Order Code RL33529
India-U.S. Relations
Updated October 2, 2007
K. Alan Kronstadt
Specialist in South 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 2006 (P.L. 109-401,
the “Hyde Act”), reverses three decades of U.S. nonproliferation policy. It requires,
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 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 major steps in this direction and coalition governments have kept the
country on a general path of reform. Yet there is U.S. concern that such movement
is 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 been identified
as a serious development. See also CRS Report RL34161, India-U.S. Economic and
Trade Relations. This report will be updated regularly.

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Contents
Key Current Issues and Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S.-India Civil Nuclear Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Indian Political Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
India-Burma Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S.-India Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
India-Pakistan Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Kashmir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Context of the U.S.-India Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Current U.S.-India Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
India’s Regional Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The “IPI” Pipeline Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Other Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Political Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
National Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Congress Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Bharatiya Janata Party (BJP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Regional Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Left Front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bilateral Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
“Next Steps in Strategic Partnership” and Beyond . . . . . . . . . . . . . . . . . . . 23
Civil Nuclear Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Civil Space Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
High-Technology Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The Indian Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
U.S.-India Security Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Nuclear Weapons and Missile Proliferation . . . . . . . . . . . . . . . . . . . . 37
U.S. Nonproliferation Efforts and Congressional Action . . . . . . . . . . 38
The Proliferation Security Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
India-Iran Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
India’s Economy and U.S. Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Barriers to Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Special Economic Zones (SEZs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Multilateral Trade Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
The Energy Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
The Kashmir Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Other Regional Dissidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
The Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Maoist Insurgency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Hindu-Muslim Tensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Human Rights Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

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Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Caste-Based Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
HIV/AIDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
U.S. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Selected Relevant Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . 61
List of Figures
India in Brief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Figure 1. Deaths Related to Kashmiri Separatism, 1988-2006 . . . . . . . . . . . . . . 52
Figure 2. Map of India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
List of Tables
Table 1. Direct U.S. Assistance to India, FY2000-FY2008 . . . . . . . . . . . . . . . . 62

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India-U.S. Relations
Key Current Issues and Developments
U.S.-India Civil Nuclear Cooperation. On July 27, the United States and
India announced having concluded negotiations on a peaceful nuclear cooperation (or
“123”) agreement, calling it a “historic milestone” in the bilateral strategic
partnership (the agreement text was released on August 3). The announcement came
one week after a fifth round of formal bilateral negotiations had ended in
Washington, where a high-level Indian delegation led by National Security Advisor
M.K. Narayanan met with numerous top U.S. officials, including Vice President Dick
Cheney and Secretary of State Condoleezza Rice. Under Secretary of State for
Political Affairs Nicholas Burns, the lead U.S. negotiator, called the deal “perhaps
the single most important initiative that India and the United States have agreed to
in the 60 years of our relationship” and “the symbolic centerpiece of a growing global
partnership between our two countries.”1 U.S. officials now urge New Delhi to move
rapidly toward completing remaining steps to consummation of the pact. These
include finalizing arrangements for International Atomic Energy Agency (IAEA)
inspections of India’s civilian nuclear facilities and winning the endorsement of the
Nuclear Suppliers Group (NSG) for nuclear trade.2 Following these steps, the 123
Agreement can become operative only through a Joint Resolution of Approval from
Congress. (See also “Civil Nuclear Cooperation” section below and CRS Report
RL33016, U.S. Nuclear Cooperation With India: Issues for Congress.)
Among the text’s more salient provisions are the following:
! India is granted authorization to reprocess spent fuel at a national
reprocessing facility that New Delhi plans to establish under IAEA
safeguards.
! In the event of a future nuclear test by India, the two countries would
launch immediate bilateral consultations to “consider carefully the
circumstances” and take into account whether the circumstances
resulted from “serious concern about a changed security
environment or as a response to similar actions by other states which
could impact national security.” While the U.S. President would
1 See [http://www.state.gov/p/us/rm/2007/89559.htm].
2 In September, India’s Atomic Energy Agency director met with IAEA Secretary-General
ElBaradei in Vienna, but did not launch a process to establish IAEA inspections of India’s
civil nuclear reactors. Days later, Dick Stratford, the Director of the State Department’s
Office of Nuclear Energy Safety, and Security, reportedly said that the United States was
“trying hard” to convince the NSG to allow for nuclear commerce with India (“US ‘Trying
Hard’ to Convince NSG: Stratford,” Press Trust India, September 21, 2007).

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CRS-2
maintain a right to demand the return of all U.S.-supplied nuclear
equipment and material in such a circumstance, the text recognizes
that “exercising the right of return would have profound
implications” for bilateral relations and it calls for both parties to
“take into account the potential negative consequences” of any
termination of ongoing cooperation. (Testing is not explicitly
referenced in the text, but observers widely see the above language
as being linked to such potential future activity.)
! India is given assurances that supplies of fuel for its civilian reactors
will not be interrupted — even if the United States terminates the
123 Agreement — through U.S. commitments to “work with friends
and allies ... to create the necessary conditions for India to obtain full
access to the international fuel market” and to “support an Indian
effort to develop a strategic reserve of nuclear fuel.”3
Many analysts had identified a U.S. granting of unambiguous reprocessing
rights as being a key requirement for New Delhi’s negotiators. Press reports
indicated that this issue, along with an Indian insistence on U.S. guarantees of an
uninterrupted fuel supply for all imported reactors, had become a central obstacle in
the lead-up to July’s talks in Washington, and that Indian negotiators had taken
uncompromising positions in both areas. Subsequent reports suggested that U.S.
negotiators had made considerable concessions to Indian demands and that the
agreement could face resistance from some in Congress if its legal stipulations are
seen to deviate from those found in enabling legislation (P.L. 109-401, the “Hyde
Act”).4 A July letter to President George W. Bush signed by 23 House Members
stressed the need for any civil nuclear cooperation agreement with India to conform
to “the legal boundaries set by Congress.” The letter noted that the U.S. Constitution
provides Congress with the sole authority to regulate foreign commerce, and it
expressed ongoing concerns about “India’s deepening military-to-military
relationship with Iran ... [which] places congressional approval of the Agreement for
Nuclear Cooperation in jeopardy.”5
In India, where the executive can enter international agreements without
parliamentary approval, Prime Minister Manmohan Singh’s Congress Party-
dominated cabinet endorsed the agreement text on July 25. On August 13, Singh
issued a statement to Parliament assuring lawmakers that, in concluding the deal, his
government had ensured that the autonomy of the country’s nuclear weapons
program would be maintained and that all key commitments previously made to
parliament were adhered to, including those related to plutonium reprocessing and
nuclear weapons testing rights, as well as assured and uninterrupted supplies of
3 See the 123 Agreement text at [http://www.state.gov/r/pa/prs/ps/2007/aug/90050.htm].
4 Somini Sengupta , “In Its Nuclear Deal With India, Washington Appears to Make More
Concessions,” New York Times, July 28, 2007; Carol Giacomo, “India Nuclear Deal Said
Complies With US Law,” Reuters, July 25, 2007; “US Congress to Scrutinize Nuclear Pact
With India,” Agence France Presse, August 3, 2007.
5 Letter available at [http://markey.house.gov/index.php?option=com_content&task=
view&id=3003&Itemid=141].

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CRS-3
nuclear fuel even if the agreement is terminated.6 Days later, in response to
continued controversy over whether or not India’s freedom to conduct future nuclear
weapons tests is restricted by the agreement, External Affairs Minister Pranab
Mukherjee told Parliament, “There is nothing in the bilateral agreement that would
tie the hands of a future government or legally constrain its options.”7
Despite such assurances, ensuing debate over the deal appears to have divided
the New Delhi establishment as much as any issue in the country’s history, and Prime
Minister Singh may have underestimated the degree of anti-Americanism and anti-
imperialism held by his coalition’s communist Left Front allies, who provide his
ruling coalition with crucial parliamentary support. Some analysts even see the deal
unraveling as a result resistance from a broad spectrum of Indian political parties.8
In August, senior leaders of the main opposition Bharatiya Janata Party (BJP)
reiterated their party’s “reservations” about the nuclear deal and its potentially
negative impact on India’s nuclear weapons program, and they “demanded” that the
Singh government establish a parliamentary committee to examine the text of the 123
Agreement in detail, then gain parliamentary approval before further steps are taken.9
(The Congress Party later rejected the demand, saying such practice is neither
required nor expected in the Indian system.) India’s communist parties have gone
much further in their criticisms, issuing a joint statement which called the 123
Agreement “flawed” and claiming that it “must be seen as a crucial step to lock India
into the U.S. global strategic designs.” Their vigorous campaign to block the
agreement has included pamphlets deriding the deal part of an attempt by the Singh
government to “integrate India more closely” with the United States.10
India’s influential nuclear scientific community, which has been skeptical about
planned cooperation with the United States, more recently appears to be acquiescing
to the Singh government’s plan, even as some continue to express concerns about
unresolved issues involving India’s reprocessing rights. One grouping of such
scientists came together to reject the argument that India’s nuclear weapons program
would be constricted by the deal.11
Many independent Indian commentators are approving of the pact, seeing in it
an end to “nuclear apartheid” that likely will “go down as one of the finest
6 See [http://www.indianembassy.org/newsite/press_release/2007/Aug/4.asp].
7 See [http://www.indianembassy.org/newsite/press_release/2007/Aug/7.asp].
8 Jonathan Soble, “Singh Underestimates Anti-US Feeling,” Financial Times (London),
August 22, 2007; Emily Wax and Rama Lakshmi, “Dissent Threatens U.S.-India Nuclear
Cooperation Deal,” Washington Post, August 26, 2007.
9 Press statement issued by Yashwant Sinha and Arun Shourie, August 4, 2007.
10 Y.P. Rajesh, “Indian Communists Reject U.S. Nuclear Pact,” Reuters, August 7, 2007;
“Indian Marxist Pamphlets Say Nuclear Deal to Push “US Agenda,” Press Trust of India,
September 3, 2007.
11 T.S. Subramanian, “Euphoria and Fear,” Frontline (Chennai), August 24, 2007; Ashish
Sinha, “‘N-Deal Won’t Affect Weapons Development,’” Times of India (Delhi), August 28,
2007.

