GOI UPDATES ON EXPORT CONTROLS DURING HTCG

UNCLAS SECTION 01 OF 05 NEW DELHI 009260

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SENSITIVE
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DEPT FOR SA/RA, DDTC, ISN, AND PM - ERUSSEL AND MMARKOFF,
DOC FOR BIS AND ITA, DOE FOR NNSA

E.O. 12958: N/A
TAGS: PREL ETRD ETTC KNNP KSTC PARM TSPA MTCRE IN
SUBJECT: GOI UPDATES ON EXPORT CONTROLS DURING HTCG

REF: A. NEW DELHI 5444

B. STATE 112244

C. NEW DELHI 6848


1. (SBU) Summary: MEA officials used the Strategic Trade
session of the High Technology Cooperation Group meetings
held in New Delhi December 1 to respond to USG questions
about India's export controls, stating that the Indian regime
"completely covers" MTCR and NSG requirements. The GOI
presenters gave an overview of steps the GOI has taken and
continues to take to implement the May 2005 WMD Bill in
letter and spirit, and to educate the Indian export community
on the new legal requirements. USG and GOI participants
noted the need for greater GOI and industry understanding of
the current control requirements for US exports to India and
agreed to increase collaboration in outreach to government
and industry groups. The Indians signaled clearly that
harmonization with Waassenar and the Australia Group are off
the table for now, and that formal public adherence to the
NSG and MTCR will have to move in tandem with steps by those
regimes to accommodate India as a partner and not as a
target. USG representatives responded that increased GOI
transparency on regime adherence would facilitate US efforts
on civil nuclear cooperation in Congress and the NSG. End
Summary.

WMD Export Controls
--------------


2. (SBU) Responding to lingering USG questions on details of
India's new WMD Bill (Ref B),MEA Joint Secretary
(Disarmament and International Security) Hamid Ali Rao told
the USG participants led by DOC/BIS DAS for Export
Administration Matt Borman that the revised SCOMET (Special
Chemicals, Organisms, Materials, Equipment and Technologies)
List published following the passage of the Bill "completely
covers" all the items on the MTCR and NSG control lists. Rao
outlined GOI efforts to implement the May 2005 WMD Bill,
including Directorate General of Foreign Trade (DGFT)-led
regional and sectoral outreach sessions to explain the
revised export controls to the Indian export community; and
government checks including end-use verification, controls on
re-exports, documentation, "visible" authority to intercept
shipments, and "non-visible" screening of end-users. The MEA
now leads an interagency group charged with examining
transactions and export license requests, and a Core Group
has been created to train ports and customs inspectors on the
new guidelines, he added. Rao noted that a separate group is
using intelligence inputs to target suspect transactions. He
also stated that the GOI looks forward to hosting an exchange
of customs officials in early 2006, and would appreciate
suggestions for dates from the USG.


3. (SBU) State/ISN officer Schultz noted that there were a
number of MTCR-controlled items that we had not been able to
identify on India's SCOMET list. Handing over a list of 84
items, Schultz requested that the GOI review this list and
provide clarification to the US so that we might reach a
common understanding of the correlation of India's SCOMET
listing and that of the MTCR. DOE officer Welihozkiy
similarly noted that a few questions remained in terms of
harmonization of the control lists and guidelines with the
NSG, and offered to provide later a nonpaper outlining those

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issues. MEA Deputy Secretary (DISA) Naveen Srivastava
reassured that harmonization with NSG and MTCR had been
achieved, and that these perceived differences may be a
matter of interpretation of some of the technical terms. In
an offline discussion, ISRO Assistant Secretary Rajeev Lochan
volunteered to Schultz that SCOMET phrasing was very
carefully chosen, and frequently was done to be more
encompassing than that of the NSG and MTCR.


