Order Code RL33529
India-U.S. Relations
Updated December 19, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
India-Burma Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
U.S.-India Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
India-Pakistan Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Context of the U.S.-India Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Current U.S.-India Engagement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
India’s Regional Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
The “IPI” Pipeline Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Other Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Political Setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
National Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
The Congress Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
The Bharatiya Janata Party (BJP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Regional Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
The Left Front . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Bilateral Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
“Next Steps in Strategic Partnership” and Beyond . . . . . . . . . . . . . . . . . . . 24
Civil Nuclear Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Civil Space Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
High-Technology Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
The Indian Military . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
U.S.-India Security Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Nuclear Weapons and Missile Proliferation . . . . . . . . . . . . . . . . . . . . 38
U.S. Nonproliferation Efforts and Congressional Action . . . . . . . . . . 38
The Proliferation Security Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
India-Iran Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
India’s Economy and U.S. Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Barriers to Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Special Economic Zones (SEZs) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Multilateral Trade Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
The Energy Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
The Kashmir Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Other Regional Dissidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
The Northeast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Maoist Insurgency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Hindu-Muslim Tensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Human Rights Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Human Trafficking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

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Religious Freedom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Caste-Based Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
HIV/AIDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
U.S. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Economic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Selected Relevant Legislation in the 110th Congress . . . . . . . . . . . . . . . . . . 63
List of Figures
India in Brief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 1. Deaths Related to Kashmiri Separatism, 1988-2006 . . . . . . . . . . . . . . 54
Figure 2. Map of India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
List of Tables
Table 1. Direct U.S. Assistance to India, FY2000-FY2008 . . . . . . . . . . . . . . . . 63

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India-U.S. Relations
Key Current Issues and Developments
U.S.-India Civil Nuclear Cooperation. Plans to initiate India-U.S. civil
nuclear cooperation largely have been placed on hold due to domestic political
resistance in India (see “Indian Political Crisis” section below). On July 27, the
United States and India announced having concluded negotiations on a peaceful
nuclear cooperation (or “123”) agreement (the agreement text was released on
August 3). 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 urged 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. 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.)
Among the 123 Agreement text’s more salient provisions are the granting to
India of a right to reprocess spent fuel at a national reprocessing facility that New
Delhi plans to establish under IAEA safeguards; assurances to India 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;” and what some critics view as watered-down language on
the effects of any future nuclear test by India: while the U.S. President would
maintain a right to demand the return of all U.S.-supplied nuclear equipment and
material in such a circumstance, the text calls for 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” (likely a reference to potential nuclear tests by China and/or Pakistan).2
Press reports suggested that U.S. negotiators had made considerable concessions
to Indian demands on these points and that the agreement could face resistance from
1 See [http://www.state.gov/p/us/rm/2007/89559.htm].
2 See the 123 Agreement text at [http://www.state.gov/r/pa/prs/ps/2007/aug/90050.htm].

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CRS-2
some in Congress if its legal stipulations are seen to deviate from those found in
enabling legislation (P.L. 109-401, the “Hyde Act”).3 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.”4 In October, H.Res. 711, expressing the sense of the House concerning
the U.S.-India nuclear cooperation agreement, was referred to House committee. The
bill would seek Bush Administration clarifications on the 123 Agreement’s
compliance with U.S. law.
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
achievements of Indian diplomacy.”5 There also 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. In November, 23 former
Indian military chiefs, senior bureaucrats, and scientists signed an open letter to
Parliament urging approval of the pact so as to remove the “crippling constraints”
India suffers due to international regimes that deny it high-technology goods.6
In New Delhi, 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. It then set about assuring
domestic skeptics that the autonomy of the country’s nuclear weapons program
would be maintained and that all key commitments previously made to parliament
were being adhered to, including those related to plutonium reprocessing and nuclear
weapons testing rights, as well as assured and uninterrupted supplies of nuclear fuel
even if the agreement is terminated.7 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.”8
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
3 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.
4 Letter available at [http://markey.house.gov/index.php?option=com_content&task=
view&id=3003&Itemid=141].
5 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.
6 See [http://www.indianexpress.com/story/239308.html].
7 See [http://www.indianembassy.org/newsite/press_release/2007/Aug/4.asp].
8 See [http://www.indianembassy.org/newsite/press_release/2007/Aug/7.asp].

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ruling coalition with crucial parliamentary support. 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. Yet India’s communist parties went 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.”9
Their view is not limited to those with communist sentiments: One former Indian
national security advisor asserts that while a vast majority of the country’s rising
urban middle class firmly favors closer India-U.S. ties, it “will not tolerate a
subservient relationship” and retains significant differences in approaches to third
parties such as Iran and Pakistan.10
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.”11 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.12 There remain
significant apparent contradictions between the expectations of and public statements
by U.S. and Indian officials.13
In a surprise development, political squabbling in New Delhi put the nuclear
deal on possibly indefinite hold. On October 15, Prime Minister Singh informed
President Bush that “certain difficulties have arisen with respect to the
operationalization” of the deal. Spokesmen for both the White House and for India’s
ruling coalition-leading Congress Party later denied that the deal was “dead.”14
Hopes for consummation were revived in November when the Left Front allowed the
Indian government to begin talks with the IAEA. Such consultations began on
November 21, and New Delhi later submitted written “discussion points” on a
9 Y.P. Rajesh, “Indian Communists Reject U.S. Nuclear Pact,” Reuters, August 7, 2007.
10 Brajesh Mishra, “No to Subservient Relations,” India Today (Delhi), September 24, 2007.
11 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.
12 “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.
13 A useful table is at [http://www.carnegieendowment.org/files/123agreementchart.pdf].
14 See [http://www.indianembassy.org/newsite/press_release/2007/Oct/12.asp]; “US Nuclear
Deal On, Says India Ruling Party,” Agence France Presse, October 17, 2007.