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CRS-4
achievements of Indian diplomacy.”12 Top officials in the Singh government also
endorse the 123 Agreement, rejecting the arguments of opponents and saying the deal
meets all of India’s needs.13 Moreover, there is evidence that the Indian business
community is supportive of the deal as a means contributing to India’s rise as a major
power and of bolstering the country’s energy security.14
Nonproliferation experts have been consistent in their opposition to the nuclear
deal, believing it will significantly damage the global nonproliferation regime and
facilitate an Asian nuclear arms race. Some have asserted that the text of the 123
Agreement disregards the legislative intent of the Hyde Act, especially in the area of
continued supplies of nuclear fuel to India even if that country tests a nuclear
weapons and the agreement is terminated. Others warn that NSG endorsement of an
exception for India will “virtually ensure the demise of global nuclear export
restraints.”15 At least one nonproliferation advocate in Congress has concluded that
the 123 Agreement “is not consistent with [congressional] requirements and
restrictions” and that it would “deeply damage” the global nonproliferation regime.
He identified the issues of nuclear testing, assurances of fuel supply, and the
reprocessing of U.S.-origin nuclear material three core concerns.16
China, a potential strategic rival of India and close ally of Pakistan, has the
ability to block the deal in the NSG. Chinese officials have expressed concern about
any adverse impact on the nonproliferation regime. However, while a militarily
stronger India and the potential creation of a “democratic alliance” in Asia may be
undesirable for Beijing, many analysts believe China will not want to risk alienating
India and pushing it closer to the United States by exercising its power to veto the
nuclear deal.17 However, a proposal reportedly being circulated by the Israeli
government would set a criteria-based approach for NSG member commerce with
non-NPT signatories. The proposal may further complicate the Bush
Administration’s efforts to gain an India-specific exemption from the body.18
12 See, for example, Indrani Bagchi, “End of Nuke Apartheid Against India,” Times of India
(Delhi), August 4, 2007; C. Raja Mohan, “India Gains, US Doesn’t Lose,” Indian Express
(Delhi), August 4, 2007.
13 See, for example, Kapil Sibal, “The Left is Not Right on Nuclear Deal,” Indian Express
(Delhi), September 5, 2007.
14 “India Inc. Gives Thumbs Up to the Deal, Feels It is an Achievement for Manmohan,”
Hindu (Chennai), August 15, 2007.
15 See, for example, Michael Krepon and Alex Stolar, “The U.S.-India 123 Agreement: From
Bad to Worse,” August 23, 2007, at [http://www.stimson.org/print.cfm?SN=SA2007
08221446]; William Potter and Jayantha Dhanapala, “The Perils of Non-Proliferation
Amnesia,” Hindu (Chenai), September 1, 2007.
16 “Courses of Action for Congress and the Nuclear Suppliers Group: A Conversation with
the Hon. Edward J. Markey on Nuclear Cooperation Between the United States and India,”
Council on Foreign relations, September 13, 2007.
17 Chris Buckley, “China Likely to Swallow Anger Over India Nuclear Deal,” Reuters,
August 29, 2007.
18 Glenn Kessler, “Israel Submits Nuclear Trade Plan,” Washington Post, September 30,
(continued...)

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CRS-5
Indian Political Crisis. Domestic debate in India on the pending U.S.-India
nuclear deal has triggered the most serious crisis to be faced by the United
Progressive Alliance (UPA) government since it came to power in May 2004. In
fact, the crisis could lead to a collapse of the ruling coalition and early elections if
both Prime Minister Singh and the Left Front parties maintain their staunch and
mutually incompatible positions on the deal.19 Upon the August 3 release of the 123
Agreement text, uproar in the Indian Parliament lasted more than one week —
effectively shutting the body down at times — with numerous lawmakers
complaining that the deal would restrict India’s ability to test nuclear weapons in the
future and threaten its foreign policy independence.20 A mid-August meeting
between Singh and top communist leader Prakash Karat ended without
reconciliation, and days later the Left Front warned the central government of
“serious consequences” if it moved forward with the plan. Communist leaders
subsequently threatened to end their support for the UPA coalition if it moved
forward with the deal and, on October 1, they issued a fresh demand that the deal be
put on hold until it can be discussed in Parliament’s winter session slated to begin in
late November.21 The leader of the main opposition BJP, L.K. Advani, later
reiterated his view that the nuclear deal is “unacceptable” and he urged his party to
prepare for anticipated early elections.
To facilitate what can only be an interim truce between the Congress party and
the Left Front, the creation of a panel of government officials, politicians, and
scientists that would “study” the nuclear deal was proposed. In late August,
communist leaders agreed to join the 15-member panel, which met for the first time
on September 11 to look into “certain aspects” of the deal, assumed to be those of
concern to critics, as well as study its implications “on foreign policy and security
cooperation.” A second session on September 19 brought no resolution. The
Congress Party reportedly will withhold comment on the Left Front’s ongoing
complaints until after the panel’s third meeting slated for October 5.
India-Burma Relations. During mid-September, major pro-democracy street
protests in Burma grew in scale and, on September 25, the Rangoon military regime
18 (...continued)
2007.
19 Sanjoy Majumder, “Is the Indian Government Going to Last?,” BBC News, August 20,
2007; Peter Wonacott, “India’s Singh Faces His Biggest Test,” Wall Street Journal, August
22, 2007. A September opinion survey found that the UPA coalition might actually boost
its standing in snap elections by winning a slight parliamentary majority (without Left Front
support, the UPA currently holds only a plurality of seats) (“Advantage UPA, Says Opinion
Poll,” Hindu (Chennai), September 9, 2007).
20 In September, India’s leading communist party issued an open letter to Parliament
expressing the Left Front’s strong opposition to the proposed nuclear deal, calling the
alleged creation of a “strategic alliance with America” an unacceptable departure from the
Common Minium Program and rejecting a perceived “military alliance with America” (see
[http://www.cpim.org/statement/statements_2007.htm]).
21 Kamil Zaheer, “India’s Left Issues Blunt Threat Over Nuclear Deal,” Reuters, September
13, 2007; Bappa Majumadar, “India Left Sets New Deadline in Nuclear Deal Row,”
Reuters, October 1, 2007.

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CRS-6
launched a violent crackdown to suppress the movement being led by Buddhist
monks. In response, the United States announced new sanctions on Burma and urged
other countries to follow suit. India has in recent years been pursuing closer relations
with the repressive regime in neighboring Burma, with an interest in energy
cooperation and to counterbalance China’s influence there. The Bush Administration
has urged India to be more active in pressing for democracy in Burma; however, New
Delhi calls democracy and human rights internal Burmese issues. On September 26,
External Affairs Minister Mukherjee issued a statement calling for a “broad-based
process of national reconciliation and political reform” in Burma.22
On October 1, S.Res. 339, expressing the sense of the Senate on the situation
in Burma, was passed by the full Senate. The resolution includes a call for the
United States and the United Nations to “strongly encourage China, India, and Russia
to modify their position on Burma and use their influence to convince the
Government of Burma to engage in dialogue with opposition leaders and ethnic
minorities towards national reconciliation.” On the same day, New Delhi reiterated
its calls for political reform in Burma and urged Rangoon to launch a formal inquiry
into recent use of force against pro-democracy protestors there.23 In a justification
of New Delhi’s relatively uncritical approach to the Rangoon regime, some
commentators call past and continued cooperation by the Burmese military vital in
New Delhi’s efforts to battle separatist militants in India’s northeast.24
U.S.-India Relations. Unexpectedly strong domestic political resistance to
plans for U.S.-India civil nuclear cooperation has combined with some minor
controversies over the meaning of certain clauses in the 123 Agreement to interrupt
what have been mostly enthusiastic sentiments about U.S.-India relations.25
However, security relations appear unaffected: In late August, the Commander of the
U.S. Pacific Command, Adm. Timothy Keating, arrived in New Delhi for talks with
top Indian leaders and military officers. Adm. Keating lauded U.S.-India defense
relations as “solid, good, and improving steadily,” and he rejected suggestions that
upcoming “Malabar 07” joint naval exercises were an effort to sideline China.26 On
September 4, those exercises — of unprecedented scale and held off India’s east
coast for the first time — began in the Bay of Bengal, with India hosting a total of 27
warships from five countries, including the United States, Japan, Australia, and
Singapore. Even as U.S. and Indian leaders insist the exercises are about increasing
interoperability and preparedness for operations in maritime security and
22 See [http://meaindia.nic.in/pbhome.htm].
23 Y.P. Rajesh, “India Renews Pressure on Myanmar, Suggests Probe,” Reuters, October 1,
2007.
24 See, for example, Shishir Gupta, “Rangoon Isn’t Kathmandu,” Indian Express (Delhi),
October 2, 2007.
25 See, for example, Somini Sengupta, “A Bump in U.S.-India Rapport: Defining ‘Ally,’”
New York Times, August 23, 2007; Chidanand Rajghatta, “PM, Rice Visits on Ice as
Bilateral Ties Skid,” Times of India (Delhi), August 22, 2007.
26 Ashok Sharma,” US Admiral Says Military Cooperation With India Improving Steadily,”
Associated Press, August 23, 2007.

