SCENESETTER FOR REPRESENTATIVE ACKERMAN JULY 2008 VISIT TO

UNCLAS SECTION 01 OF 08 NEW DELHI 001756

SENSITIVE
SIPDIS

FOR REPRESENTATIVE ACKERMAN FROM AMBASSADOR MULFORD
STATE FOR SCA/INS, H

E.O. 12958: N/A
TAGS: PREL PGOV ECON KNNP IN
SUBJECT: SCENESETTER FOR REPRESENTATIVE ACKERMAN JULY 2008 VISIT TO
INDIA


1. (SBU) Dear Representative Ackerman and Delegation: The Country
Team and I warmly welcome you to India. Your visit comes at a
critical juncture in what has been a period of profound
transformation in Indo-US relations. While we have successfully
accelerated and expanded the ties between our two democracies into a
broad, comprehensive relationship, the ruling coalition, known as
the United Progressive Alliance (UPA),has effectively stalled the
implementation of the civil nuclear initiative in the face of
vociferous Communist opposition, which has threatened to bring down
the government if India gets closer to the U.S. Despite the delay
in implementing the initiative, which has impacted other potential
collaborative activities, the long term prospects for a closer,
abiding bilateral relationship with a vibrant, prosperous India are
very strong - and remain of strategic importance to the U.S. With
India expected to surpass China as the fastest growing economy in
2015, this may well become our most important bilateral relationship
within 20 years. Your visit helps demonstrate the vitality and
breadth of our relationship, which now touches on almost all areas
of human endeavor. Our Embassy is trying to put out the public
message that there are numerous natural complementarities and deep
linkages between our two countries. We hope that the more these
linkages bring visible benefits to ordinary Indians, the more the
Communist parties' intransigence and ideology will be seen as
incurring heavy costs to India and its people. The bright spot
remains the private sector's exponential growth and people-to-people
ties, to which government-to-government ties ultimately must catch
up.


2. (SBU) This message provides you an update on the status of the
civil nuclear deal, political climate, economic situation,
trafficking in persons and climate change.

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The Civil Nuclear Cooperation Initiative
--------------


3. (SBU) President Bush and Prime Minister Singh pledged in July
2005 to take a series of reciprocal steps that would culminate in
the opening of India's formerly sanctioned civil nuclear market.
India completed the first milestone on March 2, 2006 by releasing a
plan to separate its civilian and strategic nuclear programs in a
phased manner, and pledging to place its civilian facilities under
International Atomic Energy Agency (IAEA) safeguards. An
overwhelming, bipartisan majority in the U.S. Congress then approved
in December 2006 the Hyde Act, which allowed the U.S. and India to
engage in civil nuclear trade. The U.S. and India concluded an
Agreement for Peaceful Nuclear Cooperation, also known as the 123
Agreement, in July 2007, which sparked political turmoil when the
Communist parties threatened to withdraw their support from the
government because the Agreement, they felt, brought India too close
to the U.S. The opposition parties also claimed that the terms of
the Hyde Act and 123 Agreement rendered India's nuclear weapons
program useless. Meanwhile, India and the IAEA have effectively
reached agreement on a safeguards agreement. The coalition United
Progressive Alliance (UPA) government has had several meetings with
the Left to convince them of the merits of the initiative, but the
Left intransigence remains strong. The Prime Minister, hoping to
discuss the nuclear initiative at the G8 Summit in early July, again
pressed the issue in mid-June, prompting another round of flurried
talks among the government allies and rumors of early elections.
Should the government decide to go ahead, it will submit the
agreement to the IAEA Board of Governors for approval, and the U.S.
will seek to enact a policy change in the Nuclear Suppliers Group
(NSG) to allow India to engage in civil nuclear commerce globally.
Finally, the Administration will submit the 123 Agreement to the
U.S. Congress for an up-or-down vote of approval. Civil nuclear
cooperation between the U.S. and India will offer benefits to both
countries' citizens through enhanced energy security, more robust
nonproliferation efforts, an energy source without carbon emissions,
and greater economic opportunities.

