclear facility] separation plan.”21 After months of complex and difficult
negotiations, the Indian government had presented a plan to separate its civilian and
military nuclear facilities as per the July 2005 Joint Statement. The separation plan
would require India to move 14 of its 22 reactors into permanent international
oversight by the year 2014 and place all future civilian reactors under permanent
safeguards. Shortly thereafter, legislation to waive the application of certain
requirements under the Atomic Energy Act of 1954 with respect to India was, at the
President’s request, introduced in the U.S. Congress.
Civil nuclear cooperation with India cannot commence until Washington and
New Delhi finalize a peaceful nuclear cooperation agreement (and Congress endorses
such an agreement with an up-or-down vote), until the NSG allows for such
cooperation, and until New Delhi concludes its own safeguards agreement with the
International Atomic Energy Agency.22
Potential Benefits and Costs. Secretary of State Condoleezza Rice
appeared before key Senate and House committees in April 2006 to press the Bush
Administration’s case for civil nuclear cooperation with India. The Administration
offered five main justifications for making changes in U.S. law to allow for such
cooperation, contending that doing so would
! benefit U.S. security by bringing India “into the nonproliferation
mainstream;”
! benefit U.S. consumers by reducing pressures on global energy
markets, especially carbon-based fuels;
! benefit the environment by reducing carbon emissions/greenhouse
gases;
! benefit U.S. business interests through sales to India of nuclear
reactors, fuel, and support services; and
! benefit progress of the broader U.S.-India “global partnership.”23
Many leading American experts on South Asian affairs joined the Administration in
urging Congress to support the new policy, placing particular emphasis on the
“necessary” role it would play in promoting a U.S.-India global partnership.24 At
present, nuclear power accounts for less than 3% of India’s total electricity
21 See [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html].
22 There are indications that some NSG member states are wary of allowing the provision
to India of nuclear-related assistance. Japan, for instance, has signaled that India’s non-
membership in the NPT regime remains a “core problem” for Tokyo (“Japan ‘Cautious’ on
India, US Nuclear Deal,” Agence France Presse, April 3, 2007).
23 See “U.S.-India Civil Nuclear Cooperation Initiative Fact Sheet,” U.S. Department of
State, at [http://www.state.gov/r/pa/scp/2006/62904.htm]; Condoleezza Rice, “Our
Opportunity With India,” Washington Post, March 13, 2006.
24 See, for example, an open letter Congress at [http://www.indianembassy.org/newsite/
press_release/2006/Mar/30.asp].

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CRS-20
generation, and an Indian government official estimated that even under optimistic
scenarios that percentage would likely no more than double over the next 25 years.25
Further hearings in the Senate (April 26) and House (May 11) saw a total of
fifteen independent analysts weigh in on the potential benefits and/or problems that
might accrue from such cooperation. Some experts opined that the Administration’s
optimism, perhaps especially as related to the potential effects on global energy
markets and carbon emissions, could not be supported through realistic projections.
Numerous nonproliferation experts, scientists, and former U.S. government officials
warned that the Bush Administration’s initiative was ill-considered, arguing that it
would facilitate an increase in the size of India’s nuclear arsenal, potentially leading
to a nuclear arms race in Asia, and would undermine the global nonproliferation
regime and cause significant damage to key U.S. security interests.26
The U.S. Chamber of Commerce, which, along with the U.S.-India Business
Council, lobbied vigorously in favor of President Bush’s initiative, speculated that
civil nuclear cooperation with India could generate contracts for American businesses
worth up to $100 billion, as well as generate up to 27,000 new American jobs each
year for a decade.27 However, foreign companies such as Russia’s Atomstroyexport
and France’s Areva may be better poised to take advantage of the Indian market.
Moreover, U.S. nuclear suppliers will likely balk at entering the Indian market in the
absence of nuclear liability protection, which New Delhi does not offer at present.
Geopolitical Motives. In the realm of geopolitics, much of the
Administration’s argument for moving forward with the U.S.-India nuclear initiative
appears rooted in an anticipation/expectation that New Delhi will in coming years
and decades make policy choices that are more congruent with U.S. regional and
global interests (a desire for such congruence is, in fact, written into P.L. 109-401).
Proponents suggest that this U.S. “gesture” will have significant and lasting
psychological and symbolic effects in addition to the strictly material ones, and that
Indian leaders require such a gesture in order to feel confident in the United States
as a reliable partner on the world stage.28 Skeptics aver that the potential strategic
benefits of the nuclear initiative are being over-sold. Indeed, centuries of Indian anti-
colonial sentiments and oftentimes prickly, independent foreign policy choices are
unlikely to be set aside in the short run, meaning that the anticipated geopolitical
25 Alistair Scrutton and Nidhi Verma, “U.S. Nuclear Deal Won’t Power India’s Boom,”
Reuters, March 13, 2007.
26 See, for example, open letters to Congress at [http://fas.org/intt2006/X3e_FDC01218.pdf];
[http://www.armscontrol.or g/ pdf /20060912_India_Ltr_Congress.pdf]; and
[http://www.armscontrol.org/pdf/20051118_India_Ltr_Congress.pdf].
27 See Sridhar Krishnaswami, “‘Indo-US N-deal a Historic Opportunity,’” Rediff India
Abroad, March 22, 2006, at [http://www.rediff.com/news/2006/mar/22ndeal.htm].
28 Some believe that offering U.S. support for a permanent Indian seat on the U.N. Security
Council (UNSC) might have been a more appropriate and more readily delivered gesture.
For example, the former Chairman of the House International Relations Subcommittee on
Asia and the Pacific, Representative Jim Leach, called U.S. support for India’s permanent
seat on the UNSC a “self-apparent gesture” (House Committee on International Relations
Hearing, “The U.S. and India: An Emerging Entente?,” September 8, 2005).

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CRS-21
benefits of civil nuclear cooperation with India remain speculative and at least
somewhat dependent upon unknowable global political developments.
Congressional Action. After months of consideration, the House
International Relations Committee and Senate Foreign Affairs Committee both took
action on relevant legislation in late June 2006, passing modified versions of the
Administration’s proposals by wide margins. The new House and Senate bills (H.R.
5682 and S. 3709) made significant procedural changes to the Administration’s
proposal, changes that sought to retain congressional oversight of the negotiation
process, in part by requiring the Administration to gain future congressional approval
of a completed peaceful nuclear cooperation agreement with India (this is often
referred to as a “123 Agreement,” as it is negotiated under the conditions set forth in
Section 123 of the Atomic Energy Act).
During the final months of its tenure, the 109th Congress demonstrated
widespread bipartisan support for the Administration’s new policy initiative by
passing enabling legislation through both chambers (in July 2006, the House passed
H.R. 5682 by a vote of 359-68; in November, the Senate passed an amended version
of the same bill by a vote of 85-12). Numerous so-called “killer amendments” were
rejected by both chambers (Indian government and Bush Administration officials had
warned that certain proposed new provisions, such as those requiring that India halt
its fissile material production or end its military relations with Iran, would trigger
New Delhi’s withdrawal from the entire negotiation).
In a December 2006 “lame duck” session, congressional conferees reconciled
the House and Senate versions of the legislation and provided a 30-page explanatory
statement (H.Rept. 109-721). On December 18, President Bush signed the Henry J.
Hyde United States-India Peaceful Atomic Energy Cooperation Act of 2006 into law
(P.L. 109-401), calling it a “historic agreement” that would help the United States
and India meet the energy and security challenges of the 21st century. The President
also issued a signing statement asserting that his approval of the act “does not
constitute [his] adoption of the statements of policy as U.S. foreign policy” and that
he will construe such policy statements as “advisory.” Some Members of Congress
later expressed concern that President Bush would seek to disregard Congress’s
will.29
Indian Concerns. Almost immediately upon the release of the July 2005
Joint Statement, key Indian political figures and members of the country’s insular
nuclear scientific community issued strong criticisms of the U.S.-India civil nuclear
initiative; critics continue to be vocal to this day. Former Prime Minister Vajpayee,
along with many leading figures in his Bharatiya Janata Party (BJP), insisted that the
deal as envisioned would place unreasonable and unduly expensive demands on
India, particularly with regard to the separation of nuclear facilities. In reaction to
the U.S. Congress’s passage of enabling legislation in late 2006, the BJP listed
numerous continuing objections, and went so far as to call the deal “unacceptable”
29 See [http://www.whitehouse.gov/news/releases/2006/12/20061218-1.html];
[http://www.whitehouse.gov/news/releases/2006/12/20061218-12.html]; Carol Giacomo,
“Bush India Statement Raises Congress Concerns,” Reuters, December 21, 2006.

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CRS-22
and aimed at “capping, rolling back, and eventually eliminating India’s nuclear
weapons capability.”30 Many analysts view the BJP’s opposition as political rather
than substantive, especially in light of the fact that the 2004 NSSP initiative was
launched during the BJP’s tenure.
Some Indian analysts are wary of U.S. intentions in pursuing bilateral civil
nuclear cooperation, believing the initiative may be cover for a broader effort to
cement India’s cooperation in a number of non-energy-related areas, such as defense
trade and New Delhi’s relations with Iran and the Central Asia states. From this
perspective, the U.S. government also repeatedly has “shifted the goalposts” to
forward its own (veiled) nonproliferation goals.31 India’s influential communist
parties, whose Left Front provides crucial support to the Congress-led ruling
coalition in New Delhi, have focused their ire on geopolitical aspects of the civil
nuclear initiative. In December 2006, the leader of India’s main communist party
said the U.S.-India civil nuclear deal was “not acceptable” as it would “seriously
undermine India’s independent foreign policy.” Previously, the Left Front had called
India’s two IAEA votes on Iran a “capitulation” to U.S. pressure.32 Indian leftists
thus have been at the forefront of political resistance to India’s becoming a “junior
partner” of the United States.
Equally stinging and perhaps more substantive criticism has come from several
key Indian scientists, whose perspectives on the technical details of the civil nuclear
initiative are considered highly credible. India’s nuclear scientific community,
mostly barred from collaboration with international civil nuclear enterprises as well
as direct access to key technologies, has worked for decades in relative isolation,
making its members both proud of their singular accomplishments and sensitive to
any signs of foreign “interference.” Many view the enabling legislation passed by the
U.S. Congress as being more about nonproliferation and less about energy
cooperation. They consider it both intrusive on and preclusive of their activities.
The seven major criticisms of existing plans for U.S.-India civil nuclear
cooperation made by Indian commentators (and reportedly by the Indian government)
may be summarized as follows:
! India’s unilateral moratorium on nuclear tests is being codified into
a bilateral obligation through a clause that would allow the United
States to reclaim any supplied nuclear equipment if India were to test
a nuclear device;
30 See “Press Statement of the BJP on the Indo-US Nuclear Deal,” December 10, 2006, at
[http://www.bjp.org].
31 Siddharth Varadarajan, “This Has Nothing To Do With Energy,” Hindu (Chennai), May
2, 2007; Brahma Chellaney, “Nuclear Non-Starter,” Wall Street Journal, May 9, 2007..
32 In February 2007, a former U.S. Assistant Secretary of Defense reportedly said that
India’s two IAEA votes on Iran had been “coerced” and paved the way for congressional
approval of proposed U.S.-India civil nuclear cooperation. U.S. Ambassador to India David
Mulford later called the attributed statement “inaccurate” (“‘Rademaker is Not a U.S.
Official,’” Hindu (Chennai), February 17, 2007).

