INDIA COMPLETES THE NSSP, STILL PONDERING PSI

S E C R E T SECTION 01 OF 06 NEW DELHI 005444

SIPDIS

E.O. 12958: DECL: 07/15/2015
TAGS: PREL PGOV ETTC KNNP KSTC PARM TSPA IN NSSP
SUBJECT: INDIA COMPLETES THE NSSP, STILL PONDERING PSI

REF: A. STATE 129958


B. STATE 127794

C. STATE 112244

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


1. (S) Summary: Paving the way for completion of the NSSP,
MEA Additional Secretary (International Security) Meera
Shankar delivered two non-papers to the Charge and PolCouns
on July 14, one responding to USG questions about
implementation of the WMD Bill (see text in para 5 and
initial analysis in para 6) and the second listing GOI
efforts on industry outreach and preventive enforcement (see
text in para 12 and initial analysis in para 13). Shankar
confirmed that the Cabinet had approved harmonization with
the MTCR and NSG guidelines and the new export control list
was undergoing "post-approval procedures," but declined to
estimate when the new list would be made public. Based on
our initial review, we believe these non-papers meet the
remaining requirements to complete the NSSP, including
adoption of the MTCR definition of "missile." On India's
acceptance of the PSI Statement of Principles, Shankar stated
that the GOI will await formal notification of the
termination of the Core Group before it considers other legal
questions it has about the initiative. End Summary.

Agreement on Harmonization
--------------


2. (S) Charge shared with Shankar the non-paper Under
Secretary Joseph gave to Indian Ambassador Sen on July 11

SIPDIS
outlining the final steps for completion of the NSSP (Ref A),
including harmonization of India's national control list with
the MTCR and NSG. Glancing at the paper, Shankar confirmed
that the Cabinet had approved harmonization and the new
export control list was "currently undergoing post-approval
procedures," i.e., publication in the Indian equivalent of
the Federal Register. Noting that "private adherence" to the
international control regimes would suffice for now, PolCouns
expressed hope that the GOI would publicly adhere in the
future. PolCouns also pressed for more details about the
mechanics of the "post-approval procedures," including when
the list might be made public. Pressed on timing, she only
repeated, "soon." Shankar demurred to give further details
or an estimated date to release the new export control list,
saying only that it would be "soon."

Waiting for the Space Launch Agreement
--------------


3. (C) After delivering the GOI non-papers, Shankar stated,
"We consider we've fulfilled our obligations under the NSSP,"
then remarked that the GOI was still awaiting a response from
the USG on the Space Launch Agreement. Charge noted that
unresolved issues on space cooperation had been separated
from the rest of the initiatives and would not prevent the
completion of the NSSP as a whole.

Still Pondering PSI
--------------


4. (C) In light of the pending decision to dissolve the PSI
Core Group (Ref B),Charge asked whether the GOI would
announce acceptance of the PSI Statement of Principles during
the PM's visit to Washington. Shankar stated that the GOI
would await "more formal communication on the dissolution" of
the Core Group, but still needed to have internal discussions
about the legal aspects of interdiction.

Non-Paper Responding to Questions about the WMD Bill
-------------- --------------


5. (C) Begin text of GOI non-paper:

Weapons of Mass Destruction and their Delivery Systems
(Prohibition of Unlawful Activities Act) 2005
(Restricted-Releasable USG only)


A. (No part of this non-paper is quotable authority for any
activity prohibited or regulated under the Weapons of Mass
Destruction and their Delivery Systems (Prohibition of
Unlawful Activities) Act, 2005 or other relevant Acts. This
non-paper is not meant for submission to any judicial
process.)


B. Over the years, through the creation of laws, regulations
and administrative mechanisms, India has instituted an
effective domestic regime to exercise controls over the
export of materials, equipment and technologies of direct or
indirect application to weapons of mass destruction and their
means of delivery. GOI has also taken measures to update its
system of export controls through creation of new laws,
legislative amendments, amendments to existing policy and
procedures, strengthening of licensing procedures, firming up
the administrative mechanisms in place, enhanced
inter-ministerial coordination and enforcement related
aspects, details of which have been shared with the USG from
time to time.


C. The WMD Act, 2005 is an integrated and over-arching
legislation on prohibiting unlawful activities in relation to
weapons of mass destruction and their delivery systems. It
builds upon the existing extensive regulatory framework
related to controls over the export of WMD-usable materials,
equipment and technologies. The Act criminalizes a range of
unlawful activities in relation to weapons of mass
destruction and their means of delivery. It prohibits any
person not duly authorized by the Central Government to deal
with them. It prohibits unlawful possession, manufacture,
transportation, acquisition, or development of a weapon of
mass destruction (nuclear weapon or other nuclear explosive
device, chemical weapon or biological weapon) or its means of
delivery.


D. The WMD Act, 2005 fulfills the three core objectives of:
(i) prohibiting unlawful activities related to weapons of
mass destruction and their delivery systems, (ii) prohibiting
transfers of WD-usable goods and technologies to terrorists
and the transfer of radioactive or fissile material for use
in terrorist acts, and (iii) updating controls over the
export of WMD=usable goods and technologies.