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safeguards agreement. Yet, in early December, the communist leadership was again
threatening to withdraw support for the ruling coalition unless talks were halted.
Meanwhile, some reports indicate that New Delhi is meeting with unexpected
difficulties at the IAEA, especially with regard to assurances on future fuel supplies.15
While top U.S. officials will withhold comment on India’s internal political
developments, there remains a sense of urgency in Washington, with the Bush
Administration clearly eager to see the deal consummated during its remaining term
in office and so exerting diplomatic pressure on the New Delhi government to reverse
its apparent climb-down. Some analysts fear that a failure to do so will require
starting the difficult negotiation process anew in 2009, perhaps involving a
Democratic U.S. Administration and/or Congress that might be more favorable to
arguments made by nonproliferation lobbyists.16
Indian Political Crisis. Domestic debate in India on the pending U.S.-India
nuclear deal triggered the most serious crisis faced by the United Progressive
Alliance (UPA) government since it came to power in May 2004. In fact, the turmoil
nearly led to a collapse of the ruling coalition and early elections as both Prime
Minister Singh and the Left Front parties maintained staunch and mutually
incompatible positions on the deal. The August release of the 123 Agreement text
brought an uproar in the Indian Parliament — 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.17 An urgent meeting between Singh and top communist leader
Prakash Karat ended without reconciliation, and 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.18 The leader of the main opposition BJP, L.K.
Advani, later reiterated his view that the nuclear deal was “unacceptable” and he
urged his party to prepare for anticipated early elections.
To facilitate what could only be an interim truce between the Congress party and
the Left Front, the government created a panel of government officials, politicians,
and scientists to “study” the nuclear deal. Communist leaders agreed to join the 15-
15 See, for example, Seema Mustafa, “Tough Talk by IAEA, Pact on Safeguards May Take
More Time,” Asian Age (Mumbai), December 13, 2007.
16 Claudia Parsons, “Time Running Out for India Nuclear Deal - US Official,” Reuters,
October 23, 2007; Pramit Pal Chaudhuri, “Post-Bush, India May Have to Start From
Scratch,” Hindustan Times (Delhi), October 23, 2007.
17 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 Minimum Program and rejecting a perceived “military alliance with America” (see
[http://www.cpim.org/statement/statements_2007.htm]).
18 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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member panel, which met for the first time in mid-September. Three further
meetings were held by early October, with neither side budging from its strident
position.19 By this time, communist leaders were openly threatening to withdraw
support for the UPA coalition and so bring an early end to the government’s term,
which is scheduled to terminate in May 2009. Almost immediately, reports began
to indicate that the UPA leadership’s priority was saving the government, especially
with signs that junior coalition partners and even some Congress Party stalwarts did
not share the Prime Minister’s enthusiasm for the nuclear deal and/or were reluctant
to face the Indian electorate in early 2008.20 With Prime Minister Singh and
Congress Party chief Gandhi seeming to veer from strident support for the deal to an
acceptance of its potentially permanent hibernation in only a matter of days during
mid-October, the New Delhi government’s credibility came into question. According
to one senior U.S.-based analyst, “The abrupt halt ... now casts a serious doubt about
the willingness and ability of any government in New Delhi to act in a responsible,
predictable, and reliable fashion.”21
India-Burma Relations. During mid-September, major pro-democracy street
protests in Burma grew in scale and, on September 25, the Rangoon military regime
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, counterinsurgency, and to counterbalance China’s influence there. The
Bush Administration urges India to be more active in pressing for democracy in
Burma: in October, Deputy Secretary of State John Negroponte said, “Now is the
time for Beijing and New Delhi to forgo any energy deals that put money in the
pockets of the junta and to suspend weapons sales to this regime.”22 However, New
Delhi calls democracy and human rights internal Burmese issues. In late September,
External Affairs Minister Mukherjee called for a “broad-based process of national
reconciliation and political reform” in Rangoon.23
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, but New Delhi is not
19 A fifth panel session came on October 22, after which Foreign Minister Mukherjee said
the accord would not be “operationalized” before the panel’s sixth and final meeting on
November 16, when the panel’s findings were finalized.
20 “Suddenly, UPA Gets Cold Feet,” Times of India (Delhi), October 11, 2007.
21 Sumit Ganguly, “Save the Nuclear Deal,” Times of India (Delhi), October 26, 2007.
22 See [http://www.state.gov/s/d/2007/94077.htm].
23 See [http://meaindia.nic.in/pbhome.htm].

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CRS-6
seen to be adjusting its Burma policy in any meaningful way.24 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.25
On October 24, all 16 female U.S. Senators, representing the Senate Women’s
Caucus on Burma, signed a letter to Prime Minister Singh urging that, as the world’s
largest democracy, India should “join the growing international condemnation of
Burma’s military government and its brutal repression of its own citizens” and “use
its influence to put pressure on the regime to stop the violence against pro-democracy
activists, release all political prisoners including Aung San Suu Kyi, and begin a true
national dialogue on national reconciliation that will lead to a restoration of
democratic government.” While recognizing India’s “geopolitical imperatives” and
desire to maintain good relations with Burma, the letter also expressed concern about
reports of New Delhi’s ongoing military-to-military relationship with Rangoon.26
U.S.-India Relations. Unexpectedly strong domestic political resistance to
plans for U.S.-India civil nuclear cooperation 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.27 Security
ties, however, appeared unaffected: In 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.28 Those
September exercises, of unprecedented scale, 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 insisted the exercises were
about increasing interoperability and preparedness for operations in maritime security
and humanitarian relief, many analysts see a nascent “alliance of democracies”
which could be intended to balance against growing Chinese power.
U.S. Treasury Secretary Henry Paulson visited Kolkata, Mumbai, and New
Delhi during the final week of October. Secretary Paulson seeks to assist the Indian
government in advancing its economic reform agenda, in particular by working
cooperatively on New Delhi’s plans to finance physical infrastructure improvements
24 Y.P. Rajesh, “India Renews Pressure on Myanmar, Suggests Probe,” Reuters, October 1,
2007; Y.P. Rajesh, “India Silent on Myanmar Crackdown,” Associated Press, October 23,
2007.
25 See, for example, Shishir Gupta, “Rangoon Isn’t Kathmandu,” Indian Express (Delhi),
October 2, 2007.
26 Letter text at [http://hutchison.senate.gov/pr102307a.html].
27 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.
28 Ashok Sharma, “US Admiral Says Military Cooperation With India Improving Steadily,”
Associated Press, August 23, 2007.

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CRS-7
(an effort that could require up to $500 billion over the next five years), as well as by
helping strengthen and expand India’s financial system through the creation of a new
International Financial Center in Mumbai.29
India-Pakistan Relations. The India-Pakistan peace initiative continues at
a much slowed pace, given especially domestic political and security crises which
have diverted the Pakistani government’s attention away from its relations with India,
as well as a degree of political uncertainty in New Delhi. India takes pains to avoid
even the perception of meddling in Pakistan’s domestic political problems and so has
been reticent and extremely cautious in its relevant public statements. Still, officials
from both countries (and the United States) offer generally positive assessments of
the ongoing 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 bombings in Hyderabad were linked to Pakistan-based terrorist groups.
August’s 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. Also in August, bilateral
talks on the Tubal navigation project/Wullar barrage water dispute ended without
progress. In 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.”30 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. Mid-October saw mid-level Indian and Pakistani officials meet to
discuss both conventional and nuclear confidence-building measures, but no new
initiatives were announced. On October 22, the countries held a second meeting of
their Joint Anti-Terrorism Mechanism in New Delhi, where the two sides shared new
information on terrorism and agreed to continue mutual investigatory cooperation.
In other developments:
! In mid-December, voters in Gujarat went to the polls to determine
whether the incumbent BJP state government would hold power or
be replaced by a Congress-led administration (results were not in at
the time of writing).
! On December 16, Maoist rebels “liberated” a Chhattisgarh jail and
300 prisoners escaped.
! On December 15, Foreign Secretary Menon visited Iran, where he
held several high-level meetings and reiterated New Delhi’s interest
in establishing a strategic partnership with Tehran.
29 See remarks by Secretary Paulson at [http://www.ustreas.gov/press/releases/hp648.htm].
30 See [http://www.mofa.gov.pk/Spokesperson/2007/Sep/Spokes_17_09_07.htm].

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CRS-8
! On November 29, a meeting of the U.S.-India Joint Working Group
on Counterterrorism ended in Washington.
! On November 12, Prime Minister Singh visited Moscow, where he
and Russian President Putin discussed economic, energy, and
defense ties.
! On November 2, a landmine detonated by Maoist rebels killed 16
policemen in Chhattisgarh.
! On October 30, German Chancellor Angela Merkel met with Prime
Minister Singh in New Delhi, where India and Germany agreed to
bolster cooperation in energy, science, technology, and
infrastructure.
! On October 29, the benchmark Sensex index of the Bombay Stock
Exchange rose above the 20,000 mark for the first time.
! On October 27, Maoist rebels shot and killed 17 civilians at a
festival in Jharkhand.
! On October 21, Piyush “Bobby” Jindal, the son of Punjabi
immigrants, won Louisiana’s gubernatorial election to become the
first Indian-American state governor in U.S. history.
! On October 15, a ministerial meeting of the Asia Pacific Partnership
on Clean Development and Climate was held in New Delhi.
! On October 14, a bomb explosion killed six people at a crowded
cinema in a heavily Muslim Punjab neighborhood.
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.