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CRS-23
! India is being denied nuclear reprocessing technologies warranted
under “full cooperation;”
! India is not being given prior authorization to reprocess spent fuel;
! India has not been given assurances that it will receive uninterrupted
fuel supplies in perpetuity;
! the United States is retaining the right to carry out its own
“intrusive” end-use verifications;
! there is lack of clarity regarding issues of sequencing the 123
agreement, the IAEA safeguards agreement, and NSG decision
making; and
! language on securing India’s assistance with U.S. efforts to prevent
Iran from obtaining weapons of mass destruction limits New Delhi’s
foreign policy independence.33
Prime Minister Singh has stood firm against such wide-ranging and high-profile
criticisms, repeatedly assuring his Parliament that relevant negotiations with the
United States have not altered basic Indian policies or affected New Delhi’s
independence on matters of national interest. Within this context, however, Singh
has expressed serious concern about the points listed above and, in January 2007,
India’s lead negotiator warned that existing stipulations proscribing the reprocessing
spent fuel and further nuclear testing could kill the deal altogether.34 Regardless of
the legally binding or non-binding nature of certain controversial sections of the U.S.
legislation, New Delhi has found many of them to be either “prescriptive” in ways
incompatible with the provisions of the July 2005 and March 2006 Joint Statements,
or “extraneous” and “inappropriate to engagements among friends.”35
Current Status of Negotiations. As of late June 2007, following four
rounds of formal negotiations, progress has been much slower than hoped for by
proponents, U.S. officials have expressed frustration with what they describe as
India’s lack of seriousness and speed in engaging both the United States and the
IAEA, and some Indian officials have suggested that reprocessing rights are “non-
negotiable.” Indian “demands,” reported in April, may be a key cause for the
apparent stalemate and include removal of any limits on India’s possible future
nuclear testing; permission to buy U.S. reprocessing technology; and prior U.S.
approval to reprocess spent fuel.36 Leading Indian nuclear scientists are insisting that
negotiations on the 123 Agreement are “meaningless” without changes to the Hyde
33 Siddharth Varadarajan, “Major Obstacles Persist in Nuclear Deal,” Hindu (Chennai),
April 25, 2007; A. Gopalakrishnan, “Hyde-Bound N-Deal Cannot Be Accepted,” Asian Age
(Mumbai), May 15, 2007.
34 See “Excerpts from PM’s Reply to Discussion in Rajya Sabha on Civil Nuclear Energy
C o o p e r a t i o n w i t h t h e U n i t e d S t a t e s , ” A u g u s t 1 7 , 2 0 0 6 , a t
[http://www.carnegieendowment.org/static/npp/Singh_speech_Aug_2006.pdf]; “India Could
Dump U.S. Nuclear Deal: Envoy,” Reuters, January 10, 2007.
35 Author interview with Indian government official, New Delhi, September 2006.
36 Barbara Slavin, “India’s List of Demands May Scuttle Nuclear Deal,” USA Today, April
12, 2007; Jo Johnson, “Cloud Over US-India Nuclear Accord,” Financial Times (London),
June 3, 2007.

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CRS-24
Act. However, in May, the Chairman of the Senate Foreign Relations Committee
reportedly said it would be unlikely that Congress would be willing to further amend
U.S. law on nuclear testing and reprocessing.37 Later that month, 16 experts,
scholars, and former U.S. government officials sent a letter urging Senators to hold
the Bush Administration to the “set of core conditions and limitations” of the Hyde
Act, including termination of assistance upon an Indian nuclear test, permanent and
unconditional safeguards on civilian Indian facilities, and prohibitions on
reprocessing and enrichment technologies.38 In June, India proposed establishing a
special unit to reprocess spent nuclear fuel under international safeguards. U.S.
officials are reported to be studying the proposal, but have made no formal response.
Civil Space Cooperation. India has long sought access to American space
technology; such access has since the 1980s been limited by U.S. and international
“red lines” meant to prevent assistance that could benefit India’s military missile
programs. India’s space-launch vehicle technology was obtained largely from foreign
sources, including the United States, and forms the basis of its intermediate-range
Agni ballistic missile booster, as well as its suspected Surya intercontinental ballistic
missile program. The NSSP called for enhanced U.S.-India cooperation on the
peaceful uses of space technology, and the July 2005 Joint Statement called for closer
ties in space exploration, satellite navigation and launch, and in the commercial space
arena. Conferences on India-U.S. space science and commerce were held in
Bangalore (headquarters of the Indian Space Research Organization) in 2004 and
2005. During President Bush’s March 2006 visit to India, the two countries
committed to move forward with agreements that will permit the launch of U.S.
satellites and satellites containing U.S. components by Indian space launch vehicles
and, two months later, they agreed to include two U.S. scientific instruments on
India’s Chandrayaan lunar mission planned for 2007. In February 2007, a meeting
of the U.S.-India Joint Working Group on Civil Space Cooperation was held in
Washington, where officials expressed satisfaction with growing bilateral ties in the
aerospace field.
High-Technology Trade. U.S. Commerce Department officials have sought
to dispel “trade-deterring myths” about limits on dual-use trade by noting that only
about 1% of total U.S. trade value with India is subject to licensing requirements and
that the great majority of dual-use licensing applications for India are approved (more
than 90% in FY2005). July 2003 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; the fifth HTCG meeting was held in Washington in February 2006, when
U.S. Commerce Secretary Gutierrez unveiled a new “Trusted Customer” program
designed to facilitate greater high-tech trade with India. In early 2005, the inaugural
37 “U.S. Needs to Make Changes in Deal: Scientists,” Hindu (Chennai), June 18, 2007; Carol
Giacomo and Susan Cornwell, “Biden Cool to US Compromise on India Deal,” Reuters,
May 2, 2007.
38 See [http://www.armscontrol.org/pdf/20070515letteronUSIndia123House.pdf].

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CRS-25
session of the U.S.-India High-Technology Defense Working Group was held under
HTCG auspices.39
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. In September 2004, as part
of NSSP implementation, the United States modified some export licensing policies
and removed the Indian Space Research Organization (ISRO) headquarters from the
Entity List. Further adjustments came in August 2005 when six more subordinate
entities were removed. Indian entities remaining on the Entity List are four
subordinates of the ISRO, four subordinates of the Defense Research and
Development Organization, one Department of Atomic Energy entity, and Bharat
Dynamics Limited, a missile production agency.40
Security Issues
The Indian Military.41 With more than 1.3 million active personnel, India’s
is the world’s third-largest military (after China and the United States). The
country’s annual defense budget grew by 9.2% to more than $20 billion in 2006 and
is up 40% since 2002 (adjusted for inflation). The army — more than one million
strong and accounting for nearly half of the budget — has traditionally dominated,
but the navy and air force are becoming more important as India seeks to project its
power. The army possesses some 4,000 main battle tanks and 3,360 pieces of towed
artillery. The navy has grown rapidly in recent years, currently operating 58 principal
surface combatants (including 2 aircraft carriers by 2008) and 16 submarines. There
also is a significant amphibious capacity: 16 landing ships (including one recently
acquired from the United States) can carry nearly 5,000 troops or 100 tanks. The air
force flies more than 800 fighter and ground attack aircraft, the majority of them
Russian-built MiGs, along with some late-model Sukhoi-30, as well as French-built
Mirage and Anglo-French Jaguar aircraft. It also possesses modest airborne early
warning and in-flight refueling capabilities provided by Russian-made platforms. A
Strategic Forces Command oversees more than three-dozen intermediate- and short-
range ballistic missiles capable of delivering nuclear warheads.
New Delhi increasingly seeks to shift advanced military imports from finished
platforms to co-production with foreign suppliers. A 2005 deal with France will see
technology transfers and Indian construction of six Scorpene submarines to be
delivered in the next decade. In seeking to replace its aging arsenal of MiG-21
fighters, India may purchase up to 186 new jets (126 for the air force and 60 for the
navy) and has signaled a desire for technology sharing and co-production in this
effort. In addition to the submarines, other notable purchases for the Indian military
39 See U.S. Department of Commerce, Bureau of Industry and Security fact sheets at
[http://www.bis.doc.gov/InternationalPrograms/IndiaCooperation.htm] and
[http://www.bis.doc.gov/InternationalPrograms/IndialCoopPresentation.htm].
40 See [http://www.bis.doc.gov/Entities].
41 Most information in this section comes from The Military Balance 2007 (Institute for
International and Strategic Studies, London, 2007).

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CRS-26
include hundreds of the latest Russian T-90 tanks and upgrades on 600 existing T-
72s; 3 new Russian-built missile frigates; 24 new MiG-29K naval jets for deployment
on the INS Vitramaditya (formerly the Russian Gorshkov); major upgrades on MiG
and Jaguar combat aircraft; and 66 jet trainers from Britain. Russia continues to
provide the bulk of India’s imported defense wares. In recent years, however, Israel
has roughly equaled Russia in the value of defense exports to India, with each
country reportedly providing about $1.5 billion worth of defense supplies in 2006.
U.S.-India Security Cooperation. Defense cooperation between the United
States and India is in the early stages of development (unlike U.S.-Pakistan military
ties, which date back to the 1950s). Since September 2001, and despite a concurrent
U.S. rapprochement with Pakistan, U.S.-India security cooperation has flourished;
U.S. diplomats rate military cooperation among the most important aspects of
transformed bilateral 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 outlining planned 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. The
agreement may well be the most ambitious such security pact ever engaged by New
Delhi. A Maritime Security Cooperation Agreement, inked in early 2006, commits
both countries to “comprehensive cooperation” in protecting the free flow of
commerce and addressing a wide array of threats to maritime security, including
piracy and the illicit trafficking of WMD and related materials. In April 2007, the
Commander of the U.S. Pacific Command, Adm. Tim Keating, told a Senate panel
that the Pentagon intends to “aggressively” pursue expanding military-to-military
relations with India.42
The United States views defense cooperation with India in the context of
“common principles and shared national interests” such as defeating terrorism,
preventing weapons proliferation, and maintaining regional stability. Many analysts
laud increased U.S.-India security ties as providing an alleged “hedge” against or
“counterbalance” to growing Chinese influence in Asia, though both Washington and
New Delhi have repeatedly downplayed such probable motives. Still, while a
congruence of U.S. and Indian national security objectives is unlikely in the
foreseeable future, convergences are apparent in areas such as shared values, the
emergence of a new balance-of-power arrangement in the region, and on distinct
challenges such as WMD proliferation, Islamist extremism, and energy security.
There also remain indications that the perceptions and expectations of top U.S. and
Indian strategic planners are divergent on several key issues, including the role of
Pakistan, approaches to conflict resolution in Iraq and in Palestine, and Indian’s
relations with Iran, as well as with repressive governments in places such as Burma
and Sudan.43
42 Senate Armed Services Committee Hearing on U.S. Military Command Budgets, April
24, 2007.
43 See also Vibhuti Hate and Teresita Schaffer, “U.S.-India Defense Relations: Strategic
(continued...)