E. Section 13(1) provides the authority to regulate export,
transfer, retransfer, transit or trans-shipment of items and
technologies notified under this Act or any other relevant
Act. This is a regulatory provision, and not a prohibitory
one. Section 3 elaborates the extent and application of the
Act, which includes any person who commits an offense beyond
India. The definition of "re-transfer" at Section 4 (k)
makes its applicability to foreign entities abundantly clear.
Re-transfer controls are already being exercised under
existing regulations and procedures. "Re-exports" from
India, with or without value addition, of imported items that
are controlled on the national export control lists are
already subject to the same restrictions and procedures under
existing policy and procedures as are applicable to exports
(clause 2.35 of the foreign Trade Policy).


F. The Act imposes a general prohibition on brokering in a
transaction that is prohibited or regulated under the Act.
Section 12 read with Section 3 delineates the applicability
of this provision to citizens of India residing in India and
Indian citizens abroad. In addition, Section 12 on
prohibition on brokering is applicable to all residents of
India, including foreigners while in India. The provision is
applicable to items not originating in India and to
transactions that occur wholly outside India, is such items
fall within the scope of this Act.


G. The extent and application of Sections 14-17 are as per
the provisions of Section 3 which includes citizens of India
outside India. The existence or otherwise of compensation
for facilitation is not a condition for the applicability of
these Sections.


H. Section 11 on prohibition of export is applicable to any
item whether or not notified on the national export control
lists if the exporter knows that the item is intended to be
used in the design or manufacture of a weapon of mass
destruction or in its missile delivery system. The
implementation of the provision is sought to be facilitated
by maintaining internal watch lists of suspect end-users
which will be selectively or as required shared with the
exporter community. Public notification of suspect end-users
or activities is not envisaged. Section 11 covers transfers
of technology as defined in Section 4(1).


I. Section 13 provides for controls over the transfer of
technology as defined in Section 4(l) by regulating its flow
from India or by Indians abroad as well as to foreigners
while in India. No clarification of the provisions is
required. The term person is not limited to individuals but
encompasses juridical persons also. It includes any company
or association or body of persons, whether incorporated or
not.


J. Definitions of the terms "specially designed" or "capable
of" are proposed to be notified as part of the exercise that
is currently underway to revise the national export control
lists. The requirement for additional end-use conditions for
export of items or technology that bear the possibility of
diversion to or use in the development or manufacture of, or
use as, systems capable of delivery of weapons of mass
destruction is also proposed to be covered.


K. Though Section 6 authorizes the appointment of Advisory
committees by the Central Government for the purposes of this
Act, the establishment of a new agency is not currently
envisaged. Government has a vast infrastructure in place to
facilitate the enforcement of the provisions of this Act.
During the exchanges held as part of the bilateral program of
cooperation on export controls, presentations have been made
to USG delegations by relevant GOI agencies on the spectrum
of issues related to export controls and on the inherent
strengths of the GOI system and how it is being gradually
oriented to export controls. End text of GOI non-paper.

Initial Analysis of WMD Bill Implementation: Looks Good
-------------- --------------


6. (C) The GOI non-paper reviews the objectives of the WMD
Bill and provides further clarification on specific issues
such as the scope of the law, definitions (e.g., "missile"),
re-export, brokering, catch-all provisions, and intangible
technology transfer (Ref C). The non-paper also states that
the WMD Bill is not stand alone legislation, but must be read
in conjunction with previously existing GOI laws and
regulations, e.g., the Foreign Trade Policy. Issues of
particular interest are noted below:


7. (C) Definition of Missile (para J): The non-paper states
that the MTCR definition of missile as well as additional
end-use conditions will be incorporated into the implementing
regulations.


8. (C) Re-Transfer and Re-Export (para E): Section 13(1) of
the WMD Bill provides the authority to regulate -- not
prohibit -- the export, transfer, retransfer, transit or
trans-ship items and technologies, and applies to any person
in or beyond India.


9. (C) Brokering (para F): All Indian citizens in India or
abroad, as well as foreigners in India are subject to this
law. It is also applicable to items not originating in India
and to transactions that occur wholly outside India.


10. (C) Catch-all (para H): The non-paper indicates that
the Bill is applicable to any item whether it is specified on
the national export control lists or not if the exporter
knows that the item is intended to be used in the design or
manufacture of a WMD or its delivery system. Internal watch
lists of suspected end-users and activities will be
maintained for GOI use, but public notification of suspected
end-users or activities is not envisaged.


11. (C) Intangible Technology Transfer (para I): The WMD
Bill controls intangible technology transfer by regulating
its flow from India or by Indians abroad as well as to
foreigners while in India, including to businesses or
associations.

Non-Paper on Industry Outreach/Preventive Enforcement
-------------- --------------


12. (U) Begin text of GOI non-paper:

GOI Efforts on Industry Outreach and Preventive Enforcement


A. The Government of India is fully conscious of the
importance of partnership with the industry for the success
of its export control system.