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CRS-9
India’s May 1998 nuclear tests
were an unwelcome surprise and seen
India in Brief
to be a policy failure in Washington,
and they spurred then-Deputy
Population: 1.13 billion; growth rate: 1.6%
(2007 est.)
Secretary of State Strobe Talbott to
Area: 3,287,590 sq. km. (slightly more than one-
launch a series of meetings with
third the size of the United States)
Indian External Affairs Minister
Capital: New Delhi
Jaswant Singh in an effort to bring
Head of Government: Prime Minister
New Delhi more in line with U.S.
Manmohan Singh (Congress Party)
Ethnic Groups: Indo-Aryan 72%; Dravidian
arms control and nonproliferation
25%; other 3%
goals. While this proximate purpose
Languages: 22 official, 13 of which are the
went unfulfilled, the two officials
primary tongue of at least 10 million
soon engaged a broader agenda on the
people; Hindi is the primary tongue of
entire scope of U.S.-India relations,
about 30%; English widely used
Religions: Hindu 81%; Muslim 13%; Christian
eventually meeting fourteen times in
2%; Sikh 2%, other 2% (2001 census)
seven different countries over a two-
Life Expectancy at Birth: female 71 years; male
year period. The Talbott-Singh talks
66 years (2006 est.)
were considered the most extensive
Literacy: female 48%; male 70% (2003 est.)
U.S.-India engagement up to that time
Gross Domestic Product (at PPP): $4.77
trillion; per capita: $4,290; growth rate
and likely enabled circumstances in
7.9% (2007 est.)
which the United States could play a
Currency: Rupee (100 = $2.53)
key role in defusing the 1999 Kargil
Inflation: 5.8% (2006)
crisis, as well as laying the
Defense Expenditures: $23.9 billion (2.7% of
GDP; 2006)
groundwork for a landmark U.S.
U.S. Trade: exports to U.S. $24 billion; imports
presidential visit in 2000.
from U.S. $17 billion (2007 est.)
Sources: CIA World Factbook; U.S. Department of
Commerce; Economist Intelligence Unit; Global
President Bill Clinton’s March
Insight; Military Balance
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.”31 A U.S.-India
Joint Working Group on Counterterrorism was established that year and continues
to meet regularly. During his subsequent visit to the United States later in 2000,
Prime Minister Atal Bihari Vajpayee addressed a joint session of Congress and
issued a second Joint Statement with President Clinton agreeing to cooperate on arms
control, terrorism, and HIV/AIDS.32
In the wake of the September 2001 terrorist attacks on the United States, India
took the immediate and unprecedented step of offering to the United States full
cooperation and the use of India’s bases for counterterrorism operations.
Engagement was accelerated after a November 2001 meeting between President Bush
and Prime Minister Vajpayee, when the two leaders agreed to greatly expand U.S.-
India cooperation on a wide range of issues, including regional security, space and
31 See [http://www.usindiafriendship.net/archives/usindiavision/delhideclaration.htm].
32 See [http://clinton4.nara.gov/WH/new/html/Wed_Oct_4_105959_2000.html].

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CRS-10
scientific collaboration, civilian nuclear safety, and broadened economic ties.33
Notable progress has come in the area of security cooperation, with an increasing
focus on counterterrorism, joint military exercises, and arms sales. In late 2001, the
U.S.-India Defense Policy Group met in New Delhi for the first time since India’s
1998 nuclear tests and outlined a defense partnership based on regular and high-level
policy dialogue.
Prime Minister Manmohan Singh paid a landmark July 2005 visit to
Washington, where what may be the most significant joint U.S.-India statement to
date was issued.34 In March 2006, President Bush spent three days in India, discussed
further strengthening a bilateral “global partnership,” and issued another Joint
Statement.35 Today, the Bush Administration vows to “help India become a major
world power in the 21st century,” and U.S.-India relations are conducted under the
rubric of three major “dialogue” areas: strategic (including global issues and
defense), economic (including trade, finance, commerce, and environment), and
energy. President Bush’s 2002 National Security Strategy of the United States stated
that “U.S. interests require a strong relationship with India.” The 2006 version
claims that “India now is poised to shoulder global obligations in cooperation with
the United States in a way befitting a major power.”36 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.37
In late 2007, Under Secretary of State Burns, who has traveled to New Delhi at least
eight times over a two-year period, penned an article lauding stronger U.S.-India
relations while also identifying “considerable hurdles” to achieving an effective
“global partnership.” Foremost among these are terrorism, narcotics trafficking, and
nuclear proliferation, which he avers must be dealt with through stronger bilateral
security ties that will include defense sales.38 At a 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
33 See [http://www.state.gov/p/sca/rls/rm/6057.htm].
34 [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html].
35 [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html].
36 See [http://www.comw.org/qdr/fulltext/nss2002.pdf] and [http://www.comw.org/-
qdr/fulltext/nss2006.pdf].
37 [http://armed-services.senate.gov/statemnt/2007/February/McConnell%2002-27-07.pdf].
38 Nicholas Burns, “America’s New Strategic Opportunity With India,” Foreign Affairs,
November/December 2007, at [http://www.foreignaffairs.org/20071101faessay86609/
r-nicholas-burns/america-s-strategic-opportunity-with-india.html].

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CRS-11
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.39
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.40
Current U.S.-India Engagement
Following President Bush’s March 2006 visit to New Delhi — the first such
trip by a U.S. President in six years — U.S. diplomatic engagement with India has
continued to be deep and multifaceted, including visits to India by the U.S.
Secretaries of Commerce, Energy, Agriculture, and Treasury, the Trade
Representative, and the then-Chairman of the Joint Chiefs of Staff. Indian officials
visiting the United States in the past year include the then-Defense Minister (and
current Foreign Minister), the Ministers of Commerce and Power, the Foreign
Secretary, the National Security Advisor, and the Deputy Minister of the Planning
Commission. Among formal bilateral sessions over the past year were the following:
! In February 2007, a fifth session of the U.S.-India High
Technology Working Group met in Washington.
! Also in February, a meeting of the U.S.-India Joint Working
Group on Counterterrorism was held 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 Sam 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 Susan Schwab was in New
Delhi the sixth session of the U.S.-India Trade Policy Forum.
! Later in April, Foreign Secretary Shiv Shankar Menon was in
Washington for a fifth meeting of the U.S.-India Global Issues
Forum.
39 See [http://www.state.gov/secretary/rm/2007/06/87487.htm].
40 “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
! In June, a fifth meeting of the U.S.-India Agricultural Knowledge
Initiative Board was held in Washington.
! Later in June, Commerce Minister Kamal Nath visited Washington
to give a special address at the U.S.-India Business Council’s 32nd
Anniversary “Global India” Leadership Summit.
! In October, a second meeting of the Asia Pacific Partnership on
Clean Development and Climate was held in New Delhi.
! In November, a meeting of the U.S.-India Joint Working Group
on Counterterrorism was held in Washington.
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.
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 destabilize
the region and even lead to nuclear war. In 2004, New Delhi and Islamabad launched
their most recent comprehensive effort to reduce tensions and resolve outstanding
disputes, an effort that has to date resulted in modest, but still meaningful successes.
At the same time, however, many top Indian leaders are convinced that Pakistan has
long been and remains the main source India’s significant domestic terrorism
problems: According to National Security Advisor M.K. Narayanan, a former chief
of the country’s domestic intelligence agency, very few Indian Muslims have played
major roles in domestic terrorism. He asserts that, “Mostly, the [terrorist] activity has
been generated from outside” and “the overwhelming majority” of India’s terrorism
problems emanates from the Pakistan-Afghanistan border region.41
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 of that year). Subsequent “Composite
Dialogue” talks have been held to discuss militarized territorial disputes, terrorism
and narcotics, and cultural exchanges, but high hopes for a settlement of differences
over the Siachen Glacier have been dashed with repeated sessions ending without
41 “MK Narayanan” (interview), India Abroad, September 21, 2007.