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CRS-7
humanitarian relief, many analysts see a nascent “alliance of democracies” which
could be intended to balance against growing Chinese power.
India-Pakistan Relations. The India-Pakistan peace initiative continues at
a much reduced pace, given especially domestic political and security crises which
have diverted the Pakistani government’s attention away from its relations with India.
Still, officials from both countries (and the United States) offer generally positive
assessments of the ongoing, if slowed, dialogue, even as substantive progress remains
elusive. While rates of infiltration of militants into Indian Kashmir appear to be
down, New Delhi’s concerns about Pakistani links to terrorism have not abated: In
April, Defense Minister A.K. Antony said there had been “no change in Pakistan’s
support for cross-border terrorism” in Kashmir, and some Indian officials have
suggested that deadly August 25 bombings in Hyderabad were linked to Pakistan-
based terrorist groups.
In August, a fourth round of bilateral talks on economic and commercial
cooperation ended with agreements to facilitate importation of cement from Pakistan
and tea from India, among others. Indian and Pakistani officials also held technical-
level talks on the modalities of cross-border movement. On August 31, bilateral
talks on the Tubal navigation project/Wullar barrage water dispute ended without
progress. Moreover, Pakistan has renewed criticism of planned U.S.-India civil
nuclear cooperation: Pakistani political and military leaders comprising the country’s
National Command Authority issued an August statement of concern that such
cooperation has implications for South Asian strategic stability as it would enable
India to significantly increase its stocks of fissile material and potentially lead to a
nuclear arms race in the region. In mid-September, Pakistan issued a formal protest
and expressed “deep concern” in response to the Indian government’s announced
intention to open the disputed territory of the Siachen Glacier to tourism, saying the
region was “illegally occupied” by Indian troops in 1984 and its final status has yet
to be determined due to an “inflexible Indian attitude.”27 In a more positive sign, on
October 1 trucks carrying tomatoes from India to Pakistan crossed the international
border for the first time in 60 years.
Kashmir. With New Delhi’s attention taken by political crisis, the nuclear deal
with the United States, and other national issues — and Islamabad embroiled in its
own domestic crises — the issue of Kashmiri sovereignty has been less discussed of
late, but low-level separatist-related violence there continues in the Indian-controlled
portion. An August an opinion survey found nearly 90% of the residents of Srinagar,
Kashmir’s most populous and Muslim-majority city, desiring Kashmiri independence
from both India and Pakistan. In the largely Hindu city of Jammu, however, 95% of
respondents said Kashmir should be part of India.28 In late August, moderate
Kashmiri separatist leader Mirwaiz Umar Farooq said three-year-old talks between
the Indian government and moderate Kashmiri separatists had suffered a “complete
27 See [http://www.mofa.gov.pk/Spokesperson/2007/Sep/Spokes_17_09_07.htm].
28 See [http://www.indianexpress.com/story/210147.html].

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CRS-8
breakdown of communication,” and he accused New Delhi of lacking the will needed
to find a political solution to the problem.29
In other developments:
! On October 2, the Commerce Department’s Bureau of Industry and
Security formally designated India as an eligible country under its
“Validated End-User” program to allow certain trusted Indian buyers
to purchase high-technology goods without an individual license.
! On September 29, India’s outgoing army chief said that the
infiltration of militants into Indian Kashmir and from
Bangladesh has been “contained to minimum levels,” but his
replacement, General Deepak Kapoor, ruled out any reduction of the
army’s role in these regions without further improvements.
! On September 24, the Congress Party named Rahul Gandhi — son
of party chief Sonia Gandhi and former Prime Minister Rajiv
Gandhi, grandson of former Prime Minister Indira Gandhi, and
great-grandson of former Prime Minister Jawaharlal Nehru — to
serve as one of its general secretaries in a sign that the party may be
preparing for early elections.
! On September 14, the U.S. Department of State’s International
Religious Freedom Report 2007 found that, “There was no change
in the status of respect for religious freedom by the National
Government during the period covered by this report and
government policy continued to contribute to the generally free
practice of religion; however, problems remained in some areas.”
! On September 7, External Affairs Minister Mukherjee and National
Security Advisor Narayanan met with Iran’s deputy foreign minister
in New Delhi.
! On August 25, a pair of synchronized explosions killed 42 people
and wounded scores more in the southern city of Hyderabad. At
least two other unexploded bombs were discovered by officials, who
suspect the involvement of Bangladesh- and/or Pakistan-based
Islamist terrorist groups.
! On August 23, Japanese Prime Minister Shinzo Abe ended a two-
day visit to New Delhi, where he and Prime Minister Singh issued
a “Roadmap for New Dimensions to the Strategic and Global
Partnership” outlining plans for security cooperation and
comprehensive economic engagement.
! On August 15, India celebrated its 60th independence day.
! On August 12, a week of serious separatist-related violence in
Assam left at least 27 Hindi-speaking migrant workers dead after
attacks by suspected ULFA gunmen.
! On July 21, India’s electoral college chose the country’s first
woman president when Congress Party stalwart Prathiba Patil won
a five-year term in the largely ceremonial post.
29 Sheikh Mushtaq, “Kashmiri Separatist Says India Talks Break Down,” Reuters, August
30, 2007.

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CRS-9
! On July 11, India and Australia signed an agreement to increase
bilateral maritime cooperation and military exchanges.
! On July 8, India and Vietnam signed nine new economic and
trade pacts, including an agreement to explore areas for defense
cooperation.
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 to be a
policy failure in Washington, and they spurred then-Deputy Secretary of State Strobe
Talbott to launch a series of meetings with Indian External Affairs Minister Jaswant
Singh in an effort to bring New Delhi more in line with U.S. arms control and
nonproliferation goals. While this proximate purpose went unfulfilled, the two
officials soon engaged a broader agenda on the entire scope of U.S.-India relations,
eventually meeting fourteen times in seven different countries over a two-year period.
The Talbott-Singh talks were considered the most extensive U.S.-India engagement
up to that time and likely enabled circumstances in which the United States could
play a key role in defusing the 1999 Kargil crisis, as well as laying the groundwork
for a landmark U.S. presidential visit in 2000.
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.”30 A U.S.-India Joint Working Group on Counterterrorism was
established that year and continues to meet regularly. During his subsequent visit to
30 See [http://www.usindiafriendship.net/archives/usindiavision/delhideclaration.htm].

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CRS-10
the United States later in 2000, Prime
Minister Atal Bihari Vajpayee
India in Brief
addressed a joint session of Congress
and issued a second Joint Statement
Population: 1.13 billion; growth rate: 1.6%
with President Clinton agreeing to
(2007 est.)
Area: 3,287,590 sq. km. (slightly more than one-
cooperate on arms control, terrorism,
third the size of the United States)
and HIV/AIDS.31
Capital: New Delhi
Head of Government: Prime Minister
In the wake of the September
Manmohan Singh (Congress Party)
2001 terrorist attacks on the United
Ethnic Groups: Indo-Aryan 72%; Dravidian
25%; other 3%
States, India took the immediate and
Languages: 22 official, 13 of which are the
unprecedented step of offering to the
primary tongue of at least 10 million
United States full cooperation and the
people; Hindi is the primary tongue of
u s e o f In d i a ’ s b a s e s f o r
about 30%; English widely used
Religions: Hindu 81%; Muslim 13%; Christian
c o u n t ert e r r o r i s m o p e r a t i o n s .
2%; Sikh 2%, other 2% (2001 census)
Engagement was accelerated after a
Life Expectancy at Birth: female 71 years; male
November 2001 meeting between
66 years (2006 est.)
President Bush and Prime Minister
Literacy: female 48%; male 70% (2003 est.)
Vajpayee, when the two leaders
Gross Domestic Product (at PPP): $4.29
trillion; per capita: $4,239; growth rate
agreed to greatly expand U.S.-India
9.4% (2006)
cooperation on a wide range of issues,
Currency: Rupee (100 = $2.46)
including regional security, space and
Inflation: 5.8% (2006)
scientific collaboration, civilian
Defense Expenditures: $23.9 billion (2.7% of
nuclear safety, and broadened
GDP; 2006)
U.S. Trade: exports to U.S. $21.8 billion;
economic ties.32 Notable progress has
imports from U.S. $10.1 billion (2006)
come in the area of security
Sources: CIA World Factbook; U.S. Department of
cooperation, with an increasing focus
Commerce; Economist Intelligence Unit; Stockholm
International Peace Research Institute
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.33 In March 2006, President Bush spent three days in India, discussed
further strengthening a bilateral “global partnership,” and issued another Joint
Statement.34 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
31 See [http://clinton4.nara.gov/WH/new/html/Wed_Oct_4_105959_2000.html].
32 See [http://www.state.gov/p/sca/rls/rm/6057.htm].
33 [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html].
34 [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html].

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CRS-11
claims that “India now is poised to shoulder global obligations in cooperation with
the United States in a way befitting a major power.”35 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
partner of the United States but also a more formidable interlocutor in areas of
disagreement, particularly in the WTO.36
In April 2007, Under Secretary of State Burns, the lead U.S. negotiator with India,
penned an opinion article 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.37 At a June 2007 U.S.-India business conference in
Washington, Secretary of State Rice laid out the perspective that
We in America look to the rise of India as an opportunity, a chance to work with
a great fellow democracy to share not only the benefits of the international
system, but indeed, the burdens and the responsibilities of maintaining it, of
strengthening it, and defending it. We are eager to continue charting a global
partnership with India, one that addresses the global challenges upon which the
safety and success of every nation now depends: stemming nuclear proliferation,
fighting terrorism, combating disease, protecting the environment, supporting
education and upward mobility, expanding economic development, and
promoting freedom under the rule of law.38
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.39
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
35 See [http://www.comw.org/qdr/fulltext/nss2002.pdf] and [http://www.comw.org/-
qdr/fulltext/nss2006.pdf].
36 [http://armed-services.senate.gov/statemnt/2007/February/McConnell%2002-27-07.pdf].
37 Nicholas Burns, “Heady Times for India and the U.S.,” Washington Post, April 29, 2007.
38 See [http://www.state.gov/secretary/rm/2007/06/87487.htm].
39 “Indian Community Burgeoning in America,” Associated Press, October 22, 2006; Mira
Kamdar, “Forget the Israel Lobby, the Hill’s Next Big Player is Made in India,”Washington
Post, September 30, 2007.

