NEW INDIAN EXPORT CONTROL LAW IN THE MAKING

C O N F I D E N T I A L SECTION 01 OF 05 NEW DELHI 003270

SIPDIS

E.O. 12958: DECL: 04/30/2015
TAGS: ETTC KNNP KOMC KSTC PGOV IN GOI
SUBJECT: NEW INDIAN EXPORT CONTROL LAW IN THE MAKING


Classified By: Charge Robert O. Blake, Jr., for Reasons 1.4 (B, D)


1. (SBU) Summary: A front page article in the April 26
"Indian Express" reported details of an ambitious draft
export control bill giving the GOI far-reaching authority to
investigate and enforce stricter controls on WMD-related
items and technologies. Entitled "The Weapons of Mass
Destruction and their Delivery Systems (Prevention of
Unlawful Activities) Bill, 2005," the draft legislation
proposes to regulate all manner of trade and transfer of
sensitive dual-use goods and technology which is lacking in
the current Foreign Trade and Development Regulation Act.
Fundamental questions arise regarding who will implement the
legislation and whether adequate resources will be allocated
for enforcement. GOI contacts have offered to brief the USG
on the contents of the proposed law, but have not committed
to provide us with a copy before it goes to Parliament.


2. (C) Indicating broad GOI support, MEA Joint Secretary
(Americas) S. Jaishankar was optimistic that Parliament would
pass the law quickly, but previewed the possibility that the
current fractious atmosphere among MPs may delay
consideration until the next session (August-September).
Former BJP FM Sinha and members of the Indo-US Parliamentary
Forum told Charge the law should not encounter significant
opposition. If the article is generally accurate and the
text is not diluted during the comment process, its passage
will be a major milestone toward greater cooperation on all
aspects of our strategic relationship. End Summary.

Outline of Pending Export Control Legislation
--------------


3. (U) Authored by Shishir Gupta, a journalist with very
good access within the MEA, the article outlines the
jurisdiction, application, and enforcement of the proposed
legislation. The bill seeks to limit any transfer of WMDs or
their delivery systems by trade, transfer, re-transfer,
transit, and trans-shipment of materials, equipment or
technology to any state or non-state entities. The law would
apply to any mode of transport in India, its Exclusive
Economic Zone (360 km from its coast),or registered in India
but located elsewhere. Indian citizens anywhere in the
world, foreigners in India, and "persons in Indian service,
within and beyond the country" as well as "all associates,
branches or subsidiaries outside India of companies
registered in India" would be subject to the law. Finally,
Gupta lists penalties for violations ranging from a minimum
fine of five lakh rupees (approx. $11,000) to life
imprisonment. (Full text of article in para 12.)


4. (U) Preceding this report, the Indian Business Standard
on April 19 briefly outlined some procedural aspects of the
pending law. According to that article, introduction of the
new bill has been delayed so that Commerce and Industry
Minister Nath can discuss its provisions with the recently
constituted Board of Trade. The article also states that a
decision would soon be made on which ministry -- either MEA
or the Ministry of Home Affairs -- would "pilot" the
legislation.

GOI Seeking Comments?
--------------


5. (SBU) The article states that comments are currently
being sought from relevant GOI agencies, including DRDO,
before the draft bill goes to Parliament. Embassy's contacts
at DRDO, ISRO, and the Ministry of Commerce, however, told us
that they had not yet seen a copy of the proposed law.


6. (SBU) In view of keen USG interest in the legislation,
Jaishankar told Charge in an April 27 meeting that he would
suggest to MEA Additional Secretary for International
Security, Meera Shankar, that she brief Mission on bill, but
did not guarantee that we would see a copy before it goes to
Parliament. (Note: Although the GOI has sought public
comment on a few recent pieces of pending legislation that
have broad economic impact, such as the Food Safety and
Standards Bill and the Patent Amendment Bill, it still
maintains a close hold on most pending legislation until
passed by the Lok Sabha. End Note.)