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CRS-13
progress (most recently in April 2007). Multiple sessions on the Tubal navigation
project/Wullar barrage water dispute (most recently in August 2007) similarly have
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 only 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 new 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.)
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, in November 2006. No progress came on
outstanding territorial disputes, but the two officials did give shape to the new anti-
terrorism mechanism. Such a mechanism is controversial in India, where some
analysts are skeptical about the efficacy of institutional engagement with Pakistan in
this issue-area even as Islamabad is suspected of complicity in anti-India terrorism.
In January 2007, Indian Foreign Minister Mukherjee met with his Pakistani
counterpart, Kurshid Kasuri, in Islamabad for the first such visit in more than a year.
The two men reviewed past progress and planned for a new round of talks. In
February, 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 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 forum for exchanging information about
investigations of and/or efforts to prevent terrorist acts on either side of the shared

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CRS-14
border, and to meet quarterly while immediately conveying urgent information.
Hopes that the Samjhauta 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 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.42 Since that time, a political
crisis in Islamabad is widely seen as having put what are at least temporary brakes
on the bilateral peace process, and has also brought into question the efficacy of
India’s seeking to strike agreements with a Pakistani leader (Musharraf) whose
political legitimacy and longevity in office are in doubt. Multi-pronged dialogue
sessions continue apace, however, most recently including August talks on economic
and commercial cooperation; and a pair of October sessions on conventional and
nuclear confidence-building measures.
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 two countries reportedly continue to
stockpile a combined 11 million landmines and up to 2,000 square kilometers of
India’s Jammu and Kashmir state may remain mined.43 The nuclear weapons
capabilities of India and Pakistan became overt in May 1998, magnifying greatly the
potential dangers of a fourth war. Although a bilateral peace process has been
underway for nearly four 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
42 See Pakistan Foreign Ministry Press Release No. 81/2007 at [http://www.mofa.gov.pk/
Press_Releases/2007/March/PR_81_07.htm].
43 See a 2007 International Campaign to Ban Landmines report at [http://www.icbl.org/
lm/2007/india.html].

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CRS-15
diplomatic engagement, including multiple trips to the region by high-level U.S.
officials, apparently persuaded India to refrain from attacking.44 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 mutual confidence-building through
people-to-people contacts. Islamabad responded positively and, in November, took
its own initiatives, most significantly the offer of a cease-fire along the Kashmir
LOC. A major breakthrough in bilateral relations came at the close of a January 2004
summit session of the South Asian Association for Regional Cooperation in
Islamabad. After a meeting between Vajpayee and Pakistani President Musharraf —
their first since July 2001 — the two leaders agreed to re-engage a “composite
dialogue” to bring about “peaceful settlement of all bilateral issues, including Jammu
and Kashmir, to the satisfaction of both sides.”
A May 2004 change of governments in New Delhi had no effect on the
expressed commitment of both sides to carry on the process of mid- and high-level
discussions, and the new Indian Prime Minister, Manmohan Singh, met with
President Musharraf in September 2004 in New York, where the two leaders agreed
to explore possible options for a “peaceful, negotiated settlement” of the Kashmir
issue “in a sincere manner and purposeful spirit.” After Musharraf’s April 2005 visit
to New Delhi, India and Pakistan released a joint statement calling their bilateral
peace process “irreversible.” Some analysts believe that increased people-to-people
contacts have significantly altered public perceptions in both countries and may have
acquired permanent momentum. Others are less optimistic about the respective
governments’ long-term commitment to dispute resolution. Moreover, an apparent
new U.S. embrace of India has fueled Pakistan’s anxieties about the regional balance
of power. (See also CRS Report RL33498, Pakistan-U.S. Relations.)
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
44 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
considerably in recent years, the two countries have yet to reach a final boundary
agreement.45 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, ballistic
missile, and other power projection programs.46 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. More wary 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 differences, 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.”47
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
45 In late 2007, there are signs of renewed friction related to territorial disputes, with one
Indian police official accusing Chinese soldiers of making 141 incursions into Indian
territory over the past year, most of them in the Ladakh region of Kashmir, possibly
triggering major movements of Indian troops (“Chinese Soldiers Better Equipped Than
ITBP Personnel: DGP,” Press Trust India, October 23, 2007. See also Saurabh Shukla,
“Creeping Aggression,” India Today (Delhi), October 15, 2007; “India: Rumblings on the
Border With China,” Stratfor, December 13, 2007).
46 See, for example, “Wary of China, India to Boost Eastern Naval Fleet,” Reuters,
November 14, 2007.
47 Brahma Chellaney, “Don’t Get Cowed Down,” Times of India (Delhi), October 2, 2007.

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CRS-17
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.48 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. An October 2007 visit to Beijing by Congress Party chief Sonia
Gandhi may be an effort to balance New Delhi’s increasingly close relations with the
United States, Japan, and other regional countries, relations that may be straining
Indo-Chinese ties.49 Prime Minister Singh met with Chinese Premier Wen in
Singapore in November, where the two men reiterated their readiness to take the
India-China strategic and cooperative partnership “to a new level.”
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. Despite positive signaling, New Delhi has in the latter months of 2007
maintained only low-profile participation in relevant negotiations, perhaps in part due
to sensitivities surrounding the as-yet unconsummated U.S.-India civil nuclear
cooperation agreement. 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. As Iran
48 See John Lancaster, “India, China Hoping to ‘Reshape the World Order’ Together,”
Washington Post, April 12, 2005.
49 “India’s Gandhi to Visit China as Ties Show Strain,” Reuters, October 23, 2007.

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and Pakistan move to finalize the pipeline project, Tehran in November 2007 issued
a four-month deadline to India to formally announce participation.
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, Indian Oil
Minister Murli Deora assured concerned Left Front parties that India “will not be
cowed down by any threat” regarding its relations with Iran, saying that India’s
participation in the IPI pipeline project “is not the business of the United States.” In
October, Deora and Finance Minister Chidambaram both reiterated India’s
commitment to the project.50 (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, India announced a $100 million increase in its
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 concerned by political instability in Nepal and by the
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
50 “India Won’t Be Cowed Down: Deora” Hindu (Chennai), May 9, 2007; Jo Johnson, “India
‘Committed’ to Iran Pipeline,” Financial Times (London), October 23, 2007.

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CRS-19
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. 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 as a threat to Indian interests.
Further to the east, India continues to pursue closer relations with the repressive
regime in neighboring Burma, with an interest in energy cooperation and to
counterbalance China’s influence there. Such engagement seeks to achieve economic
integration of India’s northeast region and western Burma, as well as bolstering
energy security. The Bush Administration presses India to be more active in
supporting 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.51 Following Rangoon’s October 2007 crackdown
on pro-democracy protestors, New Delhi has continued to favor dialogue and is
opposed to imposing sanctions on Rangoon. India is, in fact, moving ahead with
plans to assist Rangoon in building a port in northwestern Burma as part of an effort
develop that country’s natural gas industry. This approach, justified by Indian leaders
as being a pragmatic pursuit of their national interest, has elicited accusations of
Indian complicity in Burmese repression.52
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 in 2007 it
became 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 Tamil
51 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.” New York-based Human Rights Watch has lambasted India (among other
countries) for “supplying Burma with weapons that the military uses to commit human rights
abuses and to bolster its ability to maintain power” (see [http://hrw.org/english/
docs/2007/10/10/burma17066.htm]).
52 Simon Denyer, “India to Push On With Myanmar Port Despite Unrest,” Reuters, October
10, 2007; “India Silent on Myanmar Crackdown,” Associated Press, October 23, 2007. One
observer called New Delhi’s policy a “reprehensively passive and callous posture” toward
Burma’s pro-democracy forces (Praful Bidwai, “Failing the Foreign Policy Test,” Frontline
(Chennai), October 19, 2007).