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CRS-27
Combined Military Exercises. Since early 2002, the United States and
India have held a series of unprecedented and increasingly substantive combined
exercises involving all military services. “Cope India” air exercises have provided
the U.S. military with its first look at Russian-built Su-30MKIs; in 2004, mock air
combat saw Indian pilots in late-model Russian-built fighters hold off American
pilots flying older F-15Cs, and Indian successes were repeated versus U.S. F-16s in
2005. U.S. and Indian special forces soldiers have held joint exercises near the India-
China border, and major annual “Malabar” joint naval exercises are held off the
Indian coast (the sixth and most recent in October 2006). U.S. and Indian officials
laud the exercises as evidence of a deepening bilateral defense relationship.
Arms Sales. Along with increasing military-to-military ties, the issue of U.S.
arms sales to India has taken a higher profile. In 2002, the Pentagon negotiated a sale
to India of 12 counter-battery radar sets (or “Firefinder” radars) 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 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 even further in
India’s favor. In 2006, Congress authorized and New Delhi approved a $44 million
plan to purchase the USS Trenton, a decommissioned American amphibious transport
dock. The ship, now the second largest in the Indian navy when it was commissioned
as the INS Jalashwa in June 2007, will set sail for India carrying six surplus Sikorsky
UH-3H Sea King helicopters purchased for another $39 million. In May 2007, the
Pentagon notified Congress of a possible sale to India of six C-130J Hercules military
transport aircraft (along with related equipment, training, and services) in a deal that
could be worth more than $1 billion. If the aircraft, which are manufactured by
Maryland-based Lockheed Martin, are purchased, it would represent by far the
largest-ever U.S. defense sale to India.
The Indian government reportedly possesses an extensive list of desired U.S.-
made weapons, including PAC-3 anti-missile systems, electronic warfare systems,
and possibly even combat aircraft. The March 2005 unveiling of the Bush
Administration’s “new strategy for South Asia” included assertions that the United
States welcomed 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.” India is expected by mid-2007 to issue a tender for the
purchase of 126 new fighter jets in a deal that could be worth up to $9 billion.
Lockheed Martin and Illinois-based Boeing are competing with aircraft built in
Russia, France, and Sweden.
43 (...continued)
Perspectives,” CSIS South Asia Monitor, April 4, 2007, at [http://www.csis.org/media/
csis/pubs/sam105.pdf].

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CRS-28
American defense firms eagerly pursue new and expanded business ties with
India, lobbying most recently at India’s biennial air show in Bangalore in February
2007, where 52 U.S. companies exhibited their wares and sought deals. According
to the U.S. Ambassador to India, David Mulford, there is a widespread expectation
in the United States that U.S. companies should get “favorable treatment” following
American gestures to India, even as he denied there was any “negotiated quid pro
quo” related to planned bilateral civil nuclear cooperation. 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.44 (In February 2006, the Indian Navy declined an
offer to lease two U.S. P-3C maritime reconnaissance aircraft, calling the
arrangements “expensive.”)
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 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 can cause
disquiet in Pakistan, where there is concern that induction of advanced weapons
systems into the region could disrupt the “strategic balance” there. Islamabad worries
that its already disadvantageous conventional military status vis-à-vis New Delhi will
be further eroded by India’s acquisition of sophisticated “force multipliers.” In fact,
numerous observers identify a pro-India drift in the U.S. government’s strategic
orientation in South Asia. Yet Washington regularly lauds Islamabad’s role as a key
ally in the U.S.-led counterterrorism coalition and assures Pakistan that it will take
no actions to disrupt strategic balance on the subcontinent. (See also CRS Report
RL33072, U.S.-India Bilateral Agreements, and CRS Report RL33515, Combat
Aircraft Sales to South Asia: Potential Implications.)
U.S.-India Counterterrorism Cooperation. One facet of the emerging
“strategic partnership” between the United States and India is greatly increased
counterterrorism cooperation. In November 2001, President Bush and then-Indian
Prime Minster Vajpayee agreed that “terrorism threatens not only the security of the
United States and India, but also our efforts to build freedom, democracy and
44 Rajesh Mahapatra, “U.S. Ambassador Says Nuke Deal Does Not Oblige India to Buy
American Jets,” Associated Press, February 2, 2006; “Defense Firms Seek Sales in India,”
Chicago Tribune, December 21, 2006.

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CRS-29
international security and stability around the world.”45 In 2002, India and the United
States launched the Indo-US Cyber Security Forum to safeguard critical
infrastructures from cyber attack. The June 2005 “New Framework for the U.S.-
India Defense Relationship” lists “defeating terrorism and violent religious
extremism” as one of four key shared security interests, and it calls for a bolstering
of mutual defense capabilities required for such a goal.46 An April 2006 session of
the U.S.-India Joint Working Group on Counterterrorism — the seventh such
meeting since the group’s founding in January 2000 — ended with a statement of
determination from both countries to further advance bilateral cooperation and
information sharing on such areas of common concern as bioterrorism, aviation
security, advances in biometrics, cyber-security and terrorism, WMD terrorism, and
terrorist financing.47 Expanding military-to-military links have included company-
level joint counterinsurgency training of army units.48
There have been signs that U.S. government agencies have taken greater notice
of links apparent between Pakistan-based terrorist groups and wanted Indian criminal
boss Dawood Ibrahim, who is suspected of residing in Karachi, Pakistan. In 2003,
the U.S. Department of the Treasury formally designated Ibrahim as a terrorist
supporter and accused him of collaborating with Al Qaeda in South Asia.49 In
October 2005, the United States and India concluded a treaty on criminal matters that
would institutionalize law enforcement cooperation and create a regularized channel
for mutual assistance. Among the hoped-for benefits has been more effective
counterterrorism efforts.50 It was reported in May 2006 that the United States had
offered demining assistance, counterinsurgency training for police forces, and
humanitarian relief for persons internally displaced by conflict related to the Maoist
rebellion.51 Moreover, three months after the July 2006 Bombay terrorist bombings,
senior CIA officials reportedly traveled to New Delhi to discuss improving
counterterrorism cooperation with Indian leaders, and an FBI official later called for
closer law enforcement and intelligence coordination with India in light of terrorist
attacks in that country’s interior.52
Nuclear Weapons and Missile Proliferation. Some policy analysts
consider the apparent arms race between India and Pakistan as posing perhaps the
45 “Joint Statement of U.S., India on Terrorism, Bilateral Ties,” U.S. Department of State
Washington File, November 9, 2001.
46 See [http://www.indianembassy.org/press_release/2005/June/31.htm].
47 See [http://usinfo.state.gov/is/Archive/2006/Apr/24-821244.html].
48 John Lancaster, “U.S. Troops on Front Line of Expanding India Ties,” Washington Post,
January 25, 2006.
49 “Hunting for India’s ‘Most Wanted,’” Jane’s Intelligence Digest, December 9, 2005;
Treasury notification at [http://www.ustreas.gov/press/releases/js909.htm].
50 “U.S.-India Treaty on Mutual Legal Assistance in Criminal Matters Ratified,” U.S.
Embassy New Delhi Press Release, October 3, 2005.
51 “US Offers India Help to Fight Maoists: Official,” Reuters, May 26, 2006.
52 “CIA Big Guns in Huddle,” Telegraph (Calcutta), October 24, 2006; “FBI Looks to Boost
Intelligence Ties With India,” Reuters, November 27, 2006.

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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. 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
medium-range missiles (allegedly acquired from China and North Korea). All are
assumed to be capable of delivering nuclear warheads over significant distances.
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. In 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.” India thus appears to
be taking the next steps toward operationalizing its nuclear weapons capability:
According to the director of the U.S. Defense Intelligence Agency, India is building
its stockpile of fission weapons and is likely to continue work on advanced warhead
and delivery systems.53 (See also CRS Report RL32115, Missile Proliferation and
the Strategic Balance in South Asia, and CRS Report RS21237, Indian and Pakistani
Nuclear Weapons.)
U.S. Nonproliferation Efforts and Congressional Action. Soon after
the May 1998 nuclear tests in South Asia, Congress acted to ease aid sanctions
through a series of legislative measures.54 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 race, and promote Indo-Pakistani bilateral
dialogue. In light of these goals, the Clinton Administration set out “benchmarks”
for India and Pakistan based on the contents of U.N. Security Council Resolution
1172, which condemned the two countries’ nuclear tests. These included signing and
53 Statement of Lt. Gen. Michael Maples before the Senate Select Committee on
Intelligence, January 11, 2007, at [http://intelligence.senate.gov/070111/maples.pdf].
54 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 an October 1999 military coup). (See CRS Report RS20995,
India and Pakistan: U.S. Economic Sanctions.)

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CRS-31
ratifying the Comprehensive Nuclear Test Ban Treaty (CTBT); halting all further
production of fissile material and participating in Fissile Material Cutoff Treaty
negotiations; limiting development and deployment of WMD delivery vehicles; and
implementing strict export controls on sensitive WMD materials and technologies.
Progress in each of these areas has been limited, and the Bush Administration
quickly set aside the benchmark framework. Along with security concerns, the
governments of both India and Pakistan faced the prestige factor attached to their
nuclear programs and domestic resistance to 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. Section 1601 of P.L.
107-228 outlined U.S. nonproliferation objectives for South Asia. Some Members
of Congress identify “contradictions” in U.S. nonproliferation policy toward South
Asia, particularly as related to the Senate’s rejection of the CTBT and U.S. plans to
build new nuclear weapons. In May 2006, the United States presented in Geneva a
draft global treaty to ban future production of fissile material (a Fissile Material
Cutoff Treaty) that it hopes will be supported by India. Some analysts speculated that
the move was meant to bolster U.S. congressional support for proposed U.S.-India
civil nuclear cooperation.
India-Iran Relations. India’s relations with Iran traditionally have been
positive and, in 2003, the two countries launched a bilateral “strategic partnership.”55
The Indian government and firms have invested a reported total of nearly $10 billion
in Iran since 2000, placing India 10th on the list of international investors worldwide.
Many in the U.S. Congress have voiced concern that New Delhi’s policies toward
Tehran’s controversial nuclear program may not be congruent with those of
Washington, although these concerns were eased when India voted with the United
States (and the majority) at the International Atomic Energy Agency sessions of
September 2005 and February 2006. In each of the past three years, the United States
has sanctioned Indian scientists and chemical companies for transferring to Iran
WMD-related equipment and/or technology (most sanctions have been chemical-
related, but one scientist was alleged to have aided Iran’s nuclear program). New
Delhi called the moves unjustified. Included in legislation to enable U.S.-India civil
nuclear cooperation (P.L. 109-141) was a non-binding assertion that U.S. policy
should “secure India’s full and active participation” in U.S. efforts to prevent Iran
from acquiring weapons of mass destruction.56
55 See text of the January 2003 “New Delhi Declaration” at [http://meaindia.nic.in/
declarestatement/2003/01/25jd1.htm].
56 Although President Bush indicated he has not adopted the law’s statements of policy as
U.S. foreign policy, this provision has rankled many in New Delhi who view it as an
“extraneous” constraint on India’s foreign policy independence. In their explanatory
(continued...)