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CRS-12
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, National Security
Advisor M.K. Narayanan, 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 October 2006, a meeting of the U.S.-India CEO Forum was held
in New York City.
! In November, U.S. Under Secretary of Defense Eric Edelman met
with Defense Secretary Shekhar Dutt in New Delhi for the eighth
session of the U.S.-India Defense Policy Group to discuss
bolstering bilateral cooperation in military security and trade.
! 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.
! Later in June, Commerce Minister Nath visited Washington to give
a special address at the U.S.-India Business Council’s 32nd
Anniversary “Global India” Leadership Summit.
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 conflict nexus and nuclear weapons dyad, and so closely monitors
India’s regional relationships.

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CRS-13
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 at a slow pace,
with officials from both countries (and the United States) offering generally positive
assessments 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 were dashed when a May session ended without progress. June 2006 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 continued and top Indian leaders
renewed their complaints that Islamabad was 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. Soon after, however,
Bombay’s top police official said the 7/11 train bombings were planned by Pakistan’s
intelligence services and, in October 2006, 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, the Composite Dialogue resumed with a 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 the joint
anti-terrorism mechanism proposed in September. Such a mechanism is
controversial in India, with some analysts skeptical about the efficacy of institutional

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CRS-14
engagement with Pakistan in this issue-area even as Islamabad is suspected of
complicity in anti-India terrorism.
In January 2007, Indian Foreign Minister 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. 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 2007 and produced a joint statement in which both
governments agreed to use the mechanism for exchanging information about
investigations of 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 2007,
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.40 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 political
legitimacy and longevity in office are 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
40 See Pakistan Foreign Ministry Press Release No. 81/2007 at [http://www.mofa.gov.pk/
Press_Releases/2007/March/PR_81_07.htm].

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CRS-15
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.41 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
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
41 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-16
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
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 political theory 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, then-
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 33 rounds of border talks and joint working group
meetings aimed at reaching a final settlement have been held since 1981 — 11 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. Some skeptical Indian analysts believe China is using the
so far unavailing border dialogue as “diplomatic cover to be intractable and
revanchist.”42
42 Brahma Chellaney, “Don’t Get Cowed Down,” Times of India (Delhi), October 2, 2007.

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CRS-17
A 2003 visit to Beijing by then-Prime Minister Vajpayee was viewed as marking
a period of much improved relations. In 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” to include
broadened defense links and efforts to expand economic relations.43 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 $26 billion during the year
ending March 2007, a ten-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
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
43 See John Lancaster, “India, China Hoping to ‘Reshape the World Order’ Together,”
Washington Post, April 12, 2005.

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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.”44 (See also “India-Iran Relations” section below; CRS Report
RS22486, India-Iran Relations and U.S. Interests, 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
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. The Bangladeshi faction of the Harakat ul-Jihad-I-Islami — an Islamist
militant outfit that appears on the U.S. state Department counterterrorism Office’s
list of “other groups of concern” and has links to Pakistan-based terrorist groups —
has been implicated in several terrorist attacks inside India. 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
44 “India Won’t Be Cowed Down: Deora” Hindu (Chennai), May 9, 2007.

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CRS-19
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 2006, India transferred to Burma two maritime surveillance aircraft and
a number of air defense guns, and the Indian defense minister announced the sale to
Burma of more defense equipment — including tanks and heavy artillery — in
exchange for Rangoon’s counterterrorism cooperation and assistance in neutralizing
Indian separatists operating near their shared border. Such transfers reportedly are
underway.45 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 unraveled in 2006, 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 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.46 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 paid a visit to New Delhi
— his fourth since taking office — where he met with top Indian officials; signed
45 Anuj Chopra, “Why India is Selling Weapons to Burma” Christian Science Monitor, July
23, 2007. International human rights groups and some in Congress have criticized New
Delhi’s military interactions with Rangoon. Since 1988, the United States has imposed a
wide range of sanctions against Burma, including congressional passage in 2003 of the
Burma Freedom and Democracy Act (P.L. 108-61) banning imports from Burma (renewed
by Congress in 2007). In a July 23, 2007, floor statement, the Chairman of the House
Foreign Affairs Committee criticized India (and China) for propping up the Rangoon
government “through shockingly direct, blatant deals, including arms trading with this cruel
junta in Burma.”
46 Vladimir Isachenkov, “Russia, India Cement Nuclear Ties With Offer of 4 New
Reactors,” Associated Press, January 25, 2007.

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CRS-20
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 current decade.
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
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 an
interest in seeing membership of the U.N. Security Council expanded; both
governments aspire to permanent seats. India seeks Japan’s endorsement for
proposed U.S.-India civil nuclear cooperation, which has not been forthcoming to
date. An August 2007 visit to New Delhi by Japanese Prime Minister Shinzo Abe,
who is effusive in his praise of India as a “partner and friend,” was seen by many as
part of a long-term effort to hedge against China’s growing regional influence.47 Abe
and Prime Minister Singh issued a “Roadmap for New Dimensions to the Strategic
and Global Partnership” outlining plans for security cooperation and comprehensive
economic engagement.48
The U.S. and Japanese governments 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. In September, India hosted unprecedented five-country naval exercises
in the Bay of Bengal (with Australian and Singaporean vessels also participating).
Officials stressed that the exercises — which involved a total of 27 ships and
submarines, among them 2 U.S. aircraft carriers — were not prompted by China’s
growing military strength.49 New Delhi favors greater trilateral India-U.S.-Japan
cooperation, especially in the areas of trade and energy security.50
Political Setting
India is the world’s most populous democracy and remains firmly committed
to representative government and rule of law. As a nation-state, India presents a vast
mosaic of hundreds of different ethnic groups, religious sects, and social castes. U.S.
47 “Japan Seeks New Ties With India,” BBC News, August 22, 2007; Heather Timmons, “As
Japan and India Forge Economic Ties, A Counterweight to China is Seen,” New York Times,
August 21, 2007.
48 See [http://www.mofa.go.jp/region/asia-paci/pmv0708/joint-2.html].
49 “Major Naval Drill Kicks Off in Indian Ocean,” Agence France Presse, September 4,
2007.
50 See an address by the Indian Ambassador to the United States at
[http://www.indianembassy.org/newsite/press_release/2007/June/13.asp].

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CRS-21
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.
National Elections. With a robust and working democratic system, India 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). 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. The most recent
parliamentary elections were held in April and May of 2004.
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 the 2004 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 more than three years in power, exceeding the expectations of some
observers. Opinion surveys suggest 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 May 2007 state assembly elections. The Congress Party 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 2009.51
51 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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The Congress Party.52 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 the failure of Congress to make strong pre-
election alliances (as had the BJP) and perceptions that party leader Sonia Gandhi
lacked the experience to lead the country. Support for Congress had been in fairly
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 coalition’s
policy decision-making process.
The Bharatiya Janata Party (BJP).53 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 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. In preparing for general elections that may come in early
2008, the party is reportedly planning to adhere to its core Hindutva philosophy.54
Regional Parties. The influence of regional and caste-based parties has
become an increasingly important variable in Indian politics; the 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,
52 See the Indian National Congress at [http://www.congress.org.in].
53 See the Bharatiya Janata Party at [http://www.bjp.org].
54 Sanjay Jha, “BJP Goes Back to Hindutva,” Telegraph (Kolkata), September 2, 2007.

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CRS-23
and in the Congress-led coalition’s professed attention to rural issues and to relations
between state governments and New Delhi.
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
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 2007, 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.55
The Left Front.56 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 government
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 U.S.-India relations. New Delhi has long
55 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.
56 See the Communist Party of India (Marxist) at [http://www.cpim.org].

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CRS-24
pressed Washington 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 defense.57
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, and
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.58 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.
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 Washington further tightened its own export laws with
the Nuclear Nonproliferation Act of 1978 (P.L. 95-242). New Delhi has long railed
at a “nuclear apartheid” created by an apparent double standard inherent in the NPT,
which, they maintain, allows certain states to legitimately employ nuclear deterrents
while other states cannot. Under U.S. and international law, civil nuclear cooperation
with India cannot commence until Washington and New Delhi finalize a peaceful
nuclear cooperation agreement (and Congress endorses such an agreement), until
New Delhi concludes its own safeguards agreement with the International Atomic
Energy Agency, and until the NSG allows for such cooperation.59 (See also 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
57 See [http://www.whitehouse.gov/news/releases/2004/01/20040112-1.html].
58 See [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html] and
[http://www.indianembassy.org/press_release/2005/June/31.htm].
59 There are indications that some NSG member states are wary of allowing the provision
to India of nuclear-related assistance. China, for instance, has expressed concern about any
adverse impact on the global nonproliferation regime. Japan, for its part, has signaled that
India’s non-membership in the NPT regime remains a “core problem” for Tokyo. Other
reportedly skeptical governments include those from Austria, Ireland, and New Zealand.

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CRS-25
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, it 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.
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.”60 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.
Potential Benefits and Costs. Secretary of State 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.”61
60 See [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html].
61 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.

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A number of 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.62 At present, nuclear power accounts for less than 3% of India’s total
electricity generation, and an Indian government official has estimated that, even
under optimistic scenarios, this percentage would likely no more than double over the
next 25 years.63
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.64
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. A more modest estimate foresees the deal generating as much as
$40 billion in new foreign investment into India.65 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 the enabling
legislation, P.L. 109-401). Proponents suggest that this U.S. “gesture” will have
significant and lasting psychological and symbolic effects in addition to the material
62 See, for example, an open letter Congress at [http://www.indianembassy.org/newsite/
press_release/2006/Mar/30.asp].
63 Cited in Alistair Scrutton and Nidhi Verma, “U.S. Nuclear Deal Won’t Power India’s
Boom,” Reuters, March 13, 2007.
64 See, for example, open letters to Congress at [http://fas.org/intt2006/X3e_FDC01218.pdf];
[http://www.armscontrol.org/pdf/20060912_Indi a_Lt r _Congress.pdf]; and
[http://www.armscontrol.org/pdf/20051118_India_Ltr_Congress.pdf].
65 See Sridhar Krishnaswami, “‘Indo-US N-deal a Historic Opportunity,’” India Abroad,
March 22, 2006; “US Nuclear Deal Likely to get India 40bn Dollars business,” BBC
Monitoring South Asia, August 13, 2007.