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CRS-20
refugees 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.”53 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,
where he met with top Indian officials; signed several bilateral agreements on energy,
science, and space cooperation; and offered to sell four new 1,000-megawatt nuclear
reactors to India. In November, Prime Minister Singh visited Moscow, where he and
Putin discussed economic, energy, and defense ties. Agreement for the construction
of four new nuclear reactors was deferred due to “technical hitches.” Some
commentators believe the U.S. government pressured New Delhi to avoid the deal.
India’s relations with Japan only began to blossom in the current decade after
being significantly undermined by India’s 1998 nuclear weapons tests. Today,
leaders from both countries acknowledge numerous common values and interests.
They are engaging a “strategic dialogue” formally launched with a March 2007 visit
to Tokyo by 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 then-Japanese Prime
Minister Shinzo Abe, who was effusive in his praise of India as a “partner and
friend,” was seen by many as part of a long-term Japanese effort to hedge against
China’s growing regional influence. 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.54 Singh
met with the new Japanese Prime Minister, Yasuo Fukada, in Singapore in November
and reiterated a commitment to the India-Japan “strategic and global partnership.”
53 Vladimir Isachenkov, “Russia, India Cement Nuclear Ties With Offer of 4 New
Reactors,” Associated Press, January 25, 2007.
54 See [http://www.mofa.go.jp/region/asia-paci/pmv0708/joint-2.html].

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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 reportedly are
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 two U.S. aircraft carriers — were not prompted by China’s growing
military strength. New Delhi favors greater trilateral India-U.S.-Japan cooperation,
especially in the areas of trade and energy security, but shies from anything that could
be construed as a multilateral security alliance.55
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.
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
55 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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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 have remained 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 have damaged the ruling coalition’s standing. Such
analyses were forwarded when the Bahujan Samaj Party (BSP) won an outright
majority in May 2007 state assembly elections in Uttar Pradesh, India’s most
populous state. 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. This is
especially so in the wake of the New Delhi government’s failure to consummate a
civil nuclear cooperation deal with the United States, an issue upon which the UPA
leadership had staked considerable political capital.56
The Congress Party.57 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 the Congress, which
dominated Indian politics for decades, 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 seen to wield considerable influence over the coalition’s policy making process.
The Bharatiya Janata Party (BJP).58 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
56 “Unfinished Progressive Agenda,” India Today (Delhi), June 11, 2007; Alistair Scrutton,
“Weak India PM Battered by Allies and Enemies,” Reuters, October 23, 2007.
57 See the Indian National Congress at [http://www.congress.org.in].
58 See the Bharatiya Janata Party at [http://www.bjp.org].

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CRS-23
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). The party did, however, take control of the Karnataka state
government in November 2007, the first time the BJP has held power in southern
India. In preparing for a new round of general elections, the party reportedly is
planning to adhere to its core Hindutva philosophy and it has nominated hardliner
Advani to be its next prime ministerial candidate.59
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,
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 a
notable leader.60
The Left Front.61 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
59 Sanjay Jha, “BJP Goes Back to Hindutva,” Telegraph (Kolkata), September 2, 2007.
60 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.
61 See the Communist Party of India (Marxist) at [http://www.cpim.org].

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CRS-24
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
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.62
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.63 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.
62 See [http://www.whitehouse.gov/news/releases/2004/01/20040112-1.html].
63 See [http://www.whitehouse.gov/news/releases/2005/07/20050718-6.html] and
[http://www.indianembassy.org/press_release/2005/June/31.htm].

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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. 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.64 (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
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.”65 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
64 Cited in Alistair Scrutton and Nidhi Verma, “U.S. Nuclear Deal Won’t Power India’s
Boom,” Reuters, March 13, 2007.
65 See [http://www.whitehouse.gov/news/releases/2006/03/20060302-5.html].

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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.”66
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.67
Further hearings in the Senate (April 26, 2006) and House (May 11, 2006) saw
a total of fifteen independent analysts weigh in on the potential benefits and/or
problems that might accrue from such cooperation. 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. 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.68
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
66 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.
67 See, for example, an open letter Congress at [http://www.indianembassy.org/newsite/
press_release/2006/Mar/30.asp].
68 See, for example, open letters to Congress at [http://fas.org/intt2006/X3e_FDC01218.pdf];
[http://www.armscontrol.org/pdf/20060912_India_Ltr_Congr ess.pdf]; and
[http://www.armscontrol.org/pdf/20051118_India_Ltr_Congress.pdf].

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CRS-27
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.69 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
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 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
original 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.70 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).
69 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.
70 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.

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CRS-28
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.71
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
prohibitions on reprocessing and enrichment technologies.72 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.”73
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; such criticisms continue 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.”74 Many analysts view the BJP’s opposition as political rather than
71 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.
72 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).
73 [http://markey.house.gov/index.php?option=com_content&task=view&id=3003&Itemid=
141].
74 See “Press Statement of the BJP on the Indo-US Nuclear Deal,” December 10, 2006, at
[http://www.bjp.org].

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CRS-29
substantive, especially in light of the fact that the 2004 NSSP initiative was launched
during the BJP’s tenure.75
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.76 India’s influential communist parties, whose Left Front
provides crucial support to the Congress-led ruling coalition in New Delhi, have
focused their ire on geopolitical aspects of the civil nuclear initiative. In December
2006, the leader of India’s main communist party said the U.S.-India civil nuclear
deal was “not acceptable” as it would “seriously undermine India’s independent
foreign policy.” Previously, the Left Front had called India’s two IAEA votes on Iran
a “capitulation” to U.S. pressure.77 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 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;
75 See, for example, Sanjay Jha, “Politics of BJP’s Nuclear Tantrum,” Telegraph (Kolkata),
August 7, 2007.
76 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.
77 In February 2007, a former U.S. Assistant Secretary of Defense reportedly said that
India’s two IAEA votes on Iran had been “coerced” and paved the way for congressional
approval of proposed U.S.-India civil nuclear cooperation. U.S. Ambassador to India David
Mulford later called the attributed statement “inaccurate” (“‘Rademaker is Not a U.S.
Official,’” Hindu (Chennai), February 17, 2007).

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CRS-30
! India was not being 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;
! 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.78
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.79 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.”80
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 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 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.”81 U.S. officials urged 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.
78 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.
79 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].
80 Author interview with Indian government official, New Delhi, September 2006.
81 See [http://www.state.gov/p/us/rm/2007/89559.htm].

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CRS-31
! 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
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.”82
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).83 H.Res. 711, introduced in the House in October
2007, would seek the Bush Administration clarifications on the 123 Agreement’s
compliance with U.S. law.
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
82 See text of the 123 Agreement at [http://www.state.gov/r/pa/prs/ps/2007/aug/90050.htm].
83 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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CRS-32
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 they later agreed to include two U.S. scientific instruments
on India’s planned Chandrayaan lunar mission. 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 FY2006). 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 Carlos Gutierrez unveiled a new “Trusted Customer”
program designed to facilitate greater high-tech trade with India. In 2005, the
inaugural session of the U.S.-India High-Technology Defense Working Group was
held under HTCG auspices.84 Commerce’s Bureau of Industry and Security formally
designated India as an eligible country under its “Validated End-User” program in
October 2007. This designation will allow certain trusted Indian buyers to purchase
high-technology goods without an individual license.85 (See also CRS Report
RL34161, India-U.S. Economic and Trade Relations.)
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.86
Security Issues
The Indian Military.87 With more than 1.3 million active personnel, India’s
is the world’s third-largest military (after China and the United States). The
84 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].
85 “US Streamlines High-Tech Export Controls on India,” Reuters, October 2, 2007.
86 See Commerce’s Entity List at [http://www.bis.doc.gov/Entities].
87 Much information in this section comes from The Military Balance 2007 (Institute for
International and Strategic Studies, London, 2007).