B. Outreach meetings are conducted by relevant Departments
of the Government to increase awareness among the exporter
community about the GOI system of export controls, relevant
laws, regulations and procedures, and any amendments made
therein. DGFT and its 32 regional offices spread across the
country conduct outreach meetings with the exporter
community, including through open house meets and personal
interviews. This existing infrastructure is available for
industry outreach efforts on export controls. Department of
Chemicals and Petrochemicals routinely conducts region-wise
outreach meetings to increase awareness among the exporters
about the dual-use nature of the controlled chemicals and the
importance of exercising due diligence. Department of
Bio-technology has also held outreach meetings.


C. The authority to conduct industry outreach activities
flows from the relevant clauses in the Handbook of Procedures
(Vol. 1),2004-2009 notified under the Foreign Trade Policy
which provide for the Directorate General of Foreign Trade,
Ministry of Commerce to organize industry outreach meetings
on a regular basis for exporters, in particular those dealing
with SCOMET items, in close coordination with the relevant
administrative Ministries/Departments.


D. Efforts are underway to encourage the involvement of the
industry associations and chambers to conduct outreach
events. Department of Chemical and Petrochemicals, for
instance, works in close coordination with associations such
as the Indian Chemicals Manufacturers Association (ICMA).
The assistance of cross-sectoral industry associations such
as the CII and FICCI has also been solicited. There are a
number of sector-specific industry associations in the field
of aerospace technologies, chemicals, machine tools, etc.
which are proposed to be involved in the Government's
outreach effort.

E. In organizing such events, there is recognition of the
importance of conducting a mix of sector-specific and
region-wise programs with a view to reach out to targeted
audiences and it is proposed to accordingly structure the
location, periodicity, and content of the outreach events.


F. Government has established an inter-ministerial group to
make recommendations regarding specific measures on outreach
to the industry on export controls and to evolve a
department-wise but coordinated approach on the matter.
These inter-ministerial consultations are presently underway,
and are inter alia focusing on issues such as outreach
through electronic means, circulations of print material,
dissemination of information about the recently enacted
Weapons of Mass Destruction and their Delivery Systems
(Prohibition of Unlawful Activities) Act, 2005 and the
proposed revision of the lists and notification of the
general criteria for licensing.


G. Various agencies of the Government are empowered to
enforce the provisions of the laws of the rules, regulations
and orders issued thereunder, which form the legal and
regulatory basis of India's system of export controls.
Exporters are expected to comply with the provisions of the
applicable laws and regulations. Legislative provisions are
in place for initiating quasi-judicial, departmental
proceedings on the enforcement side, which may involve
seizure/confiscation and imposition of penalties for SCOMET
items exported or attempted to be exported in violation of
existing GOI export control regulations. Export or attempt
to export in violation of export control regulations is also
liable to criminal prosecution.


H. Concerted efforts are under way to enhance
inter-ministerial coordination on preventive enforcement.
Pre-license checks on end-users are conducted as appropriate
through the intelligence agencies and our Missions abroad
prior to the issue of license. Guidelines on pre-license
checks have been issued. Risk management-assessment of
exports is done at the implementation level with the
objective of making it administratively possible for Customs
officials to check exports from India with a view to ensure
that all the relevant laws and regulations are being
followed. SCOMET controls have been incorporated as an
important parameter into the GOI Risk Management System, and
a briefing on the same was provided to the USG team that
participated in the workshop on risk management and targeting
held in New Delhi in April 2005.


I. Government has established an inter-agency group under
the chairmanship of the Ministry of External Affairs to
examine intelligence made available on potential transactions
to suspect destinations. This inter-agency group meets
regularly and also works in close coordination with the
Inter-Ministerial Working Group that considers export license
applications, which is chaired by DGFT.


J. GOI has also constituted a Core Group on Training on
SCOMET Enforcement under the aegis of the Central Board of
Excise and Customs. The Core Group is comprised of
representatives of the Ministry of Home Affairs, Department
of Chemicals and Petrochemicals, Department of Biotechnology,
Defense Research and Development Organization, Department of
Atomic Energy, Directorate General of Foreign Trade, relevant
intelligence agencies, and the Ministry of External Affairs.
End text of GOI non-paper.

Initial Analysis on Outreach/Preventive Enforcement
-------------- --------------


13. (SBU) The non-paper notes an existing network of 32
regional offices of the Directorate General for Foreign Trade
(DGFT) that already does outreach and can be further utilized
to educate industry and local governments about upcoming
changes to India's export control regulations. Further, it
states that the GOI has established an inter-ministerial
group to make recommendations and coordinate future outreach
activities.


14. (SBU) A similar approach is taken on preventive
enforcement, with an inter-ministerial group chaired by MEA
to coordinate intelligence sharing between the various GOI
agencies and missions abroad, as well as a separate
inter-ministerial group chaired by Customs to conduct
training on enforcement. The non-paper also reflects GOI
implementation of issues covered by EXBS workshops such as
"Targeting and Risk Management."
BLAKE