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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. 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 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 policy initiative by passing
enabling legislation.66 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 an 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 or the “Hyde Act”), 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.67
In May 2007, 16 experts, scholars, and former U.S. government officials signed
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
66 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.
67 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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prohibitions on reprocessing and enrichment technologies.68 A July 2007 letter to
President Bush signed by 23 Members of the House stressed the need for any civil
nuclear cooperation agreement with India to conform to “the legal boundaries set by
Congress.” The letter noted that the U.S. Constitution provides Congress with the
sole authority to regulate foreign commerce, and it expressed ongoing concerns about
“India’s deepening military-to-military relationship with Iran ... [which] places
congressional approval of the Agreement for Nuclear Cooperation in jeopardy.”69
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 bilateral civil nuclear
initiative; critics continue to be vocal to this day. Former Prime Minister Vajpayee,
along with many leading figures in his opposition BJP party, 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” and aimed
at “capping, rolling back, and eventually eliminating India’s nuclear weapons
capability.”70 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.71
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. From this perspective, the U.S.
government also repeatedly has “shifted the goalposts” to forward its own (veiled)
nonproliferation goals.72 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
68 See [http://www.armscontrol.org/pdf/20070515letteronUSIndia123House.pdf]. The
Chairman of the Senate Foreign Relations Committee reportedly has said it would be
unlikely that Congress would be willing to further amend U.S. law on nuclear testing and
reprocessing (Carol Giacomo and Susan Cornwell, “Biden Cool to US Compromise on India
Deal,” Reuters, May 2, 2007).
69 [http://markey.house.gov/index.php?option=com_content&task=view&id=3003&Itemid=
141].
70 See “Press Statement of the BJP on the Indo-US Nuclear Deal,” December 10, 2006, at
[http://www.bjp.org].
71 See, for example, Sanjay Jha, “Politics of BJP’s Nuclear Tantrum,” Telegraph (Kolkata),
August 7, 2007.
72 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.

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a “capitulation” to U.S. pressure.73 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 at times by the Indian government)
are summarized as follows:
! India’s unilateral moratorium on nuclear tests was 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;
! India was being denied nuclear reprocessing technologies warranted
under “full cooperation;”
! India was not being given prior authorization to reprocess spent fuel;
! India was not given assurances that it will receive uninterrupted fuel
supplies in perpetuity;
! the United States was retaining the right to carry out its own
“intrusive” end-use verifications;
! there was 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 would limit New
Delhi’s foreign policy independence.74
Prime Minister Singh 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
expressed concern about some of the points listed above and, in January 2007, India’s
73 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).
74 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.

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lead negotiator warned that existing stipulations proscribing the reprocessing spent
fuel and further nuclear testing could kill the deal altogether.75 Regardless of the
legally binding or non-binding nature of certain controversial sections of the U.S.
legislation, New Delhi 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.”76
Bilateral Negotiations Completed. On July 27, 2007, the United States
and India announced having concluded negotiations on a peaceful nuclear
cooperation (“123”) agreement, calling it a “historic milestone” in the bilateral
strategic partnership. The announcement one week after a fifth round of formal
bilateral negotiations had ended in Washington, where a high-level Indian delegation
led by National Security Advisor M.K. Narayanan had met with numerous top U.S.
officials, including Vice President Cheney and Secretary of State Rice. Under
Secretary of State Burns, the lead U.S. negotiator, called the deal “perhaps the single
most important initiative that India and the United States have agreed to in the 60
years of our relationship” and “the symbolic centerpiece of a growing global
partnership between our two countries.”77 U.S. officials now urge New Delhi to
move rapidly toward completing remaining steps to consummation of the pact.
These include finalizing arrangements for IAEA inspections of India’s civilian
nuclear facilities and winning the endorsement of the NSG for nuclear trade.
Among the text’s more salient provisions are the following:
! India is granted authorization to reprocess spent fuel at a national
reprocessing facility that New Delhi plans to establish under
International Atomic Energy Agency safeguards.
! In the event of a future nuclear test by India, the two countries would
launch immediate bilateral consultations to “consider carefully the
circumstances” and take into account whether the circumstances
resulted from “serious concern about a changed security
environment or as a response to similar actions by other states which
could impact national security.” While the U.S. President would
have a right to demand the return of all U.S.-supplied nuclear
equipment and material in such a circumstance, the text recognizes
that “exercising the right of return would have profound
implications” for bilateral relations and calls for both parties to “take
into account the potential negative consequences” of any termination
of ongoing cooperation.
! India is given assurances that supplies of fuel for its civilian reactors
will not be interrupted — even if the United States terminates the
123 Agreement — through U.S. commitments to “work with friends
75 See “Excerpts from PM’s Reply to Discussion in Rajya Sabha on Civil Nuclear Energy
Cooperation with the United States,” August 17, 2006, at [http://www.carnegie
endowment.org/static/npp/Singh_speech_Aug_2006.pdf]; “India Could Dump U.S. Nuclear
Deal: Envoy,” Reuters, January 10, 2007.
76 Author interview with Indian government official, New Delhi, September 2006.
77 See [http://www.state.gov/p/us/rm/2007/89559.htm].

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CRS-31
and allies ... to create the necessary conditions for India to obtain full
access to the international fuel market,” and to “support an Indian
effort to develop a strategic reserve of nuclear fuel.”78
Press reports had indicated that U.S. granting of unambiguous reprocessing rights,
along with an Indian insistence on U.S. guarantees of an uninterrupted fuel supply
for all imported reactors, had become a central obstacle in the lead-up to July’s talks,
and that Indian negotiators had taken uncompromising positions in both areas.
Subsequent reports suggested that U.S. negotiators had made considerable
concessions to Indian demands and that the agreement could face resistance from
some in Congress if its legal stipulations are seen to deviate from those found in the
Hyde Act (the 123 Agreement can become operative only through a Joint Resolution
of Approval from Congress).79
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 anticipated
closer ties in space exploration, satellite navigation and launch, and in the
commercial space arena. Major conferences on India-U.S. space science and
commerce were held in Bangalore (headquarters of the Indian Space Research
Organization) in both 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 2007, when
U.S. Commerce Secretary Gutierrez unveiled a new “Trusted Customer” program
78 See text of the 123 Agreement at [http://www.state.gov/r/pa/prs/ps/2007/aug/90050.htm].
79 Somini Sengupta , “In Its Nuclear Deal With India, Washington Appears to Make More
Concessions,” New York Times, July 28, 2007; Carol Giacomo, “India Nuclear Deal Said
Complies With US Law,” Reuters, July 25, 2007; “US Congress to Scrutinize Nuclear Pact
With India,” Agence France Presse, August 3, 2007.

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designed to facilitate greater high-tech trade with India. In early 2005, the inaugural
session of the U.S.-India High-Technology Defense Working Group was held under
HTCG auspices.80 In October 2007, Commerce’s Bureau of Industry and Security
formally designated India as an eligible country under its “Validated End-User”
program to allow certain trusted Indian buyers to purchase high-technology goods
without an individual license.81
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, three Department of Atomic Energy entities, and Bharat
Dynamics Limited, a missile production agency.82
Security Issues
The Indian Military.83 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 nearly $24 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 (to include 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. The Indian navy may
80 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].
81 “US Streamlines High-Tech Export Controls on India,” Reuters, October 2, 2007.
82 See [http://www.bis.doc.gov/Entities].
83 Much information in this section comes from The Military Balance 2007 (Institute for
International and Strategic Studies, London, 2007).

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in 2008 commission a nuclear-powered attack submarine armed with nuclear-tipped
cruise missiles.84
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 — only 18 of the new air force jets are to be manufactured abroad. In addition
to the Scorpene submarines, other notable recent purchases for the Indian military
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.
As India seeks to expand its power projection capabilities, it has come under fire
from some corners for continuing to prepare for a conventional interstate war that
may be unlikely to occur. According to one report, of the country’s nearly two
million persons in uniform, only about 5,000 have meaningful counterterrorism
training.85
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 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 weapons of mass destruction (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. During an August 2007 visit to New Delhi, Adm.
84 Sandeep Unnithan, “The Secret Nuke Sub Deal,” India Today (Delhi), September 3, 2007.
85 Ajai Sukla, “Dysfunctional Defense,” Wall Street Journal Asia, July 19, 2007.

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Keating lauded U.S.-India defense relations as “solid, good, and improving
steadily.”86
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
view 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 repeatedly downplay such probable motives. Still, while a congruence
of U.S. and Indian national security objectives is unlikely in the foreseeable future,
convergences are being identified 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.87
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 seventh and most recent of these came in September 2007, when
India hosted a total of 27 warships from five countries — including the United States,
Japan, Australia, and Singapore — for maneuvers in the Bay of Bengal. U.S. and
Indian officials tout such 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, with analysts anticipating that New
Delhi will spend as much as $40 billion on weapons procurement over the next five
years.88 The first-ever major U.S. arms sale to India came in 2002, when the
Pentagon negotiated delivery 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
86 Senate Armed Services Committee Hearing on U.S. Military Command Budgets, April
24, 2007; Ashok Sharma,” US Admiral Says Military Cooperation With India Improving
Steadily,” Associated Press, August 23, 2007.
87 See also Vibhuti Hate and Teresita Schaffer, “U.S.-India Defense Relations: Strategic
Perspectives,” CSIS South Asia Monitor, April 4, 2007, at [http://www.csis.org/media/
csis/pubs/sam105.pdf].
88 Heather Timmons and Somini Sengupta, “Building a Modern Arsenal in India,” New York
Times, August 31, 2007.