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Some in Congress also have noted with alarm reports of contacts between the
Indian and Iranian militaries, although such contacts may be insubstantial.57 In April
2007, eight U.S. Senators sent a letter to Prime Minister Singh praising increasingly
warm U.S.-India relations and requesting that New Delhi “suspend its military
cooperation” with Iran, asserting that “India’s own interests are damaged by its
support for the Iranian military” and that “India’s principles are also poorly served
by deepening its military relationship with Iran.” Foreign Secretary Menon later
responded with assurances that all of India’s dealings with Iran are permitted under
U.N. Security Council Resolutions, and he expressed being “quite amazed” at reports
of closer India-Iran military ties.58 In May, eight senior U.S. Representatives —
including the Chair and Ranking Member of the House Foreign Affairs Committee
— sent a letter to Prime Minister Singh expressing “grave concern” at India’s
“increasing cooperation” with Iran, saying such cooperation raised doubts about the
further progress of the U.S.-India global partnership and about India’s commitment
to combatting global terrorism, and warning that “India’s strengthening relationship
with Iran will inevitably be a factor in the consideration of [an anticipated peaceful
nuclear cooperation agreement] when it is presented to Congress.”
There are further U.S. concerns that India will seek energy resources from Iran,
thus benefitting financially a country the United States is seeking to isolate. Indian
firms have in recent years taken long-term contracts for purchase of Iranian gas and
oil. Purchases could be worth many billions of dollars, but thus far differences over
pricing have precluded sales. Building upon growing energy ties is the proposed
construction of a pipeline to deliver Iranian natural gas to India through Pakistan.
The Bush Administration repeatedly has expressed strong opposition to any gas
pipeline projects involving Iran, but top Indian officials insist the project is in India’s
national interest and they remain “fully committed” to the multi-billion-dollar
venture, which may begin construction later in 2007. The Iran-Libya Sanctions Act
(P.L. 107-24) required the President to impose sanctions on foreign companies that
make an “investment” of more than $20 million in one year in Iran’s energy sector.
The 109th Congress extended this provision in the Iran Freedom Support Act (P.L.
109-293). To date, no firms have been sanctioned under these Acts. (See also CRS
Report RS22486, India-Iran Relations and U.S. Interests, and CRS Report RS20871,
The Iran-Libya Sanctions Act.)
India’s Economy and U.S. Concerns
Overview. India is in the midst of a major and rapid economic expansion, with
an economy projected to be the world’s third largest in coming decades. Although
there is widespread and serious poverty in the country, observers believe long-term
56 (...continued)
statement accompanying P.L. 109-401, congressional conferees repeatedly emphasized their
belief that securing India’s assistance on this matter was “critical” (H.Rept. 109-721).
57 See, for example, Vivek Raghuvanshi and Gopal Ratnam, “Indian Navy Trains Iranian
Sailors,” Defense News, March 27, 2006; “India-Iran Military Ties Growing,” Strategic
Affairs, June 16, 2001; “Rice Downplays India’s Iran Links,” CNN.com, April 6, 2006.
58 Glenn Kessler, “India Official Dismisses Iran Reports,” Washington Post, May 2, 2007.

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economic potential is tremendous, and recent strides in the technology sector have
brought international attention to such high-tech centers as Bangalore and Hyderabad.
However, many analysts and business leaders, along with 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. During his March 2006 visit to Delhi, President
Bush noted India’s “dramatic progress” in economic reform while insisting “there’s
more work to be done,” especially in lifting caps on foreign investment, making
regulations more transparent, and continuing to lower tariffs.
India’s per capita GDP is only about $820 ($4,294 when accounting for
purchasing power parity). The highly-touted information technology and business
processing industries only employ about one-third of one percent of India’s work
force and, while optimists vaunt an Indian “middle class” of some 300 million
people, a roughly equal number of Indians subsist on less than $1 per day.59 Yet,
even with the existence of ongoing problems, the current growth rate of India’s
increasingly service-driven economy is among the highest in the world and has
brought the benefits of development to many millions of citizens. The U.N.
Development Program ranked India 126th out of 177 countries (between Namibia and
Cambodia) on its 2006 human development index, up from 127th in 2005.
After enjoying an average growth rate above 6% for the 1990s, India’s economy
cooled with the global economic downturn after 2000. Yet sluggish Cold War-era
“Hindu rates of growth” became a thing of the past. For the fiscal year ending March
2006, real change in GDP was 8.5%, the second-fastest rate of growth among the
world’s 20 largest economies. During FY2006-2007, India’s economy expanded by
a blistering 9.2%. Robust growth in the services and industry sectors continues, but
is moderated by a fluctuating agricultural sector (low productivity levels in this
sector, which accounts for about one-fifth of the country’s GDP, are a drag on overall
growth). Short-term estimates are encouraging, predicting expansion well above 8%
for the next two years. A major upswing in services is expected to lead; this sector
now accounts for more than half of India’s GDP. As of June 2006, India’s foreign
exchange reserves were at a record $163 billion.
India’s central bank warned in January 2007 that rising inflation and surging
stock and property markets were “signs of overheating” in the country’s economy.
Some analysts criticize the bank for being too timid in reining in domestic demand.60
Consumer price inflation has risen (a year-on-year rate near 6.7% in April 2007), but
is predicted to again drop below 6% in coming months. The soaring Bombay Stock
Exchange tripled in value from 2001-2006, then apparently overheated with the
59 A December 2006 study by the Indian Ministry of Statistics found that more than 200
million citizens in rural areas subsist on less than 12 rupees (about 27 cents) per day. A
February 2007 government survey found that nearly half of the country’s children are
malnourished.
60 “India Overheats,” Economist (London), February 3, 2007.

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worst-ever daily decline of its benchmark Sensex index on May 22, 2006, when
almost 11% of its total value was lost. The market subsequently stabilized and
apparently recovered, reaching new highs in the closing months of 2006.
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. Reforms begun in 1991, under
the Congress-led government of Prime Minister Rao and his finance minister, current
Prime Minister Manmohan Singh, boosted growth and led to major new inbound
foreign investment in the mid-1990s. Reform efforts stagnated, however, under weak
coalition governments later in the decade, and combined with the 1997 Asian
financial crisis and international sanctions on India (as a result of its 1998 nuclear
tests) to further dampen the economic outlook. Following the 1999 parliamentary
elections, 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, New Delhi appears to gradually be embracing globalization and has
sought to reassure foreign investors with promises of transparent and
nondiscriminatory policies. A July 2006 World Bank report identified the country’s
main economic challenges as
! improving the delivery of core public services such as healthcare,
education, power and water supply for all India’s citizens;
! making growth more inclusive by diminishing existing disparities,
accelerating agricultural growth, improving th job market, and
helping lagging states grow faster;
! sustaining growth by addressing its fiscal and trade deficits, and
pushing ahead with reforms that facilitate growth, and;
! addressing HIV/AIDS before the epidemic spreads to the general
public.61
A January 2007 report from Goldman Sachs, a global investment banking and
securities firm, called India’s recent high growth rates a result of structural rather
than cyclical increases and projected a sustainable growth rate of about 8% through
2020. It identified the major risks to growth as political developments, including a
rise in protectionism; supply-side restraints, including business climate, education,
and labor market reforms; and environmental degradation.62 Other analyses identify
water shortages, urban woes, and pollution as further potential threats to Indian
prosperity.63
61 See [http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/DPR_overview.pdf]
62 See [http://www.usindiafriendship.net/viewpoints1/Indias_Rising_Growth_Potential.pdf].
63 Pramit Mitra, “Running on Empty,” CSIS South Asia Monitor 103, February 3, 2007, at
[http://www.csis.org/media/csis/pubs/sam103.pdf]; World Bank, “Urban Challenges in
India,” February 5, 2007. One recent study found that 70% of Kolkata’s population suffers
from respiratory disorders caused by air pollution (Subir Bhaumik, “Air POllution
Suffocates Calcutta,” BBC News, May 3, 2007).

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Trade and Investment. As India’s largest trade and investment partner, the
United States strongly supports New Delhi’s continuing economic reform policies;
a U.S.-India Trade Policy Forum was created in November 2005 to expand bilateral
economic engagement and provide a venue for discussing multilateral trade issues.
The United States currently accounts for about one-sixth of all Indian imports. India
was the 21st largest export market for U.S. goods in 2006 (up from 22nd the previous
year). Levels of U.S.-India trade, while relatively low, are blossoming; the total
value of bilateral trade has doubled since 2001 and the two governments intend to see
it doubled again by 2009. U.S. exports to India in 2006 had a value of $10.1 billion
(up 27% over 2005), with aircraft; business and telecommunications equipment;
pearls, gemstones, and jewelry; fertilizer; and chemicals as leading categories.
Imports from India in 2006 totaled $21.8 billion (up 16% over 2005). Leading
imports included cotton apparel; textiles; and pearls, gemstones, and jewelry.64
Annual foreign direct investment to India from all countries rose from about
$100 million in 1990 to nearly $6 billion for 2005 and more than $11 billion in 2006.
According to Indian officials, about one-seventh of foreign direct investment in India
since 1991 has come from U.S. firms; in recent months and years, the major U.S.-
based companies Microsoft, Dell, Oracle, and IBM announced plans for multi-
billion-dollar investments in India. Strong portfolio investment added another $10
billion in 2005. India has moved to raise limits on foreign investment in several key
sectors, although U.S. officials prod New Delhi to make more rapid and more
substantial changes to foreign investment ceilings, especially in the retail, financial
services, and banking sectors. In March 2006, the U.S.-India CEO Forum —
composed of ten chief executives from each country representing a cross-section of
key industrial sectors — issued a report identifying India’s poor infrastructure and
dense bureaucracy as key impediments to increased bilateral trade and investment
relations.65
In a major May 2007 speech on U.S.-India relations, Under Secretary of State
Burns captured all the major U.S. concerns (and advice) with regard to bilateral
economic issues with India, saying New Delhi must insure that
new regulations or old red tape don’t impeded growth, and that foreign
companies have a clear path to settling commercial disputes when they arise.
The Indian government should also continue economic reforms and
liberalizations that have been the basis of India’s economic boom so far. ... In
order to achieve higher growth rates as well as broad rural development, India
requires world-class airports, irrigation, and communications networks. It needs
modern power grids, ports, and highways, and many other infrastructural
improvements that could be vastly accelerated by greater investment, both public
and private. ... Our focus is on facilitating and promoting foreign direct
investment, enhancing bilateral consultations on reducing tariff and non-tariff
barriers to trade in industrial goods, services, and agriculture, preventing the
64 See [http://www.census.gov/foreign-trade/statistics/country/index.html].
65 See “U.S.-India Strategic Economic Partnership,” U.S.-India CEO Forum, March 2006
at [http://planningcommission.nic.in/reports/genrep/USIndia.pdf].