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The Political Landscape
--------------


4. (SBU) Indian domestic politics is practiced within a vibrant,
raucous, few-holds-barred democratic environment. Indians take their
democracy seriously and vote in large numbers, with turnout
sometimes exceeding 75 percent. The election campaign never ends
because an election of significance is always around the corner
somewhere in the country. In addition to national elections which
are due every five years (but can and often do occur more
frequently),several states go to the polls each year for elections
to the state legislatures. Two national parties are perched at the
top of the political pyramid - the left-of-center Congress Party and

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the right-of-center Bharatiya Janata Party (BJP). Below them are
dozens of smaller regional, state and special-interest parties.
While both the Congress Party and the BJP battle across all the
disparate regions of the country, neither has the ability to form a
national government in Delhi on its own and must rely on fractious
and unwieldy coalitions with smaller regional parties to govern.


5. (SBU) The once mighty Congress Party, dominated for long by the
Nehru-Gandhi dynasty and in the forefront of the independence
movement, has lost its aura and fallen in stature. It ruled India
for most of the period since independence in 1947 but its
credibility has eroded over the years because of the autocratic ways
of its leaders, its failure to respond to regional aspirations, and
its inability to adapt to the changing India. The BJP, with its
roots in a muscular Hindu response to centuries of foreign
subjugation, first by a succession of Muslim rulers from Central
Asia and then by the British Empire, has emerged as a viable
alternative to the Congress Party. It occasionally reverts to its
Hindu nationalist rhetoric but has tempered its discourse and
broadened its appeal to position itself as a mainstream political
force. It led the National Democratic Alliance (NDA) coalition
government from 1999-2004 before being unceremoniously ousted by the
voters for its failure to more evenly disperse the benefits of a
"Shining India" to the "aam aadmi" or common man.


6. (SBU) The Congress Party, which leads the current United
Progressive Alliance (UPA) coalition government, staggers into its
final year in office bruised and battered by rising prices, a series
of setbacks in state elections during the last year and a bitter
squabble between UPA coalition allies over the U.S.-India civil
nuclear agreement. It currently is in the middle of a serious
political crisis with its communist allies threatening to bring the
government down if it proceeds with the US-India civil nuclear
agreement. Public bullying by its communist party allies has fueled
perceptions of a feeble and indecisive party with no back-bone,
intent on hanging on to power even at the cost of compromising its
principles. The BJP, in contrast, has the wind in its sails after
its thumping wins in state elections last year and this year.
Sensing blood, the party set aside years of internal struggles
following its 2004 loss to unite under the leadership of former
Party President and former Deputy Prime Minister L.K. Advani. It
has consolidated its support with its NDA allies. It has taken
lessons from its recent state election wins to sharpen its strategy
and hone its message for the coming national elections.


7. (SBU) In search of a make-over, the Congress Party unveiled a
"please-all" super-populist budget in February, opening up the
public purse strings in typical Indian election year style. While
the budget's centerpiece is a USD 17 billion write-off of farming
debt (to be financed over four budgets),it also includes sops for
almost every interest group and voter block. The Congress Party's
hope that this election year largesse would revive its waning
fortunes failed as the party suffered another humiliating state
election loss to the BJP in May in the bellwether southern state of
Karnataka. While all parties practice it, some observers believe
that the Indian voter is too sophisticated to be taken in by such
cynical election year pandering. Besides, inflation, which has
risen to a 13-year high at over 11 percent, has taken the luster off
the UPA's budget munificence and poses a serious threat to the
Congress Party's efforts to remain competitive in the coming
national elections. Yet, it is impossible to predict at this time
which party will emerge on top in the national elections because
political shifts in India can happen swiftly and in unexpected ways.
It is safe to say, however, that neither the reeling Congress Party
nor the surging BJP is likely to win a majority on its own and
either will have to forge a coalition with the smaller regional
parties to form a government. The smaller parties will continue,
therefore, to exert greater influence on government policy that
their numbers in Parliament would justify.

