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DE RUEHNE #1223/01 1631421
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O 121421Z JUN 09
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6975
RHEHAAA/WHITE HOUSE WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
RUCPDOC/DEPT OF COMMERCE WASHDC IMMEDIATE
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 8167
RUEHGV/USMISSION GENEVA 8404
RUEKJCS/JOINT STAFF WASHDC
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE

UNCLAS NEW DELHI 001223 
 
STATE FOR SCA/INS JASHWORTH AND SCA/RA MURENA 
USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN 
DEPT PASS TO USTR FOR SOUTH ASIA - CLILIENFELD/AADLER 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - MNUGENT 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD EAGR PREL PGOV PTER IN
SUBJECT: U/S BURNS AND AHLUWALIA CHART NEXT STEPS IN THE BILATERAL 
ECONOMIC AGENDA 
 
¶1.  (SBU) Summary: Under Secretary of State for Political Affairs 
William Burns met with Planning Commission Deputy Chairman, and 
close economic adviser to the Prime Minister, Montek Singh Ahluwalia 
on June 11 to discuss proposals for moving the economic relationship 
forward.  They focused on ways to expand collaboration in the areas 
of education, agriculture, and renewable energy.  Ahluwalia 
suggested that education have its own separate forum, while 
agriculture be placed within the CEO Forum for maximum private 
sector participation.  He encouraged more US participation in 
India's renewable energy sector, especially solar electricity. 
Burns and Ahluwalia reaffirmed the value of the CEO Forum and how to 
reconstitute it to enable broader and deeper bilateral ties.  They 
looked to the September G-20 meeting to contain protectionism and 
considered how to re-start Doha Round talks and move on bilateral 
investment negotiations.  End summary. 
Strengthening the Relationship 
------------------------------ 
 
¶2.  (SBU) Under Secretary of State for Political Affairs William 
Burns met with Planning Commission Deputy Chairman Montek Singh 
Ahluwalia to gain his perspective on re-engaging on the bilateral 
economic agenda.  Under Secretary Burns first refuted claims that 
the US was not focused on India, noting that President Obama's 
administration had enormous enthusiasm for strengthening the 
structure of the relationship and building on what has already been 
accomplished.  Ahluwalia immediately assured Burns that his 
government was confident of the US's engagement with India and that 
the Prime Minister's positive views towards the bilateral 
relationship were in no way diminished.  What has changed, Ahluwalia 
opined, was the external economic environment, which required 
broadened areas of economic engagement. 
Education Excellence Through Collaboration 
----------------------------------------- 
 
¶3.  (SBU) Ahluwalia raised education as a particular area for 
enhanced collaboration between India and the US.  He stated that the 
two governments had started some initial discussions under the CEO 
Forum, but Ahluwalia said his impression from the new Human Resource 
Development (HRD) Minister Kapil Sibal was that Sibal wanted to 
rewrite the bilateral agenda on education to focus on three areas: 
expansion, inclusion and excellence.  The Deputy Chairman said that 
expansion and inclusion were already being implemented, but that 
raising the quality of education was going to be the "tough part." 
At least part of the solution lie in promoting Indian universities 
which offer a global experience through some use of visiting 
faculty, joint programs, or "twinning".  (Note: Ahluwalia has 
previously described this to American officials as a relationship 
between an Indian and American university where students from either 
institution spend one year at each university.  End note.) 
 
¶4.  (SBU) Ahluwalia suggested the best way to move forward on 
education was to have a separate bilateral forum on education, which 
Under Secretary Burns noted was floated by HRD Minister Kapil Sibal 
as well.  Ahluwalia stated he had been in contact with US faculty of 
Indian origin, who are interested in pursuing new types of 
collaboration with Indian universities.  But, Ahluwalia cautioned, 
there is a lack of clarity about which among a "multiplicity of 
models" would be best for US and Indian universities.  Burns told 
Ahluwalia that Sibal had mentioned certain legislative changes that 
were required (Sibal meeting covered septel).  Hazarding that he was 
perhaps talking out of turn, Ahluwalia asserted that he was not very 
happy with the Foreign University Bill and did not think that 
legislative changes were needed (Note: The draft Bill would allow 
foreign campuses in India.  End note.) To move forward, Ahluwalia 
suggested that a new bilateral forum identify 8-9 different 
educational collaboration models and then determine where US and 
Indian interest was strongest.  His impression was that American 
universities do not want to set up entire campuses, but rather 
facilities where they could take 30-40 students for a semester. 
Under Secretary Burns observed that some US universities in recent 
years have set up in different countries, but Ahluwalia replied that 
such models would not work in India because they are funded by the 
host country, which in India would be perceived as preferential to 
the foreign university.  Categorically, Ahluwalia stated that the 
"Dubai model" would not work.  Burns returned to the creation of a 
forum to explore the potential and agreed with Ahluwalia's 
suggestion that it be a standalone forum, rather than a part of the 
CEO Forum or other dialogue. 
 
 
CEO Forum Useful, Needs New Members 
----------------------------------- 
 
¶5.  (SBU) Turning to the CEO Forum, Ahluwalia noted that President 
Obama and Prime Minister Singh had agreed to continue it.  Ahluwalia 
described the Forum as very useful, where both US and Indian 
government interests were "consensually" served.  However, the 
Deputy Chairman told Under Secretary Burns that he thought it should 
be reconstituted to move away from the original "finance heavy" 
membership and had told Larry Summers this as well.  Ahluwalia 
suggested that perhaps during Secretary Clinton's planned visit to 
India, she could announce the new membership of the CEO Forum.  He 
recommended companies that had investments in India, as well as 
those in the technology and energy sectors. 
 