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illicit use of the financial system, and strengthening India’s regime for
intellectual property rights.66
Barriers to Trade and Investment. Despite significant tariff reductions
and other measures taken by India to improve market access, according to the 2006
report of the United States Trade Representative (USTR), a number of foreign trade
barriers remain, including high tariffs, especially in the agricultural sector. The
USTR asserts that “substantial expansion of U.S.-India trade will depend on
continued and significant additional Indian liberalization.”67 The Commerce
Department likewise encourages New Delhi to continue lowering tariffs as a means
of fostering trade and development. Indian Finance Minister P. Chidambaram agrees
that high rates of investment must be maintained to sustain the country’s economic
growth and hopes to see the current annual rate more than doubled. In January 2007,
India regained full investment-grade status after a 15-year hiatus when Standard &
Poor’s upgraded India’s sovereign rating, but the country’s public finances remain
much weaker than comparable state: India has a public debt-to-GDP ratio (85%)
more than three times higher than China’s, and interest consumes nearly one-third of
total revenue.68
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 2004, U.S.
Under Secretary of State Alan Larson opined 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.” In 2007,
U.S. Treasury Under Secretary Tim Adams urged India to further reduce trade and
investment barriers, liberalize its financial sector, and improve its business climate
as key means to “compete effectively in the global economy.”69
Inadequate intellectual property rights protection is another long-standing issue
between the United States and India. The USTR places India on its Special 301
Priority Watch List for “inadequate laws and ineffective enforcement” in this area.
The International Intellectual Property Alliance (IIPA), a coalition of U.S. copyright-
based industries, estimated U.S. losses of $496 million due to copyright piracy in
India in 2006, more than three-quarters of this in the categories of business and
entertainment software (estimated loss amounts for 2006 do not include motion
picture piracy, which in 2004 was estimated to have cost some $80 million). The
IIPA expresses frustration that “little significant progress” is being made in more
66 See [http://www.state.gov/p/us/rm/2007/85424.htm].
67 See [http://www.ustr.gov/Document_Library/Reports_Publications/Section_Index.html].
68 Jo Johnson, “India’s Sovereign Credit Rating Upgraded,” Financial Times (London),
January 30, 2007.
69 See [http://www.state.gov/e/rls/rm/2004/36345.htm] and [http://newdelhi.usembassy.gov/-
pr022007.html].

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effectively enforcing copyright protection in India.70 In December 2006, Under
Secretary of Commerce and Director of the U.S. Patent and Trademark Office Jon
Dudas told a New Delhi audience that “further modifications are necessary” in
India’s intellectual property rights protection regime and that India’s copyright laws
are “insufficient in many aspects.” He also warned that “piracy and counterfeiting
rates will continue to rise without effective enforcement.”71
While the past two decades have seen a major transformation of the Indian
economy, it remains relatively closed in many aspects. The Heritage Foundation’s
2007 Index of Economic Freedom — which may overemphasize the value of absolute
growth and downplay broader quality-of-life measurements — again rated India’s
economy as being “mostly unfree” and ranked it 104th out of 157 countries. The
index highlights restrictive trade policies, heavy government involvement in the
banking and finance sector, rigorous investment caps, demanding regulatory
structures, and a high incidence of corruption.72 (Berlin-based Transparency
International placed India 70th out of 163 countries in its 2006 “corruption
perceptions index.” The group’s 2006 “bribery index” found India to be the worst
offender among the world’s top 30 exporting countries.)73 The Vancouver-based
Fraser Institute provides a more positive assessment of economic freedom in India,
while also faulting excessive restrictions on capital markets and regulations on
business.74 (See also CRS Report RS21502, India-U.S. Economic Relations.)
Special Economic Zones (SEZs). In March 2005, New Delhi announced
plans to allow Indian states to establish Chinese-style special economic zones that
would encourage foreign investment and boost employment by bypassing the
country’s strict labor laws. Parliament soon approved implementation and, in
February 2006, the SEZ Act went into effect. Later, with 237 such zones approved
and hundreds more planned, SEZs have become a matter of significant controversy.
Proponents view them as sensible means of growing the economy through greatly
increased investment, as well as improving infrastructure. Yet the policy has elicited
energetic opposition from interest groups representing the political left and right,
alike.
Some critics says that building SEZs on fertile agricultural land will impoverish
farmers without adequate compensation. Even Congress Party chief Sonia Gandhi
openly opposed exposing farmers to “unscrupulous developers.” Other opponents,
including India’s finance minister, warn that the government will be denied billions
of dollars in tax revenues lost due to special concessions offered to participating
firms. In January 2007, after the Left Front parties demanded extensive curbs on the
SEZ initiative, New Delhi suspended approval of 304 more SEZs pending decisions
70 See [http://www.iipa.com/rbc/2007/2007SPEC301INDIA.pdf].
71 See [http://newdelhi.usembassy.gov/pr120706.html]. Bush Administration policy is at
[http://mumbai.usconsulate.gov/chris_israel.html].
72 See [http://www.heritage.org/research/features/index/country.cfm?id=India].
73 See [http://www.transparency.org].
74 See [http://www.fraserinstitute.ca/admin/books/chapterfiles/3aEFW2006ch3A-K.pdf#].

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on issues including compensation for displaced farmers.75 In March 2007, police in
Nandigram, West Bengal, opened fire on a group of protesters who were
demonstrating against state land appropriations for a planned SEZ. At least 14
people were killed and the incident led to days of violent protests against the state
government’s action and the arrest of up to 800 farmers. Days later, the state
government dropped its plans for the site and the ruling coalition in New Delhi
vowed to “refine” its SEZ policy to make it more equitable.
Multilateral Trade Negotiations. In July 2006, the World Trade
Organization’s “Doha Round” of multilateral trade negotiations were suspended due
to disagreement among the WTO’s six core group members — which include the
United States and India — over methods to reduce trade-distorting domestic
subsidies, eliminate export subsidies, and increase market access for agricultural
products. The United States and other developed countries seek substantial tariff
reductions in the developing world. India, like other members of the “G-20” group
of developing states, has sought more market access for its goods and services in the
developed countries, while claiming that developing countries should be given
additional time to liberalize their own markets. In particular, India is resistant to
opening its markets to subsidized agricultural products from developed countries,
claiming this would be detrimental to tens of millions of Indian farmers and result in
further depopulation of the countryside. According to Indian officials, the WTO’s
narrow focus on economic issues excludes political and social variables which are
equally sensitive for New Delhi and which constrain the options available to the
Indian government.
India’s Commerce Minister, Kamal Nath, has blamed U.S. intransigence for the
Doha Round’s collapse. In November 2006, during a visit to New Delhi to discuss
trade issues with top Indian leaders, U.S. Agriculture Secretary Mike Johanns urged
India to match “ambitious” U.S. offers and “lead the way toward unlocking the Doha
negotiations by offering real market access.”76 Indian officials later rejoined the
negotiations, but, in June 2007, claimed the talks had “collapsed” due to lack of
convergence among the major actors. Trade Representative Schwab and Agriculture
Secretary Johanns expressed being “deeply disappointed” by the sudden withdrawal
of India (and Brazil), but said the United States is not giving up on efforts to
complete the Doha Round.(See also CRS Report RL32060, World Trade
Organization Negotiations: The Doha Development Agenda, and CRS Report
RL33144, WTO Doha Round: The Agricultural Negotiations.)
The Energy Sector. India’s continued economic growth and security are
intimately linked to the supply of energy resources. Indeed, Indian leaders insist that
energy security is an essential component of the country’s development agenda,
calling for an integrated national energy policy, diversification of energy supplies,
75 Jo Johnson, “India Puts Brakes on Tax-Break Zones,” Financial Times (London), January
23, 2007; Amy Yee, “India’s Farmers Grumbling as SEZs Eat Up Land,” Financial Times
(London), March 12, 2007; “India to ‘Refine’ Economic Zone Policy After Shooting
Deaths,” Agence France Presse, March 19, 2007.
76 “India Blames U.S. for Failure of WTO Talks,” Hindu (Chennai), July 26, 2006; Secretary
Johanns at [http://newdelhi.usembassy.gov/pr112106b.html].

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greater energy efficiency, and rationalization of pricing mechanisms. The country’s
relatively poor natural energy resource endowment and poorly functioning energy
market are widely viewed as major constraints on continued economic growth.
Estimates indicate that maintaining recent rates of growth will require that India
increase its commercial energy supplies by 4%-6% annually in coming years.77 The
U.S. government has committed to assist India in promoting the development of
stable and efficient energy markets there; a U.S.-India Energy Dialogue was launched
in July 2005 to provide a forum for bolstering bilateral energy cooperation.78
India is the world’s fifth largest energy consumer and may become third by the
middle of this century. Overall power generation in the country more than doubled
from 1991 to 2005.79 Coal is the country’s leading commercial energy source,
accounting for more than half of national demand. India is the world’s third most
productive coal producer, and domestic supplies satisfy most demand (however, most
of India’s coal is a low-grade, high-ash variety of low efficiency). Oil consumption
accounts for some one-third of India’s total energy consumption; about 70% of this
oil is imported (at a rate of 1.7 million barrels per day in 2005), mostly from the West
Asia/Middle East region. India’s domestic natural gas supply is not likely to keep
pace with demand, and the country will have to import much of its natural gas, either
via pipeline or as liquefied natural gas. Hydropower, especially abundant in the
country’s northeast and near the border with Nepal, supplies about 5% of energy
needs. Nuclear power, which Indian government officials and some experts say is
a sector in dire need of expansion, currently accounts for only 1% of the country’s
energy supplies and less than 3% of total electricity generation.80 Even optimistic
projections suggest that nuclear power will provide less than 10% of India’s
generation capacity in 25 years.81 One-fifth of the country’s power is consumed by
farmers’ irrigation systems, making the farm lobby a powerful obstacle to curtailing
subsidies provided by State Electricity Boards, which collectively lose $4.5 billion
annually. Moreover, from one-quarter to half of India’s electricity is said to
disappear though “transmission losses,” i.e., theft. In fact, a growing electricity crisis
may be severely hampering India’s continued economic security and growth.82
77 See Vibhuti Hate, “India’s Energy Dilemma,” Center for Strategic and International
Studies, September 7, 2006, at [http://www.csis.org/media/csis/pubs/sam98.pdf].
78 See U.S. Department of State fact sheet at [http://www.state.gov/p/sca/rls/fs/2005/
49724.htm]. In May 2006, the Senate Foreign Relations Committee passed S. 1950, to
promote global energy security through increased cooperation between the United States and
India on non-nuclear energy-related issues, but the full Senate took no action on the bill.
79 See [http://powermin.nic.in/reports/pdf/ar05_06.pdf].
80 Data from U.S. Department of Energy, Energy Information Administration, January 2007
at [http://www.eia.doe.gov/emeu/cabs/india.html]; Tanvi Madan, “India,” Brookings
Institution Energy Security Series Report, November 2006 at [http://www.brookings.edu/
fp/research/energy/2006india.pdf].
81 John Stephenson and Peter Tynan, “Will the U.S.-India Civil Nuclear Cooperation
Initiative Light India?,” November 13, 2006, at [http://www.dalberg.com/npec.pdf].
82 Mark Gregory, “India Struggles With Power Theft,” BBC News, March 15, 2006; Somini
Sengupta, “Electricity Crisis Hobbles an India Eager to Ascend,” New York Times, May 21,
(continued...)