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INDIAN FOREIGN POLICY
--------------


8. (SBU) India's current foreign policy can best be summarized as
"be friends with everyone," as we can see Delhi keeping one foot
squarely inside the Non-Aligned Movement camp, while at the same
time increasing engagement with the U.S., China, Russia, EU, and
Japan. This has been exemplified recently by India accepting visits
from Presidents Ahmadinejad and Assad while considering moving ahead
with the civ-nuke deal and planning to attend the G8 Summit in
Hokkaido. The top priorities for India's Foreign Ministry would
include: 1) maintaining healthy relations with all neighbors in
order to promote Indian interests of stability and access to
resources, particularly energy, with Pakistan/Kashmir seen as the

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most immediate threat and China as the long-term strategic one; 2)
completing the US-India civilian-nuclear deal; 3) and pursuing a
permanent seat on the UNSC, as part of a broader strategy of
becoming a more respected global player. Prime Minister Singh and
other senior leaders have told our visiting dignitaries explicitly
that India has made the strategic choice of seeking close relations
with the U.S.; however, they have yet to explain what that means
concretely. You may wish to ask your interlocutors what specific
steps India plans to take in order to improve the relationship.
Better U.S. relations are hampered by domestic criticism that the
government is becoming a supplicant of American hegemony.


9. (SBU) In addition to the burgeoning U.S.-India relationship,
Pakistan and China are the two most immediate issues in Indian
foreign policy. U.S. policy in Pakistan is an enigma for India.
Delhi shares our belief that stability in Pakistan is in everyone's
interest; however, the Indian obsession with terrorist attacks
allegedly emanating from Islamabad/ISI - not to mention the legacy
of four wars since independence - can't be overrated. As India
seeks to attain global power, it has placed greater emphasis on
looking beyond conflict with Pakistan and more toward economic
growth and power projection. Both Foreign Minister Mukherjee and
Foreign Secretary Menon recently visited Islamabad for the fifth
round of Composite Dialogue talks. It was India's first high-level
visit to Pakistan since its new government was elected this year.
Pakistani Foreign Minister Qureshi is scheduled to visit Delhi just
before your delegation arrives. India has a complex relationship
with China. While the economic relationship is growing in leaps and
bounds, building a healthy interdependence, political rivalry
continues to manifest itself in areas ranging from border disputes
going back decades to a battle for influence in Burma. Recent
feel-good summits between the two countries' leaders were tarnished
somewhat by controversies over the border immediately before/after
the summits took place with Chinese border incursions reported in
the Indian media regularly. However, the Indian government
downplays the instances, noting that the border is not definitively
marked and mechanisms are in place to deal with the incursions
peacefully. While India has been a welcoming refuge for Tibetan
refugees, including the Dalai Lama, in a gesture to Beijing, it does
not condone "political activities" by resident Tibetans.

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A COMPREHENSIVE ECONOMIC RELATIONSHIP
--------------


10. (SBU) The bilateral economic relationship is a critical driver
in deepening ties between our countries. This is happening through
government exchanges such as the Economic Dialogue and the Trade
Policy Forum, and by our countries' private sectors, including the
CEO Forum, that are boosting U.S.-India trade and investment to new
heights.

--------------
INDIA'S ECONOMIC TRAJECTORY - ONE OF TRANSFORMATION
--------------


11. (SBU) I know that you are well aware of India's economic
performance that has seen Gross Domestic Product (GDP) growth jump
in the last two decades from the 6 percent range to four years
straight of 8.9 percent compounded annual growth. While some
question whether this growth is simply cyclical, we perceive
fundamental structural changes underway that are reshaping India's
socio-economic landscape. These include the significant rise in
savings and investment, the declining share of agriculture in GDP,
replaced by industry, and the "market-seeking" flows of foreign
direct and portfolio investment into the country. The central
bank's tightening monetary policy over the last year, partially a
response to higher global commodity prices, is adversely affecting
consumer demand in some sectors. This is expected to moderate
India's growth in the coming fiscal year, with many economists
projecting 7.5 to 8% GDP growth.


12. (SBU) Savings have risen over the past decade to hit roughly 34
percent of GDP, a combination of more corporate saving and less
government dis-saving (debt financing). While corporate savings may
ebb a bit in the next few years, household savings are also
beginning to rise and to become more fluid, moving from government
subsidized post office savings deposits to commercial banks and
mutual funds. Investment has also grown significantly in recent
years, nearing 37 percent of GDP - again, mainly a function of
corporate expansion plans, but the government's infrastructure goals
are boosting public investment levels as well. Indian economists
have noted that many Asian economies hit a "take off" stage in their
growth once investment crossed the threshold of 40 percent of GDP.
The savings-investment gap is clearly financedthrough imports and a

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trade deficit, but other inflows, including the FDI and portfolio
investment noted above, have kept the balance of payments in surplus
for three years, and boosted foreign exchange reserves to USD300
billion, one of the largest in the world.