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CRS-33
country’s 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 and
protect an Exclusive Economic Zone of more than two million square kilometers.
The Indian 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 at least one aircraft carrier 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 navy is developing an indigenous nuclear-powered attack
submarine to be armed with nuclear-tipped cruise missiles and also plans to lease a
Russian Akula-class submarine as part of its “sea-based strategic deterrence.” 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 as many as 170 intermediate- and short-range
ballistic missiles capable of delivering nuclear warheads, and has plans to field a new
Agni-IV missile with a range that would give it inter-continental capabilities.
New Delhi increasingly seeks to shift advanced military imports from finished
platforms to co-production with foreign suppliers. A 2005 deal with France provides
for 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 providing about $1.5 billion worth of defense
supplies in 2006. India was the leading developing world arms purchaser from 1999-
2006, making arms transfer agreements totaling $22.4 billion during that period.88
As India seeks to expand its power projection capabilities, it has come under fire
from some 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.89
88 See CRS Report RL34187, Conventional Arms Transfers to Developing Nations, 1999-
2006, by Richard F. Grimmett.
89 Ajai Sukla, “Dysfunctional Defense,” Wall Street Journal Asia, July 19, 2007.

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CRS-34
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 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 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. Keating lauded U.S.-India defense relations
as “solid, good, and improving steadily.”90
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.91
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
90 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.
91 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].

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CRS-35
the U.S. military with its first look at advanced 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. It
was the first time such exercises were conducted off India’s east coast. U.S. and
Indian officials tout ongoing joint maneuvers 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 some analysts anticipating that
New Delhi will spend as much as $40 billion on weapons procurement over the next
five years.92 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
Kashmir region. In 2004, Congress was notified of a sale to India involving up to
$40 million worth of aircraft self-protection systems for mounting on the Boeing
737s that carry India’s head of government. Moreover, 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
92 Heather Timmons and Somini Sengupta, “Building a Modern Arsenal in India,” New York
Times, August 31, 2007.

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missile defense.”93 India in August 2007 invited foreign tenders for the sale 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.94 Still,
some top Indian officials express concern that the United States is a “fickle” partner
that may not always be relied upon to provide the reciprocity, sensitivity, and high-
technology transfers sought by New Delhi.95 In 2006, the Indian Navy declined an
offer to lease two U.S. P-3C maritime reconnaissance aircraft, calling the
arrangements too costly.
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 it would send the wrong signal to other
weapons-exporting states at a time when the U.S. is seeking to discourage 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.
93 See [http://www.state.gov/r/pa/prs/ps/2005/43853.htm].
94 Sujan Dutta, “126 Have Nothing to Do With 123: Antony,” Telegraph (Kolkata), August
30, 2007.
95 “Defense Firms Seek Sales in India,” Chicago Tribune, December 21, 2006.

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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.”96 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.97 An April 2006 session of
the U.S.-India Joint Working Group on Counterterrorism — the seventh such
meeting since the group’s founding in January 2000 — ended with a statement of
determination from both countries to further advance bilateral cooperation and
information sharing on such areas of common concern as bioterrorism, aviation
security, advances in biometrics, cyber-security and terrorism, WMD terrorism, and
terrorist financing.98 Expanding military-to-military links have included company-
level joint counterinsurgency training of army units.99
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.100 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.101 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.102 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
96 “Joint Statement of U.S., India on Terrorism, Bilateral Ties,” U.S. Department of State
Washington File, November 9, 2001.
97 See [http://www.indianembassy.org/press_release/2005/June/31.htm].
98 See [http://usinfo.state.gov/is/Archive/2006/Apr/24-821244.html]. The most recent
meeting of the Working Group was held in Washington in November 2007.
99 John Lancaster, “U.S. Troops on Front Line of Expanding India Ties,” Washington Post,
January 25, 2006.
100 “U.S.-India Treaty on Mutual Legal Assistance in Criminal Matters Ratified,” U.S.
Embassy New Delhi Press Release, October 3, 2005.
101 “US Offers India Help to Fight Maoists: Official,” Reuters, May 26, 2006.
102 “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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Treasury formally designated Ibrahim as a terrorist supporter and accused him of
collaborating with Al Qaeda in South Asia.103
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.
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.104 (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.105 In September 2001, President Bush
103 “Hunting for India’s ‘Most Wanted,’” Jane’s Intelligence Digest, December 9, 2005;
Treasury notification at [http://www.ustreas.gov/press/releases/js909.htm].
104 Statement of Lt. Gen. Michael Maples before the Senate Select Committee on
Intelligence, January 11, 2007, at [http://intelligence.senate.gov/070111/maples.pdf].
105 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
(continued...)

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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
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.”106 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
105 (...continued)
under sanctions as a result of an October 1999 military coup). (See CRS Report RS20995,
India and Pakistan: U.S. Economic Sanctions.)
106 See [http://www.state.gov/t/isn/c10390.htm].

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CRS-40
and its legal ramifications.107 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. India’s relations with Iran
traditionally have been positive and, in 2003, the two countries launched a bilateral
“strategic partnership” of their own.108 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 voiced
past concerns that New Delhi’s policies toward Tehran’s controversial nuclear
program were not congruent with those of Washington, although these concerns were
eased when India voted with the United States (and the majority) at the International
Atomic Energy Agency sessions of September 2005 and February 2006. In each of
the past three years (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.109 New Delhi firmly opposes the emergence of any new nuclear
weapons powers in the region.
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.110 Expressions of these congressional concerns
became more pointed in 2007:
107 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.
108 See text of the January 2003 “New Delhi Declaration” at [http://meaindia.nic.in/
declarestatement/2003/01/25jd1.htm]. In December 2007, Indian Foreign Secretary Menon
visited Iran, where he held several high-level meetings and reiterated New Delhi’s interest
in establishing a strategic partnership with Tehran.
109 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).
110 See, for example, Vivek Raghuvanshi and Gopal Ratnam, “Indian Navy Trains Iranian
Sailors,” Defense News, March 27, 2006; 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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! 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.”
New Delhi has offered assurances that all of India’s dealings with Iran are permitted
under U.N. Security Council Resolutions; one official expressed being “quite
amazed” at reports of closer India-Iran military ties. In September 2007, Assistant
Secretary of State Boucher conceded that some concerns about India-Iran military
relations are “exaggerated,” but that the onus is on New Delhi to “explain” its
relations with Tehran.111
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.)
111 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.
See also Rama Lakshmi, “India’s Long-Standing Ties With Iran Straining Alliance With
U.S.,” Washington Post, September 20, 2007.

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India’s Economy and U.S. Interests112
Overview. India is in the midst of a major and rapid economic expansion, with
an economy projected to soon be the world’s third largest. 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 new global 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.113
According to the World Bank, India’s per capita GDP was only about $805 in
2006 ($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 people, a larger number of Indians subsists on
less than $1 per day.114 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 128th out of 177 countries on its
2007/2008 human development index (between Morocco and Laos), down from 126th
in 2006.115
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” had become 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
112 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.
113 See [http://www.whitehouse.gov/news/releases/2006/02/20060222-2.html].
114 The Indian government’s official poverty line for 2004-2005 was an income of 356
rupees (about $9) per person per month. By this measure, the national poverty rate was
about 28%. Yet estimates indicate that some 400 million Indians subsist on less than 40
rupees per day. See also Somini Sengupta, “Economic Boom Fails to Generate Optimism
in India,” New York Times, August 16, 2007.
115 See [http://hdr.undp.org/en/reports/global/hdr2007-2008].