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During a March 2007 visit to New Delhi, U.S. Energy Secretary Sam Bodman
held wide-ranging talks with numerous Indian officials and business leaders to
discuss India’s energy needs and strategies for relevant bilateral cooperation.
Secretary Bodman stressed “the absolute necessity of substantial and sustained
investment in innovation on a global scale” and listed five major global goals for all
countries, including the United States and India: 1) diversifying the available supply
of conventional fuels and expanding their production; 2) diversifying energy
portfolios through expanded use of alternative and renewable sources, including
nuclear energy; 3) promoting increased energy efficiency and conservation; 4)
reducing pollution and energy intensity in the global economy; and 5) protecting
critical energy infrastructure.83
In February 2007, H.R. 1186, to promote global energy security through
increased U.S.-India cooperation, was introduced in the House. In April, the
Assistant Secretary of Commerce for Market Access and Compliance, Mark
Bohigian, led a delegation of 17 U.S. companies on a Clean-Energy Technologies
Trade Mission to New Delhi. During the same month, the Energy Diplomacy and
Security Act of 2007 (S. 193) was introduced in the Senate. The bill includes
provisions for establishing energy crisis response mechanisms in cooperation with
the governments of India and China. In May, the International Climate Cooperation
Re-engagement Act of 2007 (H.R. 2420) was introduced in the House. The bill
contains provisions for expanding efforts to promote U.S. exports in clean and
efficient energy technologies to India and China.
The Kashmir Issue
Although India suffers from several militant regional separatist movements, the
Kashmir issue has proven the most lethal and intractable. Gunbattles and bomb
blasts have reportedly killed an average of between four and six people every day in
India’s Jammu and Kashmir state.84 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 competing claims to the former
princely state, divided since 1948 by a military Line of Control (LOC) separating
India’s Muslim-majority Jammu and Kashmir state and Pakistan-controlled Azad
[Free] Kashmir. The dispute relates to the national identities of both countries: India
has long sought to maintain its secular, multi-religious credentials, in part by
successfully incorporating a Muslim-majority region, while Pakistan has since
independence been conceived as a homeland for the subcontinent’s Muslims. India
and Pakistan fought full-scale wars over Kashmir in 1947-48 and 1965. Some
Kashmiris seek independence from both countries. Spurred by a perception of rigged
state elections in 1989, an ongoing separatist war between Islamic militants (and their
supporters) and Indian security forces in Indian-held Kashmir has claimed at least
41,000 and perhaps as many as 66,000 lives.
82 (...continued)
2007.
83 See [http://newdelhi.usembassy.gov/pr032007a.html].
84 “India Says Kashmir Toll Over 41,000, Others Differ,” Reuters, December 7, 2006.

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India blames Pakistan for supporting “cross-border terrorism” and for fueling
a separatist rebellion in the Muslim-majority Kashmir Valley with arms, training, and
militants. Islamabad, for its part, claims to provide only diplomatic and moral
support to what it calls “freedom fighters” who resist Indian rule and suffer alleged
human rights abuses in the region. New Delhi insists that the dispute should not be
“internationalized” through involvement by third-party mediators and India is widely
believed to be satisfied with the territorial status quo. In 1999, a bloody, six-week-
long battle near the LOC at Kargil cost more than one thousand lives and included
Pakistani army troops crossing into Indian-controlled territory. 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.
During the early years of the Kashmir insurgency, hundreds of thousands of
indigenous Hindu “Pandits” were driven from the region in what amounted to a form
of “ethnic cleansing.” Up to half a million Kashmiri Pandits, accounting for the vast
majority of Hindus then living in the area around Srinagar, fled their homes after
coming under threat from Muslim militants. For many Indians, the Kashmir dispute
cannot be resolved without arrangements for the return of these refugees, more than
100,000 of whom continue to live in camps with government support. Resolutions
in the 110th Congress (H.Con.Res. 55 and S.Con.Res. 38) call for the safeguarding
of the physical, political, and economic security of the Kashmiri pandits.
Some separatist groups, such as the Jammu and Kashmir Liberation Front
(JKLF), continue to seek an independent or autonomous Kashmir. Others, including
the militant 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 has included 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 Pakistan, India,
and representatives of the Kashmiri people. Hurriyat leaders demand Kashmiri
representation at any talks between India and Pakistan on Kashmir. The Hurriyat
formally split in 2003 after a dispute between hardliners allied with Islamabad and
those favoring negotiation with New Delhi. Subsequent efforts to reunify the group
failed. In September 2005, the Congress-led government renewed high-level contact
with moderate Hurriyat leaders begun by the previous BJP-led coalition. New Delhi
vowed to pull troops out of Kashmir if militant infiltrations and violence there cease,
but to date only nominal troop withdrawals have come in response to a somewhat
improved security situation in the region.
In December 2006, Pakistani President Musharraf issued a newly-modified
version of his “out-of-the-box” thinking on resolution to the Kashmir problem,
saying Pakistan is “against independence” for Kashmir, and offering instead a four-
point proposal that would lead to “self-governance,” defined as “falling between
autonomy and independence.” Many analysts saw the proposal as being roughly in
line with New Delhi’s Kashmir position. Some Kashmiri separatist groups rejected
the proposal as an abandonment of Islamabad’s long-held policy, but Indian leaders

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welcomed Musharraf’s statements; in February 2007, Prime Minister Singh said the
Pakistani government was “saying the right thing” in rejecting armed militancy as a
solution to the Kashmir problem. Still, a lack of consensus among Kashmiri leaders
and political parties is likely to hamper progress. Even Kashmiri political figures
who accept the principle of a solution within the framework of the Indian
Constitution cannot agree on what such a solution may look like, and the Hurriyat
Conference — which boycotted the state’s 2002 elections — remains rife with its
own divisions. Some analysts urge greater U.S. efforts to prod the New Delhi and
Islamabad governments along in the ongoing search for a final resolution.85
Figure 1. Deaths Related to Kashmiri Separatism, 1988-2006
5000
Militants
Civilians
4500
Security Force Personnel
Total
4000
3500
s
e
liti
3000
ta
f fa
2500
r o
e
b
2000
m
Nu
1500
1000
500
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source: Adapted by CRS from data provided by the South Asia Terrorism Portal, Institute for
Conflict Management, New Delhi, India.
Figure 1 shows that levels of violence in Kashmir were high and steady through
the mid- and late 1990s, peaked in 2001, and have been in decline since. Despite
waning rates of infiltration and separatist-related violence, the issue continues to
rankle leaders in New Delhi and remains a serious potential impediment to progress
in the current India-Pakistan peace initiative. Even as the normalization of India-
Pakistan relations moves forward — and to some extent in reaction to their apparent
marginalization in the face of this development — separatist militants continue their
attacks on both civilians and Indian security forces, and many observers in both India
and the United States believe that active support for Kashmiri militants remains
Pakistani policy. The militants, seeing their relevance and goals threatened by
movement toward peaceful resolution, regularly lash out with bloody attacks meant
to derail the process. For example, on May 1, 2006, suspected Islamist separatists
massacred at least 35 Hindu villagers just ahead of a meeting between Prime Minister
Manmohan Singh and a group of moderate Kashmiri figures. Likewise, as a
relatively violence-free 2006 spring season seemed to be approaching, the Valley’s
85 See, for example, Lisa Curtis, “India and Pakistan Poised to Make Progress on Kashmir,”
Heritage Backgrounder No. 1997, January 12, 2007, at [http://www.heritage.org/Research/
AsiaandthePacific/bg1997.cfm].

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CRS-43
struggling tourist industry was on the brink of recovery, with hotels reporting full
bookings for coming months. Yet a series of grenade attacks specifically targeting
tourists killed and injured scores of people throughout May and June, and had the
result of again devastating what could be a major source of income and development
for the region: most hotels were deserted by July.86
Despite this ongoing violence, many indications point to positive long-term
trends. The steadily reduced rates of infiltration may be attributed to the endurance
of India-Pakistan dialogue and, with a flurry of diplomatic exchanges in late 2006,
many analysts believe prospects for a meeting of minds between New Delhi and
Islamabad are better than ever before (determining and incorporating the desires of
the Kashmiri people remain highly problematic).87 In October 2006, India’s army
chief credited much of a 20% drop in levels of violence in the region to the surrender
of more and more “disillusioned” militants. At the same time, the state’s political
leadership has lauded a major decline in reported human rights abuses by security
forces, attributing the improvement to policies of restraint launched by the Peoples
Democratic Party-Congress Party coalition which took power in late 2002.88 While
those responsible for Kashmir’s security remain vigilant and convinced that the
Islamabad government “controls the tap” of cross-LOC infiltration, the people of
Srinagar are widely approving of the “flexibility” exhibited by Pakistan’s president
and hopeful that such flexibility will be mirrored in New Delhi so as to create a
resolution that works for all stakeholders.89
Other Regional Dissidence
The United States maintains an ongoing interest in India’s domestic stability and
the respect for internationally recognized human rights there. The U.S. Congress has
held hearings in which such issues are discussed. 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. Beyond the Kashmir problem,
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 numerous states.
India also has suffered outbreaks of serious communal violence between Hindus and
Muslims, especially in the western Gujarat state. According to the Indian Home
Ministry, there were 4,542 incidents of domestic terrorism in 2006 — down from
86 Author interviews, Srinagar, Kashmir, September 2006.
87 “Army Chief Confirms Reduced Infiltration in Kashmir,” Hindustan Times (Delhi),
October 7, 2005; A.G. Noorani, “A Step Closer to Consensus,” Frontline (Chennai),
December 15, 2006.
88 Nita Bhalla, “India’s Army Says Tide Turning in Restive Kashmir,” Reuters, October 1,
2006; “Kashmiri Leader Lauds Drop in Custodial Killings, Disappearances,” Agence France
Presse, October 30, 2006.
89 Author interviews, Srinagar, Kashmir, September 2006.

