RE-TOOLING THE HTCG: EMBASSY'S THOUGHTS

UNCLAS SECTION 01 OF 03 NEW DELHI 007436

SIPDIS

SENSITIVE

DEPT FOR EB/TPP; SA/FO - RCHRISTENSON AND SA/INS -
MNEWBILL
USDOC FOR 4530/MAC/AMESA/OSAO/LDROKER/ASTERN
USDOC FOR 3131/USFCS/OIO/DHARRIS
USDOC FOR 6430/ITA/TD/ITI/KJENCI/EHOLLOWAY
USDOC FOR 532/BIS/MDIPAULA-COYLE
USDA FOR FAS/ITP/MEYER/ARGUETA
DEPT PASS USTR FOR S.ASIA - AWILLS/BSTILLMAN
GENEVA FOR USTR

E.O. 12958: N/A
TAGS: ECON ETTC EINT EINV ETRD PREL EAGR IN HTCG
SUBJECT: RE-TOOLING THE HTCG: EMBASSY'S THOUGHTS

REFERENCES: A) NEW DELHI 2299
B) NEW DELHI 2849
C) SECSTATE 171713


1. (SBU) SUMMARY. As we plan for the December 1-2
meeting of the High Technology Cooperation Group (HTCG)
in New Delhi, the Embassy HTCG working group -- Econ,
Pol, Sci, FAS, ODC, FCS - met on September 20. The
consensus of our group is that the focus of the HTCG in
the post-NSSP era should undergo a gradual, but
important, shift from drafting of export control
legislation in India to trade facilitation issues, which
will require adherence to export control laws of the US
as well as of India. In addition to this consensus,
from Mission's perspective, several conclusions are
worth noting. We have received indications from Indian
Ministries that they share our priorities for
discussion: biotechnology, defense trade,
nanotechnology, IT and IPR issues. Mission believes
that both governments ought to strive to rope in the
private sector so that it can initiate business
activities in these areas. The CEO Forum is uniquely
positioned to support this effort.


2. (SBU) Equally important to the future success of
the HTCG is that both governments bring into the HTCG
representatives from stakeholder agencies who have
technical expertise and who can work effectively with
the private sector. While Mission has had a productive
collaboration with USDOC/BIS on the export control legal
and implementation front and the HTCG, trade
facilitation will also require robust participation from
USTR, DoD, HHS, USDA, DOJ, USDA, and other agencies. On
the Indian side, it will be essential that MEA, as the
lead/coordinating agency, facilitate rather than inhibit
GOI inter-ministerial and private sector participation.
Mission believes that, as we shift into a trade
facilitation mode, the Ministry of Commerce and Industry
will have to slowly assume the leading GOI role and
ultimately take over responsibility from MEA as HTCG
coordinator. Mission's recommendations for
implementing this strategy follow. END SUMMARY.

NARROWING HTCG FOCUS WHILE BROADENING INTERAGENCY BUY-IN
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3. (SBU) Mission recommends narrowing the HTCG focus
by developing specific objectives for IT, biotech and
defense technology. At the same time, USDOC, as the
coordinating agency, perhaps should ensure that other
agencies are extensively involved and present at future
HTCG meetings. As a starting point, Mission suggests
the following agencies be included: USDOC (FCS and
BIS),USDA (FAS),State (EB, OES, SA),USTR, USPTO, DOJ,
DHS (USCS),Treasury, NSF, and DoD. Once the USG
identifies specific objectives, it will need to bring to
the table those who have the knowledge and a mandate to
handle policies that can facilitate and increase
bilateral trade and investment in high technology.


4. (SBU) As agencies join in, USDOC should perhaps
brief new players on USDOC's accomplishments on the
HTCG to date. We also must ensure that the private
sector track has the right mix. In our opinion, senior
level representatives from USIBC, relevant private
industries (IT, biotech, nanotech, and defense) and
major R&D universities could be effective players. As a
matter of fact, one of our goals in the HTCG should be
to encourage India to pursue the US model of R&D, i.e.,
which leverages government, university and private
sector collaborations.