Working Together on Renewable Energy and Agriculture 
--------------------------------------------- ------- 
 
¶6.  (SBU) Under Secretary Burns next explained that Secretary 
Clinton wanted to unveil new areas of engagement and suggested 
education and agriculture.  Ahluwalia agreed to both, but also 
suggested that renewable energy could be another subject for 
collaboration.  He stated that his government had developed an 
Action Plan for Climate Change that would set out domestic goals 
independent of deliberations in international fora.  While many of 
the relevant issues are addressed under the Energy Dialogue, 
Ahluwalia suggested that the two countries re-examine possibilities 
for joint research, especially in solar technology.  The Deputy 
Chair noted that the Clinton Foundation was working with the state 
governments of Gujarat and Rajasthan on large solar thermal power 
stations.  For its part, the central government was devising a 
National Solar Plan that would incorporate a declining subsidy in 
the belief that new technologies would lower costs over time. 
Ahluwalia urged that US industry be encouraged to partner with 
companies in India to build a solar industry.  Assistant Secretary 
Blake noted that the recent stimulus package and proposed budget 
included strong incentives for the development of solar 
technologies. 
 
¶7.  (SBU)  Turning to agriculture, Ahluwalia frankly observed that 
was one area of bilateral engagement that had not worked well, save 
the scholarships and faculty exchanges, which he praised and 
encouraged further expansion.  He saw the current structure as 
limited to where Indian government institutions engaged American 
universities, but where a critical commercial element was lacking. 
Assistant Secretary Blake informed Ahluwalia that several US private 
sector companies had expressed interest in such commercial 
endeavors.  Ahluwalia welcomed that, stating that the US private 
sector needed to be matched with Indian private sector companies. 
The difficulty, Ahluwalia perceived, was that the entry of private 
companies into Indian agriculture was very nascent, but still the 
need was obvious for development of private sector cold chain 
systems, food processing and seed production.  The Planning 
Commission Deputy underlined that the agriculture research is still 
important, but it cannot be the lead in this joint effort on 
agriculture.  He suggested that an agriculture subgroup be made part 
of the CEO Forum, where the private sector could lead it. 
 
Global Economy and Trade 
----------------------- 
 
¶8.  (SBU) Burns then asked for Ahluwalia's assessment of the global 
economy.  He started by identifying "the good news": the world's 
economic managers have averted catastrophe and the global economy is 
not falling off a cliff and may even turnaround in the second half 
of 2009.  However, he perceived continuing uncertainty about when 
and how much recovery would take place over the next few years.  For 
India's growth, he said they had achieved 6.7% for their last fiscal 
year, which was better than other countries, but below India's 
recent 9% growth.  With the proper stimulus, he maintained that 
India could hit 7% growth in the coming year.  What was important to 
consider, Ahluwalia continued, was whether countries' growth was 
constrained by external demand factors or by supply factors.  It is 
a problem for developing countries if their growth has been driven 
by external demand, for the global economy will only recover to 
modest growth rates and thus subdued consumer demand.  For India, he 
perceived a supply constraint that could be addressed through 
 
increasing productivity, skill training and literacy, and boosted by 
India's high savings rate. 
 
¶9.  (SBU) Ahluwalia warned, however, that global economic recovery 
is predicated on the G-20 containing protectionism.  He asserted 
that for India to remain open to trade, others must do so as well. 
Under Secretary Burns agreed that protectionism was a critical issue 
and expected that countering it would be a continuing theme at the 
G-20 talks in September.  He then asked Ahluwalia what he thought of 
the fate of the Doha Trade Round.  Ahluwalia claimed that the global 
trade talks needed to be restarted as a signal on global openness, 
to which Burns agreed.  Ahluwalia opined that India has been "bad 
mouthed" in the US for its stance in the WTO, while the degree to 
which the gap between the different positions has been narrowed has 
been overlooked.  The Deputy Chairman suggested that the talks be 
restarted with emphasis on how much the gap between differences has 
been narrowed.  He also suggested that if President Obama could 
obtain Trade Promotion Authority, that would be a significant sign 
to the Doha participants of the US' commitment to resolution. 
 
¶10.  (SBU) Finally, Ahluwalia asked about the status of proposed 
investment treaty negotiations.  When told that US proposed dates 
were awaiting Indian confirmation, Ahluwalia offered his sense of 
the main difference in the two countries' approaches.  For India, he 
said that it would be difficult to accept the US requirement of 
national treatment of firms prior to entry, since currently India 
provides only post-entry national treatment.  His understanding is 
that the US has suggested that it be done on an exclusion basis that 
explicitly sets aside certain sectors from the requirement, but 
Ahluwalia worries that if India concedes to this, then other 
countries will ask for the same treatment.  That would effectively 
get rid of caps in foreign investment in various sectors, which will 
be difficult to do.  Under Secretary Burns closed the meeting by 
welcoming the start of negotiations as another good signal of 
substantive economic engagement between India and the US. 
 
¶11.  (U) Participants:  Under Secretary of State William Burns, 
Charge Peter Burleigh, Assistant Secretary for South and Central 
Asia Robert Blake, Dr. Derek Chollet - Principal Director, Policy 
Planning Office, Department of State, P Special Assistant Tom West, 
Planning Commission Deputy Chairman Montek Singh Ahluwalia, Ministry 
of External Affairs Joint Secretary (Americas) Gaitri Kumar, and 
Econoff (notetaker). 
¶12.  (U) Under Secretary Burns' office cleared this cable. 
BURLEIGH