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4,930 the previous year — costing 2,863 lives, about two-fifths of them civilian.
(See also CRS Report RL32259, Terrorism in South Asia.)
The Northeast. Since the time of India’s foundation, numerous militant
groups have fought for greater ethnic autonomy, tribal rights, 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 estimated that more than 50,000 people have
been killed in such fighting since 1948, including some 10,000 deaths in 15 years of
fighting in the Assam state. 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. ULFA, like other groups,
accuses New Delhi of exploiting their state’s resources while doing little to forward
development and allowing thousands of non-indigenous people (often from Bihar)
to flood the local job markets. In April 2005, the U.S. State Department’s
Counterterrorism Office named ULFA in its list of “other groups of concern,” the
first time an Indian separatist group outside Kashmir was so named.90
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 New Delhi 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 2003 and appeared to have routed the ULFA
and NDFB. In 2004, five leading separatist groups from the region rejected New
Delhi’s offer of unconditional talks, saying talks can only take place under U.N.
mediation and if the sovereignty issue was on the table. Later, in what seemed a
blow to the new Congress-led government’s domestic security policies, a spate of
lethal violence in Assam and Nagaland was blamed on ULFA and NDFB militants
who had re-established their bases in Bhutan. Major Indian army operations in late
2004 may have overrun Manipur separatist bases near the Burmese border. In early
2007, New Delhi requested further Burmese military action against separatist rebels
operating in India’s northeastern states.
New Delhi’s hesitant year-long efforts at negotiation with ULFA rebels and a
six-week-old cease-fire in Assam collapsed in October 2006, leading to a spike of
lethal violence that included multiple bombings the final months of 2006 (one series
of bombings left at least 15 people dead and dozens more injured in November).
Some analysts criticized the central government for allowing the militants to revive
their strength during the cease-fire period. By January 2007 a full-blown separatist
war was again underway in Assam, with ULFA launching bomb and gun attacks that
killed scores of civilians, most of them Hindi-speaking migrant workers, threatening
and assassinating ruling Congress Party politicians, and warning Hindi-speakers to
“stay away” from the region. In response, New Delhi sent up to 13,000 Indian army
and paramilitary troops to fan out across the state in what was termed the “largest-
ever” operations against ULFA rebels. Following this latest rash of violence,
Defense Minister A.K. Antony said defeating the rebels would require the help of the
90 See [http://www.state.gov/s/ct/rls/crt/2005/65275.htm].

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Bangladesh and Burma governments. In March 2007, Burmese forces reportedly
captured a base used by separatist rebels fighting in Nagaland, and India sent an
additional 3,000 troops to its border with Bhutan to join 9,000 already there seeking
to prevent militants from crossing over. New Delhi refuses further negotiations in
the absence of stringent conditions, in particular a mutual acceptance of the Indian
Constitution, most of which are rejected by rebel leaders.
Maoist Insurgency. Also operating in India are “Naxalites” — Maoist
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. The groups get their name from
Naxalbari, a West Bengal village and site of a militant peasant uprising in 1967. In
April 2006, Prime Minister Singh identified a worsening Maoist insurgency as “the
single biggest internal security challenge” ever faced by India, saying it threatened
India’s democracy and “way of life.” The U.S. State Department’s Country Reports
on Terrorism 2006 warned that attacks by Maoist terrorists in India “grew in
sophistication and lethality” and may pose a long-term threat.91 Some of these groups
may be growing poppy and extorting farmers and opium traders to fund their
activities. Naxalites now operate in nearly half of India’s 28 states and related
violence caused more than 700 deaths in 2006, including nearly 300 civilians.
The most notable of these outfits 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 2004, the two groups merged to form the Communist
Party of India (Maoist). Both appear on the U.S. State Department Counterterrorism
Office’s list of “groups of concern” and both are designated as terrorist groups by
New Delhi, which claims there are nearly 10,000 Maoist militants active in the
country. Other estimates see some 20,000 such fighters in India, including up to
5,000 in the central Chhattisgarh state alone. PWG fighters were behind a 2003
landmine attack that nearly killed the chief minster of Andhra Pradesh. In 2004, that
state’s government lifted an 11-year-old ban on the PWG, but the Maoists soon
withdrew from ensuing peace talks, accusing the state government of breaking a
cease-fire agreement. Violent attacks on government forces then escalated in 2005
and continued with even greater frequency in 2006.
The Chhattisgarh state government has since 2005 sponsored a grassroots anti-
Maoist effort. This “Salwa Judum” (“Campaign for Peace” or, literally, “collective
hunt”) militia, comprised of about 5,000 lightly-armed tribal people who are paid
about $1 per day, is viewed by some as an effective countervailing people’s
movement, but others label it a vigilante group that has engaged in its own coercive
and violent tactics against innocent tribals, and that only serves to accentuate the
conflict.92 Following a March 2007 raid on a Chhattisgarh police camp up to 600
armed Maoists in which 55 people, including 19 policemen, were killed, Maoist
leaders threatened further attacks if the Salwa Jundum was not dismantled. New
91 See [http://www.state.gov/s/ct/rls/crt/2006/82734.htm].
92 See, for example, an Asian Center for Human Rights press release at
[http://www.achrweb.org/press/2007/IND0307.htm].

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Delhi has also expressed concern that indigenous Maoists are increasing their links
with Nepali communists that recently ended their war with the Kathmandu
government. Many analysts see abundant evidence that Naxalite activity is spreading
and becoming more audacious in the face of incoherent and insufficient Indian
government policies to halt it.93
Hindu-Muslim Tensions. Some elements of India’s Hindu majority have at
times engaged in violent conflict with the country’s Muslim minority. In late 1992,
a huge mob of Hindu activists in the western city of Ayodhya demolished a 16th
century mosque said to have been built at the birth site of the Hindu god Rama.
Ensuing communal riots in cities across India left many hundreds dead. Bombay was
especially hard hit and was the site of coordinated 1993 terrorist bombings believed
to have been a retaliatory strike by Muslims. In early 2002, another group of Hindu
activists returning by train to the western state of Gujarat after a visit to the site of the
now razed Babri Mosque (and a proposed Hindu temple) were attacked by a Muslim
mob in the town of Godhra; 58 were killed. Up to 2,000 people died in the fearsome
communal rioting that followed, most of them Muslims. The BJP-led state and
national governments came under fire for inaction; some observers saw evidence of
state government complicity in anti-Muslim attacks.
The U.S. State Department and human rights groups have been critical of New
Delhi’s largely ineffectual efforts to bring those responsible to justice; some of these
criticisms were echoed by the Indian Supreme Court in 2003. In March 2005, the
State Department made a controversial decision to deny a U.S. visa to Gujarat Chief
Minster Narendra Modi under a U.S. law barring entry for foreign government
officials found to be complicit in severe violations of religious freedom. The
decision was strongly criticized in India. Five years after Gujarat’s communal
rioting, international human rights groups express serious concerns about obstacles
faced by victims seeking justice, the continuing internal displacement of thousands
of families who lack basic necessities, and large numbers of uninvestigated related
criminal cases, despite the Indian Supreme Court’s 2004 order to reopen nearly 1,600
such cases.94
Sporadic communal violence in India is ongoing. Recent examples include
three days of rioting that followed the May 2006 demolition of a Muslim shrine in
the western Gujarat state. Six people died and dozens of others were injured; more
than 1,000 Indian army troops were deployed to quell the violence. In June, clashes
between Hindus and Muslims in the Uttar Pradesh state left 2 children dead and more
than 100 homes destroyed by fire. July saw two policemen and two civilians killed,
and at least three dozen people injured, in communal clashes in the western
Maharashtra state. In October, 2 people were killed and 86 others injured over
several days of communal violence in the southern Kerala state.
93 See, for example, Ajai Sahni, “The Ignored Red Lights,” Outlook (Delhi), March 19,
2007, at [http://www.outlookindia.com/full.asp?fodname=20070319&fname=
ajainshani&sid=1]; Mark Sappenfield, “In Heart of India, a Little-Known civil WAr,”
Christian Science Monitor, May 1, 2007, at [http://www.csmonitor.com/2007/0501/
p06s02-wosc.html].
94 See [http://web.amnesty.org/library/Index/ENGASA200072007?open&of=ENG-IND].

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Human Rights Issues
Many of India’s more than one billion citizens suffer from numerous and
oftentimes serious human rights abuses. Some analysts are concerned that, as
Washington pursues a new “strategic partnership” with New Delhi, U.S. government
concerns about such abuses have receded. According to the U.S. State Department’s
Country Report on Human Rights Practices, 2006, 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; “harsh, life-threatening” prison
conditions and lengthy pretrial detentions without charge; “pervasive” police
corruption; forced prostitution; child prostitution and female infanticide; forced child
labor; human trafficking; and “ubiquitous” caste-based discrimination and violence,
among others. Terrorist attacks and kidnapings also remained grievous problems,
especially in Kashmir and the northeastern states. Indian law provides for extensive
human rights protections, but enforcement is “lax” and convictions rare.95
New York-based Human Rights Watch’s 2007 annual report noted that India has
a vibrant press and civil society, but also suffers from a number of chronic human
rights problems, calling impunity a “critical issue” involving officials and members
of the security services abusing their power and “rarely if ever brought to justice for
torture, arbitrary detentions and extrajudicial killings ....” It lists among other human
rights concerns in India the alleged “failure to implement policies that protect the
rights of children, religious minorities, those living with HIV/AIDS or those
belonging to vulnerable communities such as tribal groups, Dalits and other
‘backward’ castes.” London-based Amnesty International’s 2007 annual report also
claims that perpetrators of human rights violations in India, in particular those related
to 2002 communal rioting in Gujarat, continued to enjoy impunity, and asserts that
concerns over protection of economic, social, and cultural rights of already
marginalized communities grew in 2006.96 The State Department itself recognizes
impunity as a major human rights problem in India, asserting in its most recent (April
2007) report on Supporting Human Rights and Democracy that, “A widespread
culture of impunity among police and security forces and pervasive corruption
continued to be the principal obstacles to improving human rights” there.97
The State Department’s Bureau of Democracy, Human Rights, and Labor has
claimed that India’s human right 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
95 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].
96 See [http://hrw.org/englishwr2k7/docs/2007/01/10/global15039.htm] and
[http://report2007.amnesty.org/eng/Homepage].
97 See [http://www.state.gov/g/drl/rls/shrd/2006/80590.htm].

