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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. 
 
------ 
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. 
 
------ 
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 
 
NEW DELHI 00001756  002 OF 008 
 
 
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. 
 
------ 
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 
 
NEW DELHI 00001756  003 OF 008 
 
 
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. 
 
------ 
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 
 
NEW DELHI 00001756  004 OF 008 
 
 
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 
 
NEW DELHI 00001756  005 OF 008 
 
 
items, including export bans on rice and wheat. 
 
------ 
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. 
 
------ 
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. 
 
------ 
ECONOMIC POLICY-MAKING IN A COALITION 
 
NEW DELHI 00001756  006 OF 008 
 
 
------ 
 
¶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. 
 
------ 
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. 
 
-------- 
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 
 
NEW DELHI 00001756  007 OF 008 
 
 
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. 
 
------ 
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 
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¶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 
 
NEW DELHI 00001756  008 OF 008 
 
 
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 
------ 
 
¶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