4. (SBU) Rao and J/S (Americas) S Jaishankar cautioned that
discussion of Indian harmonization with Waassenar and
Australia Group guidelines would be "premature" at this
stage, adding that this issue had been discussed at higher
levels of our governments. USG representatives, noting that
Waassenar and Australia Group harmonization would facilitate
trade, urged the GOI to hold open this option. State/ISN
Schultz separately noted with Jaishankar the benefits that
harmonization would have in preventing onward proliferation.
Regarding adherence to the NSG and MTCR, Rao responded that
while New Delhi is "committed to working towards adhering" to
the regimes, it does not intend to submit formal statements
of adherence until the regimes "adjust to India." Recalling
the GOI's objections to language referring to nuclear weapons
states and non-nuclear weapons states in the new protocols to
the Convention for the Suppression of Unlawful Acts against
the Safety of Maritime Navigation (SUA Convention) (Ref C),
Rao explained that because the NSG "targets India," New Delhi
would defer any formal notification to the NSG chair until
the NSG members altered their policies toward India.
Nevertheless, he emphasized, as a matter of fact India has
harmonized its control lists with both the NSG and MTCR
guidelines through the new Bill and its attendant lists and
guidelines. Written adherence, he argued, was a "formality."
US Delegation members noted that adherence would be a
demonstration of India's non-proliferation commitment,
particularly to those whose cooperation would be essential to
fulfilling the goals of the July 18 agreement on civil
nuclear cooperation. Pressed by PolCouns on the question of
NSG adherence, J/S Jaishankar declared that "we are where we
are ... pending the formal step of sending a piece of paper."

Implementation of Regime Adherence: Harmonization of Control
Lists and Guidelines
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5. (SBU) MEA's Naveen Srivastava explained that while the
WMD Bill used the language "missiles designed" for delivery
of WMD, the GOI SCOMET list and implementation guidelines
(available on the DGFT web site at dgftcom.nic.in, under
"SCOMET," "What's New") issued in July 2005 specifically
control end uses in which there exists a possibility of
diversion, or use in a "system capable of delivery" of WMD.
This is the first time India has made public its
implementation guidelines. Srivastava noted that the SCOMET
list controls all missiles, regardless of range or payload.
He pointed out that all entities in India dealing with
missiles are government-controlled, and therefore India's
control over exports is even tighter than the MTCR guidelines
would suggest. The WMD Bill also covers systems such as
microlights and hang gliders that could be used for terrorism
purposes, but are not captured by the MTCR.


6. (SBU) Regarding the use of the words "safeguards as

NEW DELHI 00009260 003 OF 005


appropriate" in the SCOMET and guidelines, Rao clarified that
the GOI interprets this in the same manner as the NSG
language "full-scope safeguards." The difference in language
simply reflects the fact that India is not a party to the
NPT, he explained. Similarly, the GOI believes that other
variations in language are "not technically relevant."
However, Srivastava agreed to review and respond to the list
of USG questions regarding variances of language between
SCOMET and the MTCR guidelines. Responding to a USG question
on whether the SCOMET includes EDP (especially designed or
prepared) language, Srivastava pointed to SCOMET item 0B001,
which states "especially dewigned, prepared for, or adapted,"
the same language as the NSG guidelines.

Catch-all, Industry Outreach, and Licensing Volume
-------------- --------------


7. (SBU) Srivastava further explained that the GOI has an
internal watch list of end-users that it uses to implement
catch-all provisions of the WMD bill. The GOI is "fully
conscious" of the need for outreach to industry and has
conducted outreach activities to educate suppliers of the
need to investigate potential end-users before exporting.
These have been targeted, for instance, at manufacturers of
glass-lined furnaces who are based in Gujarat. DGFT has
drawn up an outreach plan that targets both economic sectors
and regions and will work with such industry organizations as
the Confederation of Indian Industry (CII),the Federation of
Indian Chambers of Commerce and Industry (FICCI),and the
Indian Chemical Manufacturers Association to implement it.
Asked about the number of licenses issued, Rao reported a
range of 100-120 each year, mainly for "process equipment"
like glass-lined reactors and graphite-based heat exchangers.

EXBS Program
--------------


8. (U) In response to SA/RA Director Schlosser's point that
the EXBS program is a resource that can be drawn on to
enhance the GOI's enforcement and industry outreach efforts,
Rao stated that India is prepared to reschedule two EXBS
exchanges, on customs enforcement and commodity
classification, in early 2006.