ROLE OF THE PRIVATE SECTOR IN THE HTCG
-------------- -


5. (SBU) The CEO forum, with 20 major US and Indian
companies representing roughly USD 8 trillion in
capital, could play an important role in the HTCG, by
identifying major private sector projects it could
launch in the coming months. We are confident that
nothing beats a few large projects to entice GOI
participation from the top down. With this incentive,
the GOI bureaucracy will have no other choice but to
engage us on policy initiatives that could encourage
defense, biotech, IT, and overall infrastructure US-
India collaborations. By shifting the focus of the HTCG
to developing big visionary projects, policy changes
will then naturally follow.

DEFENSE TECHNOLOGY: DOD PARTICIPATION ESSENTIAL
-------------- --


6. (SBU) Mission believes that DOD's strong
participation in the HTCG is essential as a robust USG
strategy for defense sales in India is required to
enhance the long-term Indo-US strategic partnership (Ref
B). As the complexity and range of issues in this area
is large, DoD ought to encourage participation of those
who can discuss in detail and with authority
questions/issues that relate to defense technology,
munitions licensing, defense procurement, and trade
promotion.


7. (SBU) At a minimum, there ought to be a "defense
basics" component to HTCG sessions to complement the
more advanced topics that previous HTCG meetings have
addressed. The USG must be prepared to continually
brief the unfamiliar nuts and bolts of our defense sales
system to potential Indian buyers. Such discussions
would also allow the defense sector to understand the
peculiarities of the Indian defense acquisition process.
We can expect the GOI to raise offsets with us. We
ought to encourage the GOI to pursue offsets via private
sector channels.

TAAs: EXPLAIN AND EXPLAIN - THE GOI STILL DOESN'T GET IT
-------------- --------------


8. (SBU) Smooth execution of Technical Assistance
Agreements (TAAs) and International Traffic in Arms
Regulations (ITAR) provisions is essential for progress
in space and other areas of cooperation that involve
sharing of sensitive USG technology with India. The
Indian Space Research Organization (ISRO) continues to
express frustration and question the need for ITAR-
related provisions in our TAAs. The Ministry of
External Affairs is not far behind. As the ISRO TAA
problem has been festering for nine months now, we
believe that the USG should pursue a two-track TAA
policy in the HTCG. One is to raise the TAA requirement
at a high political level (e.g. Foreign Secretary
Saran),while continuing to engage at the working level
(State, DoD, USDOC, DOJ) to encourage GOI to abide by
TAA requirements.

IPR REMAINS A CROSS-CUTTING ISSUE
--------------


9. (SBU) IPR protection cuts across almost every HTCG
topic, whether related to biotechnology (both
pharmaceutical and agriculture),nanotechnology, IT, or
defense technology. As such, the need to achieve Indian
buy-in on IPR protection requires strong coordination
among all USG agencies, but especially among State,
USPTO, USTR, and USDOC. By bringing the right experts
into the HTCG, the HTCG can continue its important role
in engaging India in across-the-board improvements for
IPR protection.

CHANGE THE FOCUS ON NANOTECHNOLOGY AND AG BIOTECH
-------------- --------------

10. (SBU) Mission understands that USG agencies
believe that agricultural biotechnology ought not to be
part of the HTCG. We concur as we attempt to shift HTCG
focus and other fora are discussing this topic already.
We believe that the nanotechnology focus ought to be on
how India can add value in an area where the private
sector is the driver of development. Thus, we recommend
that State, NSF and USDOC discuss USG nanotechnology
activities in the HTCG context when Minister of Science
Kapil Sibal will hold policy discussions in Washington
on October 18 (Ref. C).

COMMENT
--------------


11. (U) USDOC and State might consider convening a PCC
to discuss these issues and agree on a way forward. If
convened at an early enough time in the day, Mission
would welcome the opportunity to participate by DVC.

Blake