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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.116
Consumer price inflation rose somewhat in mid-2007, then appeared to be leveling
off at a lower rate toward year’s end (with a year-on-year rate of 5.5% in October).
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 (related also to
political developments). The market subsequently stabilized and then recovered
mightily, reaching new highs in the closing months of 2006. More new record highs
became even more frequent in the latter half of 2007; as of mid-December, the
Sensex was up nearly 40% for the year. India now boasts more billionaires (40) than
any other Asian country and has the fourth most in the world, trailing only the United
States, Germany, and Russia. The bounty of India’s newly-super-wealthy is traced
largely to phenomenal gains in the country’s stock market, but, in a further indicator
of serious income disparity, only about 2% of the country’s working-age population
hold any stock at all.117
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 Singh, boosted growth and led to major new inbound foreign
investment in the mid-1990s. Reform efforts stagnated, however, under weak
coalition governments later in the decade, and combined with the 1997 Asian
financial crisis and international sanctions on India (as a result of its 1998 nuclear
tests) to further dampen the economic outlook. Following the 1999 parliamentary
elections, the BJP-led government launched second-generation economic reforms,
including major deregulation, privatization, and tariff-reducing measures.
Once seen as favoring domestic business and diffident about foreign
involvement, New Delhi appears to gradually be embracing globalization and has
sought to reassure foreign investors with promises of transparent and
nondiscriminatory policies. A 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
116 “India Overheats,” Economist (London), February 3, 2007.
117 Mark Sappenfield, “India’s Superrich Get Even Richer,” Christian Science Monitor,
December 18, 2007.

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future growth.118 An October 2007 country survey from the Paris-based Organization
for Economic Cooperation and Development (OECD) traced India’s economic
successes to reforms that reduced the role of the state in economic affairs and
claimed that New Delhi’s pursuit of further “ambitious and wide-ranging reforms”
could push India’s growth rate to a sustainable 10% annually.119 Other analyses
identify water shortages, urban woes, and pollution as further potential threats to
Indian prosperity.120 (See also CRS Report RL34161, India-U.S. Economic and
Trade Relations.)
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 2007 had an estimated value
of $21.8 billion (up 10% over 2006). Leading imports include cotton apparel;
textiles; and pearls, gemstones, and jewelry. Estimated exports to India in 2007
totaled $14 billion (up 38% over 2006), with aircraft; business and
telecommunications equipment; finished pearls, gemstones, and jewelry; fertilizer;
and chemicals as leading categories.121
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.
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 (U.S. firms invested about $2 billion in India in
2006; Indian companies invested roughly the same amount in the United States).
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
118 [http://www.usindiafriendship.net/viewpoints1/Indias_Rising_Growth_Potential.pdf].
119 See [http://www.oecd.org/eco/surveys/India].
120 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).
121 See [http://www.census.gov/foreign-trade/statistics/country/index.html].

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— issued a report identifying India’s poor infrastructure and dense bureaucracy as
key impediments to increased bilateral trade and investment relations.122
In a 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.123
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.”124 During his October 2007 visit to India,
U.S. Treasury Secretary Paulson told a Mumbai audience,
In the long term, India can take a number of steps to become even more
competitive, such as reducing requirements that financial institutions hold large
amounts of government debt, reducing requirements for banks to provide credit
to certain priority sectors, and removing various restrictions and caps on foreign
investment. Limits on debt and equity financing, and asset allocation restrictions
on financial institutions, are impediments to putting resources to their most
productive use.125
(See also CRS Report RL34161, India-U.S. Economic and Trade Relations.)
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
122 See “U.S.-India Strategic Economic Partnership,” U.S.-India CEO Forum, March 2006
at [http://planningcommission.nic.in/reports/genrep/USIndia.pdf].
123 See [http://www.state.gov/p/us/rm/2007/85424.htm].
124 See [http://newdelhi.usembassy.gov/pr91907.html].
125 See [http://www.ustreas.gov/press/releases/hp648.htm].

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continued and significant additional Indian liberalization.”126 The Commerce
Department likewise encourages New Delhi to continue lowering tariffs as a means
of fostering trade and development. Indian Finance Minister P. Chidambaram agrees
that high rates of investment must be maintained to sustain the country’s economic
growth and he hopes to see the current annual rate more than doubled. In 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.127
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,
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.”128
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.129 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.”130
126 See [http://www.ustr.gov/Document_Library/Reports_Publications/Section_Index.html].
127 Jo Johnson, “India’s Sovereign Credit Rating Upgraded,” Financial Times (London),
January 30, 2007.
128 See [http://www.state.gov/e/rls/rm/2004/36345.htm] and [http://newdelhi.usembassy.gov/
pr022007.html].
129 See [http://www.iipa.com/rbc/2007/2007SPEC301INDIA.pdf].
130 See [http://newdelhi.usembassy.gov/pr120706.html]. Bush Administration policy is at
[http://mumbai.usconsulate.gov/chris_israel.html].

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While the past two decades have seen a major transformation of the Indian
economy, it remains relatively closed in many aspects. The Heritage Foundation’s
2007 Index of Economic Freedom — which may overemphasize the value of absolute
growth and downplay broader quality-of-life measurements — again rated India’s
economy as being “mostly unfree” and ranked it 104th out of 157 countries. The
index highlights restrictive trade policies, heavy government involvement in the
banking and finance sectors, rigorous investment caps, demanding regulatory
structures, and a high incidence of corruption.131 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.132 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.133 (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.134 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
131 See [http://www.heritage.org/research/features/index/country.cfm?id=India].
132 See [http://www.transparency.org].
133 See [http://www.fraserinstitute.ca/admin/books/chapterfiles/3aEFW2006ch3A-K.pdf#].
134 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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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.135
Multilateral Trade Negotiations. In July 2006, the World Trade
Organization’s “Doha Round” of multilateral trade negotiations were suspended due
to disagreement among the WTO’s six core group members — which include the
United States and India — over methods to reduce trade-distorting domestic
subsidies, eliminate export subsidies, and increase market access for agricultural
products. The United States and other developed countries seek substantial tariff
reductions in the developing world. India, like other members of the “G-20” group
of developing states, has sought more market access for its goods and services in the
developed countries, while claiming that developing countries should be given
additional time to liberalize their own markets. In particular, India is resistant to
opening its markets to subsidized agricultural products from developed countries,
claiming this would be detrimental to tens of millions of Indian farmers and result in
further depopulation of the countryside. According to Indian officials, the WTO’s
narrow focus on economic issues excludes political and social variables which are
equally sensitive for New Delhi and which constrain the options available to the
Indian government. They seek greater U.S. understanding of this dynamic.
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.”136 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.137 According to U.S. Treasury Secretary Paulson,
“Working together to successfully conclude a Doha agreement will be the single most
effective thing we can do to help raise living standards in India and around the
world.”138 (See also CRS Report RL32060, World Trade Organization Negotiations:
The Doha Development Agenda, and CRS Report RL33144, WTO Doha Round: The
Agricultural Negotiations.)
135 SEZ-related troubles continued in late 2007: In November, Amnesty International
expressed concern over an upsurge in political violence in West Bengal and reports that state
officials may have been complicit in attacks on farmers.
136 “India Blames U.S. for Failure of WTO Talks,” Hindu (Chennai), July 26, 2006;
Secretary Johanns at [http://newdelhi.usembassy.gov/pr112106b.html].
137 “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.
138 See [http://www.ustreas.gov/press/releases/hp636.htm].

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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.139 The
U.S. government has committed to assist India in promoting the development of
stable and efficient energy markets there; a U.S.-India Energy Dialogue was launched
in July 2005 to provide a forum for bolstering bilateral energy cooperation.140
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 2005.141 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 an inefficient low-grade, high-ash variety). 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 2006), 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.142 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 2020.143
139 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].
140 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.
141 See a Ministry of Power report at [http://powermin.nic.in/reports/pdf/ar05_06.pdf].
142 Energy 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].
143 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.