Issues to Facilitate Trade
--------------


9. (U) The delegations exchanged suggestions for
facilitating trade, and agreed on a list of action items to
direct future efforts. Jaishankar requested that the USG
review the 1984 Memorandum of Understanding on high tech
trade import certificate requirements, and determine whether
exports to India should continue to require a license for
regional stability reasons or supporting documentation for
government end-users. DAS Borman noted that a regulation
would be published in the coming days eliminating import
certification for national security requirements for GOI end
users. Jaishankar also suggested more frequent provision of
CCL licensing data related to end-use visits, so that the GOI
could share "testimonials" of good experiences with potential
end-users in India. Many of the problems in high tech trade,
he added, are due to misperceptions among potential buyers of

NEW DELHI 00009260 004 OF 005


the difficulties involved in purchasing from the United
States. Finally, Jaishankar requested that the USG speed up
the removal of GOI entities from the Entities List, arguing
that it would be difficult to convince the Indian space
community of the value of increased cooperation with the US
if Indian Space Research Organization subsidiaries remain on
the Entities List.


10. (U) The participants also discussed the value of
starting discussions of licensing early in a project's
development, so that the American and Indian partners could
prepare. However, Directorate of Defense Trade Controls
Policy Director Ann Ganzer pointed out that talks must
include the US vendor, as ultimately it is the vendor's
decision on how to apply for a license. Borman and Ganzer
agreed to provide a simplified summary of licensing options
for use in helping Indian customers understand licensing
requirements when planning procurements from the US.

Cybersecurity: Waiting for Answers
--------------


11. (U) National Security Council Secretariat Joint
Secretary Arvind Gupta pointed out that the GOI is still

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awaiting answers from the US on proposals made at the last
cybersecurity working group for a Joint Fund and Joint
Research and Development Center. He also reiterated India's
desire for technical exchanges of experts in cybersecurity,
to include new areas such as transportation and financial
services.

Action Items
--------------


12. (U) Wrapping up the meeting, Jaishankar and Borman
agreed to the following plan of action for progress:

-- For Both Governments

A. Review the 1984 Memorandum of Understanding to determine
whether it should be abrogated.

B. Discuss joint outreach to other GOI agencies to explain
current US licensing requirements and policy.

-- For the USG

A. Notify the GOI that the regulation eliminating import
certification for national security requirements for GOI end
users has been published.

B. Review whether India can be removed from the list of
countries for which supporting documents are required for
government-owned purchasers under EAR Section 748.9(2).

C. Determine whether the Department of Commerce can provide
licensing data more frequently to the GOI.

D. Consider the GOI's request to remove Indian entities from
the Entities List as new information arises.

E. Provide a non-paper giving a simplified overview of the
licensing options for Indian users.

F. Give to the GOI the USG comparison of the revised SCOMET
lists to the NSG and MTCR lists and guidelines. (Note: MTCR
paper was provided during the meeting. End Note)

G. Consider providing to the GOI data on CCL license
applications that have been returned without action (RWA).

-- For the GOI

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A. Review the USG analysis of the SCOMET lists and respond to
perceived variances from the NSG and MTCR lists.


13. (U) Meeting Participants:

GOI
---

MEA J/S (Americas) S Jaishankar
MEA J/S (Disarmament and International Security) Hamid Ali Rao
Indian Embassy Washington DCM Raminder Jassal
MEA Director (Americas) Gaitri Kumar
ISRO Asst. Scientific Secretary Rajeev Lochan
ISRO Dept. of Space Jacob Ninan
Dept. Atomic Energy Head (ISD) K Raghuraman
National Security Council Secretariat J/S Arvind Gupta
National Security Council Secretariat Cdr. Mukesh Saini
MEA D/S (Disarmament and International Security) Naveen
Srivastava
MEA D/S (Americas) Santosh Jha
MEA U/S (Americas) Raj Srivastava
MEA U/S (Americas) Viraj Singh
MEA U/S (Disarmanent and International Security) Jayant
Khobragade

USG
---

DOC/BIS DAS Matt Borman
DOC/BIS Special Assistant Mark Webber
SA/RA Director John Schlosser
DOS/DTCP Director Ann Ganzer
DOS/ISN Kathryn Schultz
DOE/NNSA Anatoli Welihozkiy
PolCouns Geoff Pyatt
EconCouns Lee Brudvig
Poloff Jai Nair, notetaker


14. (U) Visit New Delhi's Classified Website:
(http://www.state.sgov.gov/p/sa/newdelhi/)
MULFORD