Initial Questions
--------------


7. (SBU) Our reading of the article raises several initial
questions, which we will pose if/when we receive the briefing
we have requested:

-- The article states, "The government may set up a
regulatory authority to implement rules and regulations under
this Act." Would the GOI create a new entity to implement
this law or would a current body (e.g., the Inter-Ministerial
Working Group that currently reviews export licenses) be
given new authority?

-- Will the proposed law include "catch-all" provisions and
end-use monitoring? (Note: UK PolOff recounted to PolMilOff
recent discussions by a Missile Technology Control Regime
(MTCR) delegation with MEA Additional Secretary
(International Security) Meera Shankar. Shankar asserted
that India's current export control law is sufficient to
regulate most sensitive dual-use items. When pressed by the
MTCR delegation, however, she acknowledged that the GOI may
not consistently scrutinize the end-use of a controlled item,
according to UK PolOff. Embassy is unaware of any case where
the GOI has denied a dual-use license application, nor of any
GOI end-use checks. End Note.)

-- Would the law include product lists? (Note: Currently
there is confusion among officials as to what items are
considered "dual-use" and should require controls. End Note.)

-- Would India begin end-use verifications checks? Would
pre-license checks of end-users also be required? (Note:
The current law allows for end-use checks, but to Embassy
knowledge, these checks are not carried out. Currently,
Indian end-use "verification" merely requires that both the
supplier and user submit a certificate to the Director
General for Foreign Trade stating that the item has been
transferred and received. End Note.)

-- Will adequate resources be allocated for effective
implementation and enforcement?

Broad Support
--------------


8. (SBU) MEA contacts were hopeful that the legislation
would be introduced in the current session of Parliament, but
MEA Director Venu Rajamony noted in an April 26 meeting with
PolCouns that this bill may not get through Parliament's
agenda in the current session because of ongoing battles
about domestic issues. The April 19 "Business Standard"
article cited unnamed officials who speculated that the bill
would not be tabled in the current budget session of
Parliament. Despite discord among legislators on other
issues, Jaishankar was optimistic that the legislation would
pass quickly when it is introduced. "Even the Left has
figured out that it is to India's advantage to have a good
reputation on export controls," Jaishankar told Charge on
April 27.


9. (C) So far, we have seen no evidence of Parliamentary
resistance to this new legislation. Rather, the main
objections that MEA is facing appear to come from within
elements of the Indian scientific establishment that are
skeptical of US motives. In an April 26 meeting with the
Charge, BJP spokesman and former Foreign Minister Yashwant
Sinha emphasized that the BJP had no major differences with
the Congress on foreign policy, especially as regards
relations with the US. Indeed, he argued that the main
constraint on Congress foreign policy options was its
reliance on the Left parties, many of which remain stuck "in
a Cold War mindset." He cited an ongoing debate over pension
reform to argue that the Congress is unwilling to advance
legislation with BJP support if that means parting ways with
the Left. Referring to the NSSP, Sinha said he was happy
that US-India initiatives launched by the BJP are now bearing
fruit, and welcomed the Administration's intention to develop
a broader framework for cooperation, as outlined in the
Department's March 25 South Asia Initiative. Pressed by
PolCouns regarding the importance of speedy passage of an
export control bill, Sinha stated that "we'll be supportive,
there should be no issue with the BJP." Regarding the US,
Sinha said the BJP's concerns for now focus on the Pakistan
F-16's package, to include questions about how many aircraft
and what configuration would be offered.

IUPF Support
--------------


10. (SBU) We received similar signals of support during an
April 27 Charge-led briefing for members of the Indo-US
Parliamentary Forum. The Charge walked through the March 25
initiatives and the results of Natwar Singh's follow-on
meeting with the Secretary, emphasizing the Administration's
intention to take our bilateral relationship to an entirely
new level. The Charge and other Country Team members placed
considerable importance on the export control bill, noting
that progress on such legislation would allow the US to move
forward more quickly on issues of importance to India such as
defense technology transfer, civil nuclear cooperation, and
satellite collaboration. MPs from several different parties,
including Congress, the Congress-allied NCP, the BJP and the
NDA-affiliated Biju Janata Dal welcomed the prospect of
deeper US-India partnership in these areas and indicated that
necessary export control legislation should move ahead
quickly. Among this self-selecting, pro-US group (several of
whom were educated in America) there was none of the
defensiveness about India's existing export control regime
that we occasionally see among GOI officials.