13. (SBU) The agricultural sector is critical to many households'
incomes, since more than 50 percent of India's workers are involved
in agriculture. But in terms of GDP, agriculture accounts for less
each year, last year contributing just 18 percent to national
economic growth. On a macro scale, this decline lessens the
volatility of growth that India's mainly monsoon-dependent
agricultural sector brought, further making sustained GDP growth in
the 8-9 percent range a likely scenario. Politically, however, the
government struggles with proposed reforms that would have a broad
effect on the 600 million people who are dependent on this
under-performing sector. In India, the rural poor vote much more
than the urban masses, so any dislocation in the agricultural sector
has the potential to have wide-ranging political consequences.


14. (SBU) At the same time, India's manufacturing sector is finally
showing signs of expansion and global attention. Stuck at roughly 14
percent of GDP for nearly two decades - a stark contrast to many
Asian economies' growth trends - manufacturing grew to 17 percent of
GDP last year, and with recent growth, appears likely to continue
its increasing contribution to GDP.

--------------
JUST TWO INDIAS?
--------------


15. (SBU) India clearly has stark differences in rural/urban ratios
in social and economic indicators, and at just 30 percent
urbanization, one of the lowest urbanization rates in the world.
The urban poor are the fastest growing segment of the population, at
roughly five per cent per year. In India's "mega cities" of Delhi,
Mumbai, and Calcutta, 25-50 percent of the inhabitants live in slums
or other informal settlements. Since much of the visible economic
boom this past decade has been in knowledge-intensive industries,
mainly in urban areas, there is a widely held perception of two
widely different and diverging Indias in urban and rural India.
However, recent studies suggest that surprising developments are
quietly underway outside India's cities. One of the most important
is that agriculture now accounts for only half of India's rural
economy; no longer is rural synonymous with agricultural. Also
critical for understanding India's transformation is that rural
incomes have been growing faster than urban incomes in recent
years.


16. (SBU) Changes are occurring in India's villages and small
towns, but definitions and methodologies of measuring these changes
are lagging. Rural incomes are growing because of the increasing
use of casual or contract labor in manufacturing; the rise in
national markets for traditional handicrafts; the rise in tourism;
emerging agro-processing industries; sale of land for industrial
use; and linkages for goods and services between major metros'
demand and rural areas' supply. These dynamics are likely to become
clearer in the next few years, as domestic companies, especially in
retail, have begun to turn their marketing focus to India's rural
sector, as urban markets become saturated. This "bottom of the
pyramid" approach is the best indicator of how employment, income,
and consumption tastes are changing outside of India's metros.


17. (SBU) However, poverty remains a considerable and sober
challenge in India, with official (consumption-based) estimates
placing about 26 percent of the population below the poverty line,
which many consider an underestimation. International standards put
about 35 percent of the population below the poverty line, meaning
they live on one dollar or less a day. In spite of India's economic
growth over the past decade, 48 percent of the children under age
five are malnourished, 2.4 million children die each year of
preventable diseases (and 500,000 of those from diarrhea),only 44
percent of the children under the age of two are fully immunized,
and 50 percent of children drop out of school before the eighth
grade. In considering India's growth story and its need for
inclusive growth, it is probably more useful to think of regional
and state differences that create more than just the two India's of
its cities and countryside. Food inflation affects the livelihood
of the aam aadmi (common man) in India and, hence, is highly
politically sensitive, especially in a pre-election year. Prices of
essential food items, such as vegetable oils, pulses, and, more
recently, rice, have risen in recent months. Nevertheless, domestic
Indian prices of wheat, rice, corn and sugar are still among the
lowest in the world. In a knee-jerk reaction to the rising food
price inflation, the Government of India has announced a number of
measures in 2007-2008 to contain the price rise of essential food

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items, including export bans on rice and wheat.