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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 the $44 million purchase
of the USS Trenton, a decommissioned American amphibious transport dock. The
ship, which became the second largest in the Indian navy when it was commissioned
as the INS Jalashwa in June 2007, 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 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.”89 India is expected to soon issue a tender for the purchase of 126
new multi-role combat aircraft in a deal that could be worth more than $10 billion.
Lockheed Martin’s F-16 and Illinois-based Boeing’s F/A-18 are competing with
aircraft built in Russia, France, Sweden, and by a European consortium. (See also
CRS Report RL33515, Combat Aircraft Sales to South Asia: Potential Implications.)
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 to strike 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.
Likewise, the Indian defense minister reportedly has insisted that the final decision
on which multi-role combat aircraft to purchase will be guided solely by the needs
of the air force and have “nothing to do” with the U.S.-India nuclear deal.90 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-
89 See [http://www.state.gov/r/pa/prs/ps/2005/43853.htm].
90 Sujan Dutta, “126 Have Nothing to Do With 123: Antony,” Telegraph (Kolkata), August
30, 2007.

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technology transfers sought by New Delhi.91 In 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 have been seen to support the sale as meshing with President Bush’s policy
of cooperating with friendly countries on missile defense, State Department officials
reportedly 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. Thus, 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.
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
international security and stability around the world.”92 In 2002, India and the United
States launched the Indo-U.S. 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.93 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
91 “Defense Firms Seek Sales in India,” Chicago Tribune, December 21, 2006.
92 “Joint Statement of U.S., India on Terrorism, Bilateral Ties,” U.S. Department of State
Washington File, November 9, 2001.
93 See [http://www.indianembassy.org/press_release/2005/June/31.htm].

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terrorist financing.94 Expanding military-to-military links have included company-
level joint counterinsurgency training of army units.95
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.96 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.97 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.98 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.99
Nuclear Weapons and Missile Proliferation. Some policy analysts
consider the apparent arms race between India and Pakistan as posing perhaps the
most likely prospect for the future use of nuclear weapons by states. In May 1998,
India conducted five underground nuclear tests, breaking a self-imposed, 24-year
moratorium on such testing. Despite international efforts to dissuade it, Pakistan
quickly followed. The tests created a global storm of criticism and represented a
serious setback for two decades of U.S. nuclear nonproliferation efforts in South
Asia. Following the tests, President Clinton imposed full restrictions on non-
humanitarian aid to both India and Pakistan as mandated under Section 102 of the
Arms Export Control Act. 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.
94 See [http://usinfo.state.gov/is/Archive/2006/Apr/24-821244.html].
95 John Lancaster, “U.S. Troops on Front Line of Expanding India Ties,” Washington Post,
January 25, 2006.
96 “Hunting for India’s ‘Most Wanted,’” Jane’s Intelligence Digest, December 9, 2005;
Treasury notification at [http://www.ustreas.gov/press/releases/js909.htm].
97 “U.S.-India Treaty on Mutual Legal Assistance in Criminal Matters Ratified,” U.S.
Embassy New Delhi Press Release, October 3, 2005.
98 “US Offers India Help to Fight Maoists: Official,” Reuters, May 26, 2006.
99 “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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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 2003, New Delhi announced creation of a
Nuclear Command Authority. After the body’s first session in September of that
year, 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 in a
2007 statement to a Senate panel, India is building its stockpile of fission weapons
and is likely to continue work on advanced warhead and delivery systems.100 (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.101 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
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, at best, and the Bush
Administration quickly set aside the benchmark framework. Along with security
concerns, the governments of both India and Pakistan face 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
100 Statement of Lt. Gen. Michael Maples before the Senate Select Committee on
Intelligence, January 11, 2007, at [http://intelligence.senate.gov/070111/maples.pdf].
101 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-39
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 in 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.
The Proliferation Security Initiative. In May 2003, President Bush
announced a new multilateral initiative that aims to prevent the flow of WMD and
related materials through a set of Interdiction Principles that include coordinated
national export control and information exchange efforts, and the interception of
WMD or related materials moving to or from “states or non-state actors of
proliferation concern.” According to the State Department, PSI is not an
organization, but rather an activity with more than 80 current “participants.”102 New
Delhi was at first concerned that a “core group” comprising PSI’s founding states
represented a two-tiered system; India was reassured that the organization is
nondiscriminatory, and the core group was disbanded in 2005. However, Indian
officials express ongoing reservations about the mechanics of maritime interdiction
and its legal ramifications.103 While neither the June 2005 defense pact nor the July
2005 Joint Statement make direct mention of the PSI, U.S. legislation enabling U.S.-
India civil nuclear cooperation (P.L. 109-401, the “Hyde Act”) calls for securing
India’s full participation in the PSI and seeks New Delhi’s full commitment to the
Interdiction Principles. (See also CRS Report RS21881, Proliferation Security
Initiative (PSI).)
India-Iran Relations. India-Iran relations may complicate progress in New
Delhi’s nascent “strategic partnership” with Washington.104 India’s relations with
Iran traditionally have been positive and, in 2003, the two countries launched a
bilateral “strategic partnership” of their own.105 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. Some 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.
102 See [http://www.state.gov/t/isn/c10390.htm].
103 C. Raja Mohan, “Dismantling Core Group, US Eases India’s Path to Proliferation
Security,” Indian Express (Bombay), August 18, 2005; “India Seeks ‘Clarification’ on Anti-
Proliferation Program,” Press Trust India, July 1, 2007.
104 Rama Lakshmi, “India’s Long-Standing Ties With Iran Straining Alliance With U.S.,”
Washington Post, September 20, 2007.
105 See text of the January 2003 “New Delhi Declaration” at [http://meaindia.nic.in/
declarestatement/2003/01/25jd1.htm].

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In each of the past three years (2004-2006), 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, the “Hyde act”) 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.106
Many in Congress have voiced concern about India’s relations with Iran and
their relevance to U.S. interests. Some worry especially about New Delhi’s defense
ties with Tehran and have sought to link the issue with congressional approval of
U.S.-India civil nuclear cooperation.107 Expressions of these congressional concerns
became more pointed in 2007:
! In April, eight U.S. Senators sent a letter to Prime Minister Singh
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.”
! In May, eight U.S. Representatives — including the Chair and
Ranking Member of the House Foreign Affairs Committee — sent
Singh a letter expressing “grave concern” at India’s “increasing
cooperation” with Iran.
! In July, a letter to President Bush by 23 House Members expressed
concern with “India’s deepening military-to-military relationship
with Iran ... [which] places congressional approval of the Agreement
for Nuclear Cooperation in jeopardy.”
! In September, two Senators wrote to Secretary of State Rice to
express their concern about India-Iran military-to-military relations,
saying that, as supporters of the U.S.-India civil nuclear deal, they
are “apprehensive that the (123) agreement could be sidetracked by
what appears to be a growing relationship between Iran and India.”
Indian Foreign Secretary Menon has offered assurances that all of India’s dealings
with Iran are permitted under U.N. Security Council Resolutions, and he has
expressed being “quite amazed” at reports of closer India-Iran military ties. In
September 2007, Assistant Secretary of State Boucher said that some concerns about
106 Although President Bush indicated he has not adopted the law’s statements of policy as
U.S. foreign policy, this provision rankled many in New Delhi who view it as an
“extraneous” constraint on India’s foreign policy independence. In their explanatory
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).
107 See, for example, Vivek Raghuvanshi and Gopal Ratnam, “Indian Navy Trains Iranian
Sailors,” Defense News, March 27, 2006; Vivek Raghuvansh, “India, Iran Form Joint Group
to Deepen Defense Ties,” Defense News, March 19, 2007; C. Christine Fair, “India and Iran:
New Delhi’s Balancing Act,” Washington Quarterly, Summer 2007; “India Trains Iranian
Navy Despite US Pressure,” Hindustan Times (Delhi), September 4, 2007.

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India-Iran military relations are “exaggerated,” but that the onus is on New Delhi to
“explain” its relations with Tehran.108
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 expresses 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. 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. Concerns109
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
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. Just prior to his March 2006 visit to New 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.110
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 employ only about one-third of one percent of India’s work
force and, while optimists vaunt an Indian “middle class” of some 300 million
108 Glenn Kessler, “India Official Dismisses Iran Reports,” Washington Post, May 2, 2007;
“US Asks India to Come Clean On Ties With Iran,” Press Trust India, September 19, 2007.
109 See also CRS Report RL34161, India-U.S. Economic and Trade Relations. Most of the
economic data in these sections come from the Economist Intelligence Unit and Global
Insight, as well as from U.S. and Indian government sources.
110 See [http://www.whitehouse.gov/news/releases/2006/02/20060222-2.html].

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people, a much larger number of Indians subsists on less than 50 cents per day.111
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 on its 2006 human
development index (between Namibia and Cambodia), 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.
India’s central bank warned in early 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.112
Consumer price inflation has dropped somewhat in mid-2007 (with a year-on-year
rate of 5.7% in June), and is predicted to level off at around 5% in the latter months
of the year. The soaring Bombay Stock Exchange tripled in value from 2001-2006,
then apparently overheated with the 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 and throughout 2007.
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
111 An August 2007 Indian government report found that about three-quarters of Indians —
more than 800 million people — subsists on less than 20 rupees (about 50 cents) per day.
See also Somini Sengupta, “Economic Boom Fails to Generate Optimism in India,” New
York Times, August 16, 2007.
112 “India Overheats,” Economist (London), February 3, 2007.

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sought to reassure foreign investors with promises of transparent and
nondiscriminatory policies. A 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 the 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.113
A January 2007 report from global investment banking and securities firm Goldman
Sachs 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 political developments — including a rise in protectionism; supply-side
restraints, including business climate, education, and labor market reforms; and
environmental degradation — as representing major risks to future growth.114 Other
analyses identify water shortages, urban woes, and pollution as further potential
threats to Indian prosperity.115
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 exports. 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. imports from India in 2006 had a value of $21.8
billion (up 16% over 2005). Leading imports included cotton apparel; textiles; and
pearls, gemstones, and jewelry. Exports to India in 2006 totaled $10.1 billion (up
27% over 2005), with aircraft; business and telecommunications equipment; finished
pearls, gemstones, and jewelry; fertilizer; and chemicals as leading categories.116
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.
113 [http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/DPR_overview.pdf].
114 [http://www.usindiafriendship.net/viewpoints1/Indias_Rising_Growth_Potential.pdf].
115 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 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).
116 See [http://www.census.gov/foreign-trade/statistics/country/index.html].