Comment
--------------


11. (C) Comment: If the article is generally accurate and
the text is not diluted during the comment process, its
passage will be a major milestone toward greater cooperation
on all aspects of our strategic relationship. End Comment.

Text of Article
--------------


12. (U) Begin text of April 26 "Indian Express" article:

Government Ready with Law against Smuggling WMDs, N-Material,
by Shishir Gupta

Bill: Strict checks, life penalty for offenders as India
assures world of commitment to non-proliferation

Seven years after India conducted the Shakti series of
nuclear tests at Pokhran, the UPA government is bringing in
legislation that steel-clads the non-proliferation framework
and imposes punishment, up to life imprisonment, on those
found involved in proliferating weapons of mass destruction
and missile delivery systems to terrorists, non-state players
and other countries.

Authoritative sources indicated that the legislation called
'The Weapons of Mass Destruction and Their Delivery Systems
(Prevention of Unlawful Activities) Bill, 2005' has been
drafted and comments are being sought from the DRDO and other
agencies to make it foolproof.

Though Parliament goes into summer recess from May 13 * it
was on this day in 1998 when India conducted the last two of
the five detonations at Pokhran * efforts are being made to
get the legislation introduced and cleared this session
itself.

The legislation has acquired urgency as private players will
soon come into the civilian nuclear energy sector and there's
greater emphasis on private involvement in the defense
sector.

This export control legislation will also help India convince
the international community that its non-proliferation record
is impeccable and provide impetus to countries such as US and
Russia towards sharing of nuclear technology with New Delhi.

The bill provides for cast-iron commitments by India, as a
nuclear weapons or other nuclear explosive devices and not to
assist or encourage any other state to manufacture or acquire
WMDs (sic).

With the broader objective of global disarmament, the bill
says that India is committed to prevent terrorists and
non-state players from acquiring nuclear devices, chemical or
biological weapons and their delivery systems.

If cleared, this legislation will be in addition to the
existing non-proliferation rules already in force. This law
will apply to the entire country, including its Exclusive
Economic Zone which is 360 km (200 nautical miles) from the
coast, and to all Indian citizens wherever they are residing.

The bill will apply to any ship, aircraft or any other medium
of transport registered in India, wherever they may be. Its
jurisdiction will extend to all foreign persons residing in
India and persons in Indian service, within and beyond the
country.

All associates, branches or subsidiaries outside India of
companies registered in India will also come under its ambit.

The draft apparently states that the Act will apply to trade,
transfers, re-transfers, transit and trans-shipment of
materials, equipment or technology (including software) of
any description as identified by the government.

The bill defines in details WMDs, biological weapons,
chemical weapons, munitions and devices, radioactive
material, fissile material and delivery systems and indicates
that the government may set-up a regulatory authority to
implement rules and regulations under this Act.

It gives full powers to the Central government and protects
the law enforcers of this Act from any counter-litigation,
prosecution or any other legal proceedings. The draft
prohibits any person other than government to deal with WMDs,
bans any transfer of nuclear technology or radioactive
material to terrorists. And imposes a ban on export of
materials, equipment or technology relating to manufacture of
biological, chemical or nuclear weapon.

The stringent law imposes heavy penalties on violators as
deterrence. Any person found dealing with WMDs or radioactive
material will be sentenced to a minimum of five years in jail
to a maximum of life imprisonment.

Any person who is found with an intent to aid any terrorist
or possesses a nuclear device can be punished for a minimum
of five years to a maximum of life imprisonment with a hefty
fine.

The proposed law also bars Indians from exhibiting, selling
or supplying WMDs to any foreign national, who is a resident,
operating, visiting or studying or conducing research within
the territorial limits of the country including the EEZ and
the airspace.

Any contravention of this rule will invite a minimum penalty
of five lakh rupees. The second or every subsequent offence
will be punishable with an imprisonment not less than six
months but can be extended to five years. End text.
BLAKE