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BIG SHIFTS POSE CURRENT CHALLENGES
--------------


18. (SBU) As manufacturing and industrialization take off,
businesses need land, as seen in the attempt to establish special
economic zones across the country. Most states are developing their
own policies for land acquisition or leasing, but are looking to the
central government to articulate a resettlement policy for those who
are displaced by transitioning land from agricultural to industrial
use. This is a challenge given India's land size is only one-third
China's, yet supports nearly as many people. For Indian landowners
themselves, the transition is less problematic, as land prices have
gone up considerably. However, landless agricultural workers and
those who leased their land from bigger farmers do not receive
compensation for the loss of their livelihood when land is purchased
from the farmers. Before these changes, they were already among the
most economically vulnerable.


19. (SBU) India's emerging organized retail sector, especially in
produce, poses another challenge to the current socio-economic
structure. Currently, only three percent of the food retail sector
is organized. Many states still have laws that limit the sale of
produce to state-sanctioned markets. Thus, direct sale to private
buyers is often prohibited or constrained. While the ostensible
reason was to protect the farmer (through state supervision),the
result has been a sanctioned monopoly that created middlemen -
called commission agents - who often exploited the farmers' lack of
selling options. The result is that Indian farmers typically get
only 35 percent of the final retail price of their goods, while in
countries with more organized retail, farmers get 65 percent of that
final price.


20. (SBU) Organized retail would benefit farmers and consumers, but
make uncertain the fate of small street vendors and shopkeepers, who
number as many as 40 million. These groups have joined together in
several politically active associations to protest - and slow down
or stop - the development of organized retail. While Wal-Mart
figures into the rhetoric because of its backend supply joint
venture with Bharti Enterprises, much of the focus is on several
large Indian companies, including Reliance. The benefits to
farmers, from higher sale prices, extension services that retail
companies have offered, and improved infrastructure and supply
chains, would be revolutionary.

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BILATERAL TRADE GROWING
--------------


21. (SBU) India-U.S. two-way merchandise trade touched USD42
billion in 2007. Last year, the U.S. trade deficit with India went
down 42 percent. Despite this strong growth in the trade
relationship, a number of impediments persist and could impact
future trade in both directions. U.S. exporters continue to
encounter tariff and non-tariff barriers, despite Indian economic
reforms and autonomous (non-WTO) reductions in duties applied to
industrial goods.


22. (SBU) Both countries have sought to advance our bilateral trade
dialogue through the U.S.-India Trade Policy Forum, which is chaired
by USTR and the Commerce Ministry and meets semiannually. The five
focus groups that comprise the Forum- agriculture, intellectual
property, investment, services, and tariff and non-tariff barriers-
interact regularly, often through video conferences


23. (SBU) Included among the bilateral Trade Policy Forum issues
are a number of food and feed market access concerns. For example,
the USG has been pressing the Indian government to allow in U.S.
poultry, pet food, dairy products, barley, and wheat for some time
now. But the Indian government has not only refused to accept the
safety of these products or recognize our regulatory systems and
standards, they have thrown up additional requirements not based on
science. In fact, the U.S. maintains a 3:1 trade deficit with India
on food and agricultural products with Indian food/feed shipments to
the U.S. of USD1.4 billion. Further, the Indian government has
requested the U.S. allow in imports of Indian fruit such as grapes,
pomegranates and mangoes. However, only mangoes have been permitted
to enter the U.S. - using radiation treatment to mitigate pests -
due to the GOI's inability to certify that pest mitigation controls
are in place in shipments to the United States.

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ECONOMIC POLICY-MAKING IN A COALITION

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--------------


24. (SBU) After delivering several key reforms, including a
national value-added tax, Open Skies Agreement with the U.S.
(India's first),improved patent protection through legislation, and
privatization of major airports, reform momentum has noticeably
stalled in the UPA coalition. Several key legislative amendments to
liberalize the banking, insurance, and pension sectors are stuck in
Parliament, mainly because of opposition by the Left parties. The
Finance Minister has acknowledged this, ascribing it to the
challenge of heading a coalition. Given the UPA's inherent
instability, and the harsh ideological divides between the Left and
reformers like the Prime Minister and his economic team, the
Ministry of Finance (MoF) has publicly described a newer approach of
"opportunistic reform" - exploiting new economic developments or
pressures that permit non-Parliamentary reforms to be enacted.