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As of August 2007, India’s foreign exchange reserves were at a record $229 billion,
up 38% in just one year. According to Indian officials, about one-seventh of foreign
direct investment in India since 1991 has come from U.S. firms; in recent years, the
major U.S.-based companies Microsoft, Dell, Oracle, and IBM have made multi-
billion-dollar investments in India. 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.117
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
illicit use of the financial system, and strengthening India’s regime for
intellectual property rights.118
In September 2007, U.S. Ambassador Mulford opined that, “Continued reform and
liberalization will help further boost ... and spread the benefits of rapid economic
growth to more recipients across India.”119
Barriers to Trade and Investment. Despite significant tariff reductions
and other measures taken by India to improve market access, according to the 2007
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.”120 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
117 See “U.S.-India Strategic Economic Partnership,” U.S.-India CEO Forum, March 2006
at [http://planningcommission.nic.in/reports/genrep/USIndia.pdf].
118 See [http://www.state.gov/p/us/rm/2007/85424.htm].
119 See [http://newdelhi.usembassy.gov/pr91907.html].
120 See [http://www.ustr.gov/Document_Library/Reports_Publications/Section_Index.html].

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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 states: 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.121
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, then-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. Under Secretary of the Treasury 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.”122
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
effectively enforcing copyright protection in India.123 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.”124
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
121 Jo Johnson, “India’s Sovereign Credit Rating Upgraded,” Financial Times (London),
January 30, 2007.
122 See [http://www.state.gov/e/rls/rm/2004/36345.htm] and [http://newdelhi.usembassy.gov/
pr022007.html].
123 See [http://www.iipa.com/rbc/2007/2007SPEC301INDIA.pdf].
124 See [http://newdelhi.usembassy.gov/pr120706.html]. Bush Administration policy is at
[http://mumbai.usconsulate.gov/chris_israel.html].

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index highlights restrictive trade policies, heavy government involvement in the
banking and finance sectors, rigorous investment caps, demanding regulatory
structures, and a high incidence of corruption.125 Berlin-based Transparency
International placed India 72nd out of 179 countries in its 2007 “corruption
perceptions index.” The group’s 2006 “bribery index” found India to be the worst
offender among the world’s top 30 exporting countries.126 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.127 (See also CRS Report RL34161, India-U.S. Economic and Trade
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 and tax laws. Parliament soon approved implementation and,
in February 2006, the SEZ Act went into effect. With well over 200 such zones
approved and hundreds more planned, SEZs have since 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
has openly opposed exposing farmers to “unscrupulous developers.” Other
detractors, 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 on issues including compensation for displaced farmers.128 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 West
Bengal 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
125 See [http://www.heritage.org/research/features/index/country.cfm?id=India].
126 See [http://www.transparency.org].
127 See [http://www.fraserinstitute.ca/admin/books/chapterfiles/3aEFW2006ch3A-K.pdf#].
128 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.

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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.
Indian 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.”129 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 later expressed
U.S. surprise at how “rigid and inflexible” India (and Brazil) were during the June
negotiations, and she suggested that “some countries ... really don’t want a Doha
round outcome.” In September, however, Nath expressed renewed optimism in
identifying a new and “greater comprehension of India’s sensitivities” regarding the
effects of U.S. farm subsidies.130 (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,
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.131 The
U.S. government has committed to assist India in promoting the development of
129 “India Blames U.S. for Failure of WTO Talks,” Hindu (Chennai), July 26, 2006;
Secretary Johanns at [http://newdelhi.usembassy.gov/pr112106b.html].
130 “U.S. Says Doha Risks Being Delayed for Several Years,” Reuters, July 5, 2007; “World
Leaders Express New Optimism on Doha Deal,” Reuters, September 25, 2007.
131 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].

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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.132
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 2005.133 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.134 Even optimistic
projections suggest that nuclear power will provide less than 10% of India’s
generation capacity in 25 years and there are doubts about New Delhi’s projected
goal of generating 20 gigawatts of nuclear power by 2020.135
One-fifth of the India’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 billions of dollars annually. Moreover,
from one-quarter to one-half of India’s electricity is said to disappear though
“transmission losses,” i.e., theft. In the summer of 2007, worsening shortfalls were
causing electrical outages of up to nine hours per day in the industrial and agricultural
belts of Punjab, Gujarat, and Maharashtra, and the capital of Delhi often has power
for only 14 hours each day. In fact, a growing electricity crisis may be severely
hampering India’s continued economic security and growth.136
132 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.
133 See a Ministry of Power report at [http://powermin.nic.in/reports/pdf/ar05_06.pdf].
134 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].
135 John Stephenson and Peter Tynan, “Will the U.S.-India Civil Nuclear Cooperation
Initiative Light India?,” November 13, 2006, at [http://www.npec-web.org]; “Top Scientist
Questions India’s N-Energy Dream,” Times of India (Delhi), September 9, 2007.
136 Mark Gregory, “India Struggles With Power Theft,” BBC News, March 15, 2006; Puja
Mehra, “Blacked Out,” India Today (Delhi), June 25, 2007; Somini Sengupta, “Electricity
Crisis Hobbles an India Eager to Ascend,” New York Times, May 21, 2007.

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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.137 In April 2007, 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.
In January 2007, the Energy Diplomacy and Security Act of 2007 (S. 193) was
introduced in the Senate and reported out of the Foreign Relations Committee in
April. 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. In May, the International Climate
Cooperation Re-engagement Act of 2007 (H.R. 2420) was introduced in the House
and reported out of the Foreign Affairs Committee in June. 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 in India’s Jammu and Kashmir state reportedly have killed an average of 5 or
6 people every day over the past 18 years.138 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.
137 See [http://newdelhi.usembassy.gov/pr032007a.html].
138 “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 in the mountains 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.139 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
moderates favoring negotiation with New Delhi. Subsequent efforts to reunify the
group failed. In 2005, the Congress-led government renewed high-level contact with
moderate Hurriyat leaders begun by the previous BJP-led coalition. Nearly two years
later, however, Hurriyat leader and noted Kashmiri cleric Mirwaiz Umar Farooq said
three-year-old talks between the Indian government and moderate Kashmiri
139 An August 2007 opinion survey found nearly 90% of the residents of Srinagar, Kashmir’s
most populous and Muslim-majority city, desiring Kashmiri independence from both India
and Pakistan. In the largely Hindu city of Jammu, however, 95% of respondents said
Kashmir should be part of India (see [http://www.indianexpress.com/story/210147.html]).

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CRS-51
separatists had suffered a “complete breakdown of communication,” and he accused
New Delhi of lacking the will needed to find a political solution to the problem.140
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
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 has hampered 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.141
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 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, in May 2006, suspected Islamist separatists
massacred at least 35 Hindu villagers just ahead of a meeting between Prime Minister
Singh and a group of moderate Kashmiri figures. Likewise, as a relatively violence-
free 2006 spring season seemed to be approaching, the Valley’s 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.142
140 Sheikh Mushtaq, “Kashmiri Separatist Says India Talks Break Down,” Reuters, August
30, 2007.
141 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].
142 Author interviews, Srinagar, Kashmir, September 2006.

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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. Data from the Institute for Conflict Management, New Delhi, India.
Despite this ongoing violence, many indicators 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).143 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 2002.144 New
Delhi has more recently 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. 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.145
143 “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.
144 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.
145 Author interviews, Srinagar, Kashmir, September 2006.

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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. Meanwhile, 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 4,930 the previous year — costing 2,863 lives, about two-fifths of
them civilian.
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. In the small state of Manipur alone there are said to be
more than 20 separatists groups fighting the Indian army at a cost of more than 8,000
lives over two decades, and the writ of the central government there is tenuous, at
best.146 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 Hindi-speakers from Bihar)
to flood the local job markets. In April 2005, the U.S. State Department’s
Counterterrorism Office listed ULFA among its “other groups of concern,” the first
time an Indian separatist group outside Kashmir was so named.147
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 these
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 there. In 2004, five leading separatist groups from the region rejected
New Delhi’s offer of unconditional talks, saying negotiation can only take place
under U.N. mediation and if the sovereignty issue was on the table. Later, in what
146 Tanya Datta, “India’s Forgotten War,” BBC News, August 8, 2007; “Militants’ Hold
Over Manipur Total,” Hindustan Times (Delhi), September 9, 2007.
147 See [http://www.state.gov/s/ct/rls/crt/2005/65275.htm].

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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 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. Some
analysts criticized the central government for allowing the militants to revive their
strength during the cease-fire period. By 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 some 13,000 army and
paramilitary troops to fan out across the state in what was termed the “largest-ever”
operations against ULFA rebels. Following the rash of violence, Defense Minister
Antony said defeating the rebels would require the help of the 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
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” in 2006 and may pose a long-term threat.148 Some of
these groups may be growing poppy and extorting farmers and opium traders to fund
their activities. Naxalites now operate in about 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
148 See [http://www.state.gov/s/ct/rls/crt/2006/82734.htm].