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Roughly 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; the capital of Delhi often has
power for only 14 hours each day. In fact, a burgeoning electricity crisis may be
severely hampering India’s continued economic security and growth.144
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.145 One month later, 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.
With emissions of more than 500 million tons of carbon dioxide per year, India
is the world’s fourth-largest producer of greenhouse gases (per capita emissions are,
however, only about one-sixteenth those of the United States). In July 2005, the
United States joined with India, China, Japan, Australia, and South Korea in the
Asia-Pacific Partnership on Clean Development and Climate, a U.S.-led effort to
accelerate the development and deployment of clean energy technologies through a
voluntary public-private partnership among six major Asia-Pacific nations. Sydney,
Australia, hosted the inaugural meeting in January 2006 and the body’s second
ministerial meeting was held in October 2007 in New Delhi, where the United States
announced providing grant funds for 23 clean technology projects in India under the
Partnership’s aegis.146
Some in Congress have sought to increase international cooperation on energy-
related matters, including with India. The Energy Diplomacy and Security Act of
2007 (S. 193) was reported out of the Senate Foreign Relations Committee in April
2007. 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
144 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.
145 See [http://newdelhi.usembassy.gov/pr032007a.html].
146 See remarks by James Connaughton, Chairman of President Bush’s Council on
Environmental Quality, at [http://newdelhi.usembassy.gov/pr101507a.html].

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cooperation, was introduced in the House. The International Climate Cooperation
Re-engagement Act of 2007 (H.R. 2420) was reported out of the House 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.147 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 is ongoing and has
claimed tens of thousands of lives.148
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 content 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
147 “India Says Kashmir Toll Over 41,000, Others Differ,” Reuters, December 7, 2006.
148 Most estimates list from 41,000 to 66,000 related deaths. The Pakistan-based Kashmir
Media Service claims that more than 92,000 Kashmiris have been “martyred” in the fighting.

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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.149 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 (originally a leading militant
force, 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 Party-led
government renewed high-level contact with moderate Hurriyat leaders begun by the
previous BJP-led coalition. Two years later, however, Hurriyat leader and noted
Kashmiri cleric Mirwaiz Umar Farooq said talks between the Indian government and
moderate Kashmiri 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.150
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 may have contributed to its own marginalization by boycotting the state’s 2002
elections — remains rife with its own divisions. Some analysts urge greater U.S.
149 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]).
150 Sheikh Mushtaq, “Kashmiri Separatist Says India Talks Break Down,” Reuters, August
30, 2007.

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efforts to prod the New Delhi and Islamabad governments along in the ongoing
search for a final resolution.151
Figure 1 indicates 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.152
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 saw prospects for a meeting of minds between New Delhi and
Islamabad as being better than ever before (determining and incorporating the desires
of the Kashmiri people remain highly problematic).153 In 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 2002.154 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
151 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].
152 Author interviews, Srinagar, Kashmir, September 2006.
153 “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.
154 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.

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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 the Muslim-
majority Kashmir Valley 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.155
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.
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. At the same time, 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.
155 Author interviews, Srinagar, Kashmir, September 2006.

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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.156 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.157
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
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, but
did not end the insurgency. 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 were termed the largest-ever
operations against ULFA rebels. Following the rash of violence, Defense Minister
156 Tanya Datta, “India’s Forgotten War,” BBC News, August 8, 2007; “Militants’ Hold
Over Manipur Total,” Hindustan Times (Delhi), September 9, 2007.
157 See [http://www.state.gov/s/ct/rls/crt/2005/65275.htm].

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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.158 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
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.”159 Following a March 2007 raid on a
158 See [http://www.state.gov/s/ct/rls/crt/2006/82734.htm].
159 Asian Center for Human Rights press release at [http://www.achrweb.org/
press/2007/IND0307.htm]. See also Purnima Tripathi, “Strategy Gone Awry,” Frontline
(continued...)

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CRS-57
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.160
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
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.161 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
159 (...continued)
(Chennai), September 21, 2007.
160 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.
161 In November 2007, Human Rights Watch called on the Indian government to launch an
investigation of Modi after he made statements apparently endorsing the extrajudicial
execution of a terrorism suspect by police (see [http://hrw.org/english/docs/
2007/12/07/india17510.htm]).

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CRS-58
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.162
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 two 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
attention to such abuses has waned. According to the U.S. State Department’s
Country Report on Human Rights Practices, 2006, the Indian government “generally
respected the human rights of its citizens; however, numerous serious problems
remained.” These included extensive societal violence against women; extrajudicial
killings, including faked encounter killings; excessive use of force by security forces,
arbitrary arrests, and incommunicado detentions in Kashmir and several northeastern
states; torture and rape by agents of the government; “harsh, life-threatening” prison
conditions and lengthy pretrial detentions without charge; “pervasive” police
corruption; forced prostitution; child prostitution and female infanticide; forced child
labor; human trafficking; and “ubiquitous” caste-based discrimination and violence,
among others. Terrorist attacks and kidnapings also remained grievous problems,
especially in Kashmir and the northeastern states. Indian law provides for extensive
human rights protections, but enforcement is “lax” and convictions rare.163
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
162 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.
163 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].

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CRS-59
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 2006.164 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.165
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.”166 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.167 India generally denies international human rights groups official access to
Kashmir and other sensitive areas.
Human Trafficking. The State Department’s latest (June 2007) annual report
on trafficking in persons said, “India is a source, destination, and transit country for
men, women, and children trafficked for the purposes of forced labor and commercial
sexual exploitation. India’s trafficking in persons problem is estimated to be in the
millions.” It further 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 ....”168 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
164 See [http://hrw.org/englishwr2k7/docs/2007/01/10/global15039.htm] and
[http://report2007.amnesty.org/eng/Homepage].
165 See [http://www.state.gov/g/drl/rls/shrd/2006/80590.htm].
166 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].
167 See “Faked Deaths Show Ills of India’s Police,” Associated Press, June 7, 2007.
168 See [http://www.state.gov/g/tip/rls/tiprpt/2007/82806.htm].

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CRS-60
“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.”169
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.
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.170
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.171
169 “India Escapes U.S. List of Worst Human Traffickers,” CNN.com, June 13, 2007; “India
Left Off Trafficking Blacklist,” Associated Press, June 12, 2007.
170 See [http://www.state.gov/g/drl/rls/irf/2007/90228.htm].
171 See [http://www.uscirf.gov/countries/publications/currentreport/index.html] and
[http://web.amnesty.org/library/print/ENGASA200072007].

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CRS-61
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.172 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.”173 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.”174 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
India’s infected population was about 2.5 million.175 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.176 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.
172 See [http://www.state.gov/r/pa/ei/bgn/3454.htm].
173 See [http://www.state.gov/g/drl/rls/hrrpt/2006/78871.htm].
174 See [http://hrw.org/englishwr2k7/docs/2007/01/11/india14868.htm] and
[http://www.hrw.org/reports/2007/india0207].
175 “India’s HIV Cases Highly Overestimated, Survey Shows,” Reuters, July 6, 2007.
176 See [http://www.usaid.gov/our_work/global_health/aids/Countries/ane/india_05.pdf].

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CRS-62
Analysts opine that substantially greater resources are needed to address HIV/AIDS
in India than are currently available.177
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 RL33485, U.S. International HIV/AIDS, Tuberculosis, and Malaria
Spending: FY2004-FY2008.)
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
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).178
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.
177 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].
178 See USAID India at [http://www.usaid.gov/in].

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CRS-63
Selected Relevant Legislation in the 110th Congress
! In December, the Clean Energy Act of 2007 became P.L. 110-140.
The bill contains provisions for expanding efforts to promote U.S.
exports in clean and efficient energy technologies to India and
China.
! In October 2007, H.Res. 711, expressing the sense of the House
concerning the U.S.-India nuclear cooperation agreement, was
referred to House committee.
! Also in October, H.R. 3730, to establish a U.S.-India
interparliamentary exchange group, was referred to House
committee.
! Also in October, S.Res. 339, expressing the sense of the Senate on
the situation in Burma, was passed by the full Senate.
! 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 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
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

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CRS-64
Program
FY
FY
FY
FY
FY
FY
FY
FY
FY
or
2007
2008
2000
2001
2002
2003
2004
2005
2006
Account
(est.)
(req.)
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.
Figure 2. Map of India

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