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NEW BUDGET HAS PRE-ELECTION POPULIST FOCUS
--------------


25. (SBU) The UPA presented its last budget before national
elections on February 29 and delivered an expected pre-election,
populist budget that targeted both poor farmers and middle class
taxpayers. While government finances can handle some increased
spending - revenues have more than doubled since 2002 - the USD189
billion budget broke with the past few years of fiscal debt
reduction. It promises the first of four budgetary payments on a
USD17 billion small farmer debt waiver program and no reform of
ballooning but ineffective, subsidies for food, fertilizer, and oil.
The budget did increase allocations for education and health by 20
percent and 15 percent respectively, as the government seeks to
boost access to primary health care and secondary education,
especially in rural areas. The government also significantly raised
spending on urban and rural infrastructure, including roads,
electrification, and sanitation.

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MILITARY TO MILITARY
--------------


26. (SBU) The trend in the U.S.-India security relationship is
overwhelmingly positive, despite irritants such as unsigned
agreements on logistics support and the sharing of classified
information, which have lingered for years. The Indian military -
particularly the Navy - generally is more willing to push the
envelope on closer relations than any other GOI body. Malabar 2007
brought Japan, Australia and Singapore together with the U.S. and
India for the first time for naval exercises. Red Flag 2008 in the
Nevada desert will include India as the first-ever non-NATO
country/major non-NATO ally to participate. The first ever
U.S.-India cooperation under the Global Peacekeeping Operations
Initiative took place in January 2008, and with India as a global
leader in PKO participation and training, there is hope for
expanding GPOI cooperation. Secretary Gates visited India February
26-27, the first visit by the U.S. Secretary of Defense since
Secretary Rumsfeld signed the Defense Framework Agreement in June
2005, and solidified gains in military-to-military relations.
Defense sales, dormant for over 40 years while India was essentially
a Soviet client, have just started to take off,WbRjji,P aircraft, and both Boeing and Lockheed
Martin are competitors for the estimated USD10 billion combat
aircraft bid expected to be decided in 2009.

--------------
TERRORISM/COUNTERTERRORISM
--------------


27. (SBU) India continues to rank among the world's most
terror-afflicted countries. The conflict in Jammu and Kashmir,
attacks by extreme leftist Naxalites and Maoists in eastern and
central India, assaults by ethno-linguistic nationalists in the
northeastern states, and terrorist strikes nationwide by Islamic
extremists took more than 2,300 lives in 2007. There were several
major attacks linked to Islamic extremists in 2007, including an
attack in May 2008 in the tourist city of Jaipur which killed more
than 60 Indian citizens. Indian officials claim that the
perpetrators of these attacks have links to groups based in Pakistan
and Bangladesh, particularly Lashkar-e-Taiba, Jaish-e-Mohammad, and
Harkat-ul-Jihad Islami, among others. The violence in Jammu and
Kashmir abated somewhat in 2007, but the area remains volatile.
Prime Minister Singh has called leftist extremist (Maoist or
agrarian Naxalite) groups, "the greatest threat to India's internal

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stability and democratic culture." Leftist extremist groups are
very active in wide areas of impoverished rural eastern and central
India, and also operate in parts of southern India.
Ethno-linguistic separatist groups attack and kill in Northeastern
India, particularly in the states of Assam, Nagaland, Manipur,
Tripura, and Meghalaya. Several proscribed terrorist groups operate
in the northeast, including the United Liberation Front of Assam
(ULFA) and the People's Liberation Army.


28. (SBU) The lack of security, remoteness, and inhospitable
terrain combine to prevent the government from providing security
and other basic services in many of the areas in which the leftist
extremists and the northeastern separatist groups operate. The
Indian government's counterterrorism efforts are hampered by its
outdated and overburdened law enforcement and legal systems. The
Indian court system is slow, laborious, and prone to corruption;
terrorism trials can take years to complete. Many of India's local
police forces are poorly staffed, lack training, and are
ill-equipped to combat terrorism effectively.


29. (SBU) The United States cooperates with India under the
Counter Terrorism Joint Working Group, which meets twice a year.
Our Anti-Terrorism Assistance program provides training to India's
law enforcement officials. One area of concern is that the program
will be cut significantly in FY 2009. We are also in the beginning
stages of developing regional programs designed to bring together
relevant officials from South Asian nations in training
opportunities. The Office of Defense Cooperation also provides
counterterrorism courses to a small number of military and civilian
officials each year.