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CRS-48
to repress them, and deficient police methods and training.”98 India’s 1958 Armed
Forces Special Powers Act, which gives security forces wide leeway to act with
impunity in conflict zones, has been called a facilitator of “grave human rights
abuses” in several Indian states (in December 2006, Prime Minister Singh said he
would seek to amend the controversial Act). In 2007, the problem of “staged
encounters” in which police officers kill suspects in faked shootouts came to the
fore.99 India generally denies international human rights groups official access to
Kashmir and other sensitive areas.
Human Trafficking. The State Department’s latest (June 2007) annual report
on trafficking in persons said, “India is a source, destination, and transit country for
men, women, and children trafficked for the purposes of forced labor and commercial
sexual exploitation. India’s trafficking in persons problem is estimated to be in the
millions.” It further states that New Delhi “does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making significant efforts
to do so” and it placed India on the “Tier 2 Watch List” for the fourth consecutive
year “for its failure to show increasing efforts to tackle India’s large and
multidimensional problem,” and “the lack of any significant government action to
address bonded labor ....”100 CNN claimed that some U.S. officials had urged India
be placed in the Tier 3 category, which is known as a “blacklist” and can lead to
penalties in lieu of swift government action. These officials reportedly were
overruled by the Secretary of State, who instead called for a special six-month
evaluation of New Delhi’s progress in this area. Upon the report’s release, the head
of State’s trafficking office, Ambassador Mark Lagan, said “The Tier 2 Watch List
is not supposed to become a parking lot for governments lacking the will or interest
to stop exploitation and enslavement on their soil,” and he called India “the world’s
largest democracy [with] the world’s largest problem.”101
Religious Freedom. An officially secular nation, India has a long tradition
of religious tolerance (with occasional lapses), which is protected under its
constitution. The 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 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
2006, the State Department found that despite positive steps taken by the central
government, “the status of religious freedom in India generally remained the same”
as in the previous year. It lauded the New Delhi government for demonstrating a
commitment to policies of religious inclusion, while again claiming that “the
98 Supporting Human Rights and Democracy: The U.S. Record 2002 -2003,” U.S.
Department of State, at [http://www.state.gov/g/drl/rls/shrd/2002/21760.htm].
99 See “Faked Deaths Show Ills of India’s Police,” Associated Press, June 7, 2007.
100 See [http://www.state.gov/g/tip/rls/tiprpt/2007/82806.htm].
101 “India Escapes U.S. List of Worst Human Traffickers,” CNN.com, June 13, 2007; “India
Left Off Trafficking Blacklist,” Associated Press, June 12, 2007.

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CRS-49
government sometimes in the recent past did not act swiftly enough to counter
societal attacks against religious minorities and attempts by some leaders of state and
local governments to limit religious freedom.”102 A May 2006 report of the U.S.
Commission on International Religious Freedom lauded continued improvements
since the May 2004 election of the Congress-led coalition, but warned that concerns
about religious freedom in India remain. These include ongoing attacks against
religious minorities, perpetrated mainly by Hindu activists and most often in states
with BJP-led governments. The Commission also continued to criticize allegedly
insufficient state efforts to pursue justice in cases related to 2002 communal rioting
in Gujarat. Five years after those riots, the victims are said to continue to face
serious challenges and obstacles in securing justice, and a large number of related
criminal cases remain uninvestigated and unresolved.103
Caste-Based Discrimination. The millennia-old Hindu caste system
reflects Indian occupational and socially-defined hierarchies. Sanskrit sources refer
to four social categories: priests (Brahmin), warriors (Kshatriya), traders (Vayisha)
and farmers (Shudra). Tribals and lower castes were long known as “untouchables,”
a term now officially banned but still widely used, or Dalits.104 Although these
categories are understood throughout India, they describe reality only in the most
general terms. National-level legislation exists to protect India’s lower castes, yet,
according to the U.S. State Department, “The Scheduled Castes and Scheduled
Tribes (Prevention of Atrocities) Act lists offenses against disadvantaged persons and
prescribes stiff penalties for offenders; however, this act had only a modest effect in
curbing abuse and there were very few convictions.”105 Human Rights Watch sits on
the U.N. Committee on the Elimination of Racial Discrimination and in February
2007 criticized India’s “hidden apartheid”: the systematic abuses against low-caste
Dalits and an “alarming” extent of sexual violence against Dalit women. That U.N.
committee itself issued a March 2007 report which criticized the “frequent failure”
of Indian law enforcement agencies to protect the country’s 165 million Dalits and
other lower-caste Indians from “de facto segregation.”106 In May 2007, H.Con.Res.
139, expressing the sense of Congress that the United States should address the
ongoing problem of untouchability in India, was introduced in the House.
HIV/AIDS
The United Nations estimates that 5.7 million Indians are infected with
HIV/AIDS, giving India the largest such population worldwide (India overtook South
102 See [http://www.state.gov/g/drl/rls/irf/2006/71440.htm].
103 See [http://www.uscirf.gov/countries/publications/currentreport/index.html] and
[http://web.amnesty.org/library/print/ENGASA200072007].
104 See [http://www.state.gov/r/pa/ei/bgn/3454.htm].
105 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].
1 0 6 See [http://hrw.org/englishwr2k7/docs/2007/01/11/india14868.htm] and
[http://www.hrw.org/reports/2007/india0207].

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CRS-50
Africa in this category in 2006).107 Due to the country’s large population, prevalence
rates among adults remain below 1%. India’s AIDS epidemic has become
generalized in four states in the country’s south (Andhra Pradesh, Tamil Nadu,
Karnataka, and Maharashtra) and two in the northeast (Manipur and Nagaland).
According to USAID, these six states account for 80% of the country’s reported
AIDS cases.108 India first launched its AIDS control program in 1992; New Delhi
boosted related funding to about $120 million in the most recent fiscal year. Stigma,
gender inequalities, and discrimination present major obstacles to controlling India’s
HIV/AIDS epidemic. In the country’s traditional society, open discussion of
sexuality and risk of infection is rare, making education and awareness difficult: one
recent Indian government survey found that nearly half of Indian women had not
even heard of the disease. Analysts have said substantially greater resources are
needed to address HIV/AIDS in India than are currently available.109
As part of its foreign assistance program in India, the U.S. government supports
integrated HIV/AIDS prevention, treatment, and support services in high prevalence
states. India received more than $16 million in direct U.S. assistance for such
programs in FY2006 and the Administration has requested another $23.5 million for
FY2008. Additional resources are provided through the President’s Plan for AIDS
Relief (PEPFAR). In January 2007, H.R. 175, to provide assistance to combat
HIV/AIDS in India, and for other purposes, was introduced in the House. (See also
CRS Report RL33771, Trends in U.S. Global AIDS Spending: FY2000-FY2007.)
U.S. Assistance
Economic. According to the U.S. Agency for International Development
(USAID), India has more people living in abject poverty (some 385 million) than do
Latin America and Africa combined. From 1947 through 2005, the United States
provided nearly $15 billion in economic loans and grants to India. USAID programs
in India, budgeted at about $68 million in FY2006, 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) energy and environment
(improved access to clean energy and water; the reduction of public subsidies through
improved cost recovery); and (5) opportunity and equity (improved access to
107 A 2007 survey reportedly suggests that the number of infected Indians could in fact be
between two and three million (Donald McNeil, Jr., “India Has Fewer AIDS Victims Than
Thought,” New York Times, June 7, 2007).
108 See USAID, “Health Profile: India,” at [http://www.usaid.gov/our_work/global_health/
aids/Countries/ane/india_05.pdf].
109 See, for example, Pramit Mitra and Teresita Schaffer, “Public Health and International
Security: The Case of India,” July 2006 at [http://www.csis.org/media/csis/pubs/
060731_aids_india.pdf].

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CRS-51
elementary education, and justice and other social and economic services for
vulnerable groups, especially women and children).110
Security. The United States has provided about $161 million in military
assistance to India since 1947, more than 90% of it distributed from 1962-1966. In
recent years, modest security-related assistance has emphasized export control
enhancements and military training. Earlier Bush Administration requests for
Foreign Military Financing were later withdrawn, with the two countries agreeing to
pursue commercial sales programs. The Pentagon reports military sales agreements
with India worth $336 million in FY2002-FY2006.
Relevant Legislation in the 110th Congress
! In May 2007, the International Climate Cooperation Re-engagement
Act of 2007 (H.R. 2420) was introduced in the House. The bill
contains provisions for expanding efforts to promote U.S. exports in
clean and efficient energy technologies to India and China.
! Earlier in May, H.Con.Res. 139, expressing the sense of Congress
that the United States should address the ongoing problem of
untouchability in India, was introduced in the House.
! In April, the Energy Diplomacy and Security Act of 2007 (S. 193)
was introduced in the Senate. The bill includes provisions for
establishing energy crisis response mechanisms in cooperation with
the governments of India and China.
! In February, H.R. 1186, to promote global energy security through
increased U.S.-India cooperation, was introduced in the House.
! Earlier in February, H.Con.Res. 55, calling for the safeguarding of
the physical, political, and economic security of the Kashmiri
pandits, was introduced in the House (a Senate version —
S.Con.Res. 38 — was introduced in June).
! In January, H.R. 175, to provide assistance to combat HIV/AIDS in
India, and for other purposes, was introduced in the House.
110 See USAID India at [http://www.usaid.gov/in].

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CRS-52
Table 1. U.S. Assistance to India, FY2000-FY2008
(in millions of dollars)
Program
FY
FY
FY
FY
FY
FY
FY
FY
FY
or
2008
2000
2001
2002
2003
2004
2005
2006
2007b
Account
(req.)
CSH
22.8
24.6
41.7
47.4
47.8
53.2
52.8
b
62.2
DA
28.7
28.8
29.2
34.5
22.5
24.9
19.7
b
0.9
ESF
—
5.0
7.0
10.5
14.9
14.9
5.0
b
—
IMET
0.5
0.5
1.0
1.0
1.4
1.5
1.3
b
1.3
INCLE
—
—
—
—
—
—
—
b
0.4
NADR
0.3
0.9
0.9
1.0
0.7
4.2
2.7
b
2.7
Subtotal
52.3
59.8
79.8
94.4
106.2
98.7
81.5
b
67.5
Food Aida
81.7
78.3
105.7
44.8
30.8
26.1
43.5
—
13.5
Total
134.0 138.1 185.5
139.2
137.0
124.8
125.0
b
81.0
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
INCLE:
International Narcotics Control and Law Enforcement
NADR:
Nonproliferation, Anti-Terrorism, Demining, and Related (mainly export control
assistance, but includes anti-terrorism assistance for FY2007)
Notes:
a. P.L. 480 Title II (grants) and Section 416(b) of the Agricultural Act of 1949, as amended (surplus
donations). Food aid totals do not include freight costs.
b. FY2007 appropriations are under a Continuing Appropriations Resolution (P.L. 109-289 as
amended). FY2007 estimates are expected later in 2007.

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CRS-53
Figure 2. Map of India

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