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country. Other estimates see some 20,000 such fighters in India, including up to
5,000 in the central Chhattisgarh state alone. PWG cadres 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. Others label it a vigilante group that has engaged in its own coercive and
violent tactics against innocent tribals, one that only serves to accentuate the conflict
as “a cure that is worse than the disease.”149 Following a March 2007 raid on a
Chhattisgarh police camp by up to 600 armed rebels in which 55 people, including
19 policemen, were killed, Maoist leaders threatened further attacks if the Salwa
Jundum was not dismantled. July 2007 gunbattles in the Chhattisgarh jungles left at
least 44 security troops and communist rebels dead.
New Delhi has in the past expressed concern that indigenous Maoists
collaborate with Nepali communists that recently ended their war with the
Kathmandu government. In June 2007, Maoists called a two-day strike to protest the
central government’s establishment of Special Economic Zones; the rebels disrupted
transportation lines across several Indian states in their first-ever coordinated attack
over a wide geographic area. Many analysts warn that Naxalite activity — including
swarming attacks on government facilities and coordinated, multi-state economic
blockades — is spreading and becoming more audacious in the face of incoherent
and insufficient Indian government policies to halt it.150
Hindu-Muslim Tensions. Some elements of India’s Hindu majority have at
times engaged in violent communal conflict with the country’s Muslim minority. In
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 2002, another group of Hindu
activists returning by train to the western state of Gujarat after a visit to the Ayodhya
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
149 See, for example, an Asian Center for Human Rights press release at
[http://www.achrweb.org/press/2007/IND0307.htm]; Purnima Tripathi, “Strategy Gone
Awry,” Frontline (Chennai), September 21, 2007.
150 See, for example, Ajai Sahni, “The Red Spreads,” Outlook (Delhi), July 5, 2007; Mark
Sappenfield, “In Heart of India, a Little-Known Civil War,” Christian Science Monitor, May
1, 2007.

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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 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. More than five years after the Gujarat riots,
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). A 2006 central government report found deep communal divisions
continuing to haunt Gujarat, concretely expressed through ghettoization and religious
segregation.151
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 2006,
clashes between Hindus and Muslims in the Uttar Pradesh state left 2 children dead
and more than 100 homes destroyed by fire. July 2006 saw two policemen and two
civilians killed, and at least three dozen people injured, in communal clashes in the
western Maharashtra state. In October 2006, 2 people were killed and 86 others
injured over several days of communal violence in the southern Kerala state. August
2007 bombings in the city of Hyderabad killed at least 40 people and are suspected
to have been triggered by Islamist terrorists seeking to kill Hindus and precipitate
further communal violence.
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
151 See [http://web.amnesty.org/library/Index/ENGASA200072007?open&of=ENG-IND];
Anuj Chopra, “Hindu, Muslim Ghettos Arise in Gujarat,” Christian Science Monitor, July
5, 2007.

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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.152
The 2007 annual report from New York-based Human Rights Watch noted that
India has a vibrant press and civil society, but also suffers from a number of chronic
human rights problems. It called impunity a “critical issue” involving officials and
members of the security services abusing their power and who are “rarely if ever
brought to justice for torture, arbitrary detentions and extrajudicial killings ....”
Listed among other human rights concerns in India is 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 it asserts that concerns over protection of economic, social, and
cultural rights of already marginalized communities grew in 2006.153 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.154
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
to repress them, and deficient police methods and training.”155 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.156 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
152 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].
153 See [http://hrw.org/englishwr2k7/docs/2007/01/10/global15039.htm] and
[http://report2007.amnesty.org/eng/Homepage].
154 See [http://www.state.gov/g/drl/rls/shrd/2006/80590.htm].
155 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].
156 See “Faked Deaths Show Ills of India’s Police,” Associated Press, June 7, 2007.

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sexual exploitation. India’s trafficking in persons problem is estimated to be in the
millions.” It further stated 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 ....”157 A major U.S. news outlet 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.”158
Religious Freedom. An officially secular nation, India has a long tradition
of religious tolerance (with periodic 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
2007, the State Department found “no change in the status of respect for religious
freedom” by India’s national government:
[G]overnment policy continued to contribute to the generally free practice of
religion; however, problems remained in some areas. Some state governments
enacted and amended "anti-conversion" laws and police and enforcement
agencies often did not act swiftly enough to effectively counter societal attacks,
including attacks against religious minorities. Despite Government efforts to
foster communal harmony, some extremists continued to view ineffective
investigation and prosecution of attacks on religious minorities, particularly at
the state and local level, as a signal that they could commit such violence with
impunity, although numerous cases were in the courts at the end of the reporting
period. The National Government, led by the United Progressive Alliance (UPA),
continued to implement an inclusive and secular platform that included respect
for the right to religious freedom.
157 See [http://www.state.gov/g/tip/rls/tiprpt/2007/82806.htm].
158 “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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The report added that a “Hindutva” — or Hindu nationalist — ideology continued to
influence some government policies and actions at the state and local levels over the
previous year.159
A May 2007 report of the U.S. Commission on International Religious Freedom
noted continued improvements since the 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. More than five years after those riots, the victims are
said to still face serious challenges and obstacles in securing justice, and a large
number of related criminal cases remain uninvestigated and unresolved.160
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.161 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.”162 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.”163 In July 2007, H.Con.Res.
139, expressing the sense of Congress that the United States should address the
ongoing problem of untouchability in India, was passed by the full House.
HIV/AIDS
The United Nations has estimated that 5.7 million Indians are infected with
HIV/AIDS, giving India the largest such population worldwide (India overtook South
Africa in this category in 2006). However, a July 2007 U.N.-backed study found that
159 See [http://www.state.gov/g/drl/rls/irf/2007/90228.htm].
160 See [http://www.uscirf.gov/countries/publications/currentreport/index.html] and
[http://web.amnesty.org/library/print/ENGASA200072007].
161 See [http://www.state.gov/r/pa/ei/bgn/3454.htm].
162 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].
1 6 3 See [http://hrw.org/englishwr2k7/docs/2007/01/11/india14868.htm] and
[http://www.hrw.org/reports/2007/india0207].

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India’s infected population was about 2.5 million.164 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.165 India first launched its AIDS control program in 1992; New
Delhi boosted related funding to about $120 million in the most recent fiscal year and
in July 2007 launched a new $2.8-billion National AIDS Control Program that will
expand free treatment for HIV-positive persons, as well as boost the number of
awareness and prevention campaigns. 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 opine that substantially greater resources are needed to address HIV/AIDS
in India than are currently available.166
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
A total of more than $15 billion in direct U.S. aid went to India from 1947
through 2006, nearly all of it in the form of economic grants and loans, more than
half as food aid. In February 2007, in response to several years of rapid Indian
economic expansion and New Delhi’s new status as a donor government, the State
Department announced a 35% reduction in assistance programs for India. The bulk
of the cuts are to come from development assistance and food aid programs.
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. USAID programs in India, budgeted at about
$64 million in FY2007, 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
164 “India’s HIV Cases Highly Overestimated, Survey Shows,” Reuters, July 6, 2007.
165 See [http://www.usaid.gov/our_work/global_health/aids/Countries/ane/india_05.pdf].
166 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-61
diseases); (3) disaster management; (4) energy and environment (improved access
to clean energy and water; reduction of public subsidies through improved cost
recovery); and (5) opportunity and equity (improved access to elementary education,
and justice and other social and economic services for vulnerable groups, especially
women and children).167
Security. The United States has provided about $162 million in military
assistance to India since 1947, more than 90% of this distributed from 1962-1966.
In recent years, modest security-related assistance has emphasized export control
enhancements and military training. Early 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.
Selected Relevant Legislation in the 110th Congress
! In October 2007, S.Res. 339, expressing the sense of the Senate on
the situation in Burma, was passed by the full Senate. The
resolution includes a call for the United States and the United
Nations to “strongly encourage China, India, and Russia to modify
their position on Burma and use their influence to convince the
Government of Burma to engage in dialogue with opposition leaders
and ethnic minorities towards national reconciliation.”
! In September, H.Res. 638, expressing the sense of the House that
the U.N. charter should be amended to establish India as a
permanent member of the U.N. Security Council, was referred to
House committee.
! In August, the New Direction for Energy Independence, National
Security, and Consumer Protection Act (H.R. 3221) was passed by
the full House and was later placed on the Senate calendar. The bill
contains provisions for expanding efforts to promote U.S. exports in
clean and efficient energy technologies to India and China. The
International Climate Cooperation Re-engagement Act of 2007
(H.R. 2420), reported by the House Foreign Affairs Committee in
June, contains similar provisions.
! In July, H.Con.Res. 139, expressing the sense of Congress that the
United States should address the ongoing problem of untouchability
in India, was passed by the full House and referred to Senate
committee.
! In June, S.Con.Res. 38, calling for the safeguarding of the physical,
political, and economic security of the Kashmiri pandits, was
referred to Senate committee (a House version, H.Con.Res. 55, was
referred to House subcommittee in April).
! In April, the Energy Diplomacy and Security Act of 2007 (S. 193)
was reported by the Senate Foreign Relations Committee and placed
on the Senate calendar. The bill includes provisions for establishing
167 See USAID India at [http://www.usaid.gov/in].

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CRS-62
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 referred to House committee.
! In January, H.R. 175, to provide assistance to combat HIV/AIDS in
India, and for other purposes, was referred to House committee.
Table 1. Direct U.S. Assistance to India, FY2000-FY2008
(in millions of dollars)
Program
FY
FY
FY
FY
FY
FY
FY
FY
FY
or
2007
2008
2000
2001
2002
2003
2004
2005
2006
Account
(est.)
(req.)
CSH
22.8
24.6
41.7
47.4
47.8
53.2
52.8
53.4
62.2
DA
28.7
28.8
29.2
34.5
22.5
24.9
19.7
10.8
0.9
ESF
—
5.0
7.0
10.5
14.9
14.9
5.0
4.9
—
IMET
0.5
0.5
1.0
1.0
1.4
1.5
1.3
1.4
1.3
INCLE
—
—
—
—
—
—
—
—
0.4
NADR
0.3
0.9
0.9
1.0
0.7
4.2
2.7
1.1
2.7
Subtotal
52.3
59.8
79.8
94.4
106.2
98.7
81.5
71.6
67.5
Food Aida
81.7
50.4
77.5
35.7
30.8
26.1
30.7
31.0
13.5
Total
134.0 110.2 157.3
130.1
137.0
124.8
112.2 102.6
81.0
Sources: U.S. Departments of State and Agriculture; U.S. Agency for International Development.
FY2007 amounts are estimates; FY2008 amounts are requested. Columns may not add up due
to rounding.
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)
a. P.L. 480 Title II (grants), Section 416(b) of the Agricultural Act of 1949, as amended (surplus
donations), and Food for Progress. Food aid totals do not include freight costs.

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Figure 2. Map of India

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