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TRAFFICKING IN PERSONS
--------------


30. (SBU) The Department of State is required by law to submit a
report each year to the U.S. Congress on foreign governments'
efforts to eliminate severe forms of trafficking in persons. The
report is intended to raise global awareness, highlight efforts of
the international community, and encourage foreign governments to
take effective actions to counter all forms of trafficking in
persons. Countries meeting minimum standards under U.S. law are
placed in Tier 1. Those assessed as not fully complying with
minimum standards but which are making significant efforts to do so
are classified as Tier 2. Countries assessed as neither complying
with the minimum standards nor making significant efforts to meet
them are classified as Tier 3.


31. (SBU) To quote the 2008 Trafficking in Persons (TIP) Report:
"The Government of India does not fully comply with the minimum
standards for the elimination of trafficking; however, it is making
significant efforts to do so. India is placed on Tier 2 Watch List
for a fifth consecutive year for its failure to provide evidence of
increasing efforts to combat trafficking in persons over the last
year. Despite the reported extent of the trafficking crisis in
India, government authorities made uneven efforts to prosecute
traffickers and protect trafficking victims. During the reporting
period, government authorities continued to rescue victims of
trafficking for commercial sexual exploitation and forced child
labor and child armed combatants, and began to show progress in law
enforcement against these forms of trafficking. Overall, the lack of
significant federal government action to address bonded labor, the
reported complicity of some law enforcement officials in trafficking
and related criminal activity, and the critical need for an
effective national-level law enforcement authority impeded India's
ability to effectively combat its trafficking in persons problem. A
critical challenge overall is the lack of punishment of traffickers,
effectively resulting in impunity for acts of human trafficking."

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CLIMATE CHANGE
--------------


32. (SBU) As a non-Annex I country with no obligations beyond
monitoring and reporting emissions, India is a strong supporter of
the Kyoto Protocol and is fully locked into the principle of common
but differentiated responsibilities as enshrined in the UN Framework
Convention on Climate Change (UNFCCC). While India is a regular
participant in the Major Economies Meetings and takes the threat of
climate change seriously, the GOI position on climate change has
remained virtually unchanged and can be summarized in the following
four points: 1) any future international agreement on climate
change must be negotiated under the rubric of the UNFCCC; 2) the
common but differentiated response language of the UNFCCC must be
maintained; 3) India's economic development and poverty alleviation

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goals are of paramount importance and will not be hindered in order
to reduce greenhouse gas (GHG) emissions; and 4) clean technology
transfer must be provided to India and other developing countries at
low or no cost. In February of 2008, Prime Minister Manmohan Singh
announced India would never emit more GHGs on a per capita basis
then the average emissions of developed countries. Given India's
population of approximately 1.2 billion, and heavy and continuing
dependence on coal for electricity generation, this pledge will have
no impact on curbing India's GHG emissions for the foreseeable
future. On a per capita basis, India is ranked 129 in the world in
fossil-fuel generated CO2 emissions. In terms of total such
emissions, India is the fourth largest emitter in the world. Large
scale development of civilian nuclear energy, as would be permitted
under the U.S.-India civil nuclear agreement, would substantially
reduce India's future production of greenhouse gases.

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VISA GROWTH MIRRORS PEOPLE-TO-PEOPLE TIES
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33. (U) One of the fundamental strengths of the U.S./India
relationship is large number of Indians who have personal links to
the United States. Following decades of travel and immigration
(even through the darkest days of our bilateral relationship) a
majority of the people you would meet in a Board Room or at a
Government conference table have some family who have studied,
worked, or lived in the United States. With some 84,000 enrolled in
the United States, India is the largest source country for foreign
students. This remarkable trend is accelerating, as visa demand is
increasing by 25 percent per year (50 percent in Mumbai). Mission
India, understanding the underlying value of the mutual
understanding gained through increased travel, has dedicated
unprecedented resources to the challenge. As a result in FY 2007,
our non-immigrant visa production soared from 459,000 to 726,000
cases. We are investing in infrastructure and personnel to continue
to make people-to-people ties one of the pillars of our dynamic
bilateral relationship. Finally, another interesting trend is the
increase in Indian-Americans who are returning to their country of
birth to take advantage of the economic miracle here.


34. (SBU) Once again, we look forward to welcoming you to
India and to working with your staff to ensure a successful and
productive visit.


MULFORD