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UNCLAS SECTION 01 OF 07 NEW DELHI 002529 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL PTER OVIP AF PK IN
SUBJECT: SCENESETTER FOR CODEL GREGG 
 
¶1. (SBU) Senator Gregg and Delegation: 
 
Mission India warmly welcomes you.  Following soon after 
Prime Minister Singh's historic official state visit to 
Washington, your visit coincides with a rapid expansion in 
the U.S.-India partnership, encompassing everything from 
agriculture to defense cooperation, and reflecting widespread 
support in both countries for broadening existing ties and 
building new ones.  India and the United States have begun 
working more closely than ever, exemplified by our parallel 
efforts to assist in Afghan reconstruction and unprecedented 
cooperation on counterterrorism following the "26/11" 
terrorist attacks in Mumbai just over a year ago.  This 
cooperation is made possible in part by the goodwill 
generated by the Civil Nuclear Cooperation Agreement.  During 
your meetings, we hope you can help focus the Indian 
government on the several key priorities that emerged from 
the PM's visit, including cooperation on counterterrorism, 
clean energy development, and global and bilateral economic 
policies.  India's position at the Copenhagen climate change 
negotiations has remained relatively inflexible, although it 
is seeking to avoid playing a spoiler role.  You can expect 
to hear justifications for India's rejection of binding 
emissions targets and of international monitoring, as well as 
questions about U.S. funding to help less developed countries 
mitigate and adapt. 
 
Strategic Dialogue:  Broader and Deeper Than Ever Before 
- - - 
 
¶2. (SBU) Secretary Clinton launched the current phase of 
rapid expansion in the U.S.-India relationship during her 
visit in July when she and Minister of External Affairs S.M. 
Krishna announced a new Strategic Dialogue structured around 
five pillars and 18 sub-dialogues.  During Prime Minister 
Manmohan Singh's historic first official state visit of the 
Obama Administration in November, our governments announced 
major outcomes representing each of the five pillars of the 
Dialogue.  Highlights include a Counterterrorism Cooperation 
Initiative; a Green Partnership including MOUs on Energy 
Security, Energy Efficiency, Clean Energy, Wind and Solar 
Power, and Climate Change; an MOI on Agricultural Cooperation 
and Food Security; the Obama-Singh 21st Century Knowledge 
Initiative; a meeting of the CEO Forum; and an MOU for the 
establishment of a Global Disease Detection (GDD) Center.  We 
look forward to building on these solid foundations leading 
toward a visit by President Obama at some point in 2010. 
 
Internal Politics:  A Raucous Democracy 
- - - 
 
¶3. (SBU) We have a true partner in the current Indian 
government led by Prime Minister Singh, but its capabilities 
are not without limits.  The strong performance by the 
Congress Party and its United Progressive Alliance (UPA) 
allies in India's national elections gave Prime Minister 
Singh's UPA coalition government a mandate to govern and -- 
freed from dependence on half-hearted allies on the Left -- 
to promote a closer relationship with the United States. The 
fallout over a joint statement from Singh's July 16 Sharm 
el-Sheikh meeting with Pakistani Prime Minister Gilani cut 
short the honeymoon period, providing an opportunity for 
Singh's otherwise fractured political opponents and 
dissidents within his own ruling coalition.  This move won 
temporary political points for the opposition Bharatiya 
Janata Party (BJP), but that party's steady summer implosion 
facilitated the UPA government's rebound, resulting in the 
Congress Party's victory in the October 13 Haryana and 
Maharashtra state elections.  The Sharm debacle reminded the 
Prime Minister of his political constraints despite his clear 
mandate.  The tentativeness of the government has been on 
 
NEW DELHI 00002529  002 OF 007 
 
 
display again during the November-December session of 
Parliament that adjourned December 18, during which the 
fractious opposition managed to unite over populist causes 
such as food price increases and a handful of narrow domestic 
political issues to put the government on the defensive. 
 
External Relations:  Afghanistan and Pakistan 
- - - 
 
¶4. (SBU) Under Prime Minister Singh's leadership, India is 
emerging as a leader in the region and in Asia at large. 
India encourages democracy in the region, but is concerned 
about continuing political instability in both Nepal and 
Bangladesh and the humanitarian situation in Sri Lanka.  We 
have followed closely as India and China have sought warmer 
relations through periodic dialogue and increased trade, but 
Indo-China ties are strained by contentious border issues and 
a sense of mutual suspicion.  However, India's greatest 
external challenges remain with its neighbors to the West. 
 
¶5. (SBU) India is proud of its ongoing "development 
partnership" with post-Taliban Afghanistan.  The GOI claims 
to have given USD 1.3 billion to Afghanistan since 2001. 
Projects have included road construction, food aid to 
children, power transmission, and telecommunications 
assistance.  India has also expressed interest in increasing 
military training and assistance, and in providing training 
for Afghan police.  While expressing appreciation for India's 
efforts in Afghanistan, you could also advocate increased 
coordination of Indian aid with the USG and other 
international partners in order to maximize impact as we 
pursue a common goal of increased Afghan capacity.  Indian 
reaction to the President's December 1 speech on the way 
forward in Afghanistan was that the U.S. is headed for the 
exit sooner rather than later, and that this had significant 
consequences for India's own security. 
 
¶6. (SBU) The Indians understand our message about the 
importance of resuming a robust dialogue with Pakistan and 
the necessity of increased GOI communication to reassure 
Pakistani officials about India's good intentions in 
Afghanistan.  The response we have consistently received is 
that the GOI will not re-engage in meaningful dialogue until 
Pakistan demonstrates tangible results in acting against 
terror directed at India.  The prevailing Indian media 
assumption is that a Pakistani hand is behind much of the 
plotting against India, including the October 8 bombing of 
the Indian Embassy in Kabul, and this perception will likely 
make the GOI even less eager to rush into resuming the sort 
of forward-leaning communications that took place several 
years ago with the Musharraf government.  Indian reluctance 
to re-engage may be further compounded by the case of alleged 
Lashkar-e-Tayyiba operative David Coleman Headley arrested by 
the FBI in Chicago, which fuels speculation of an official 
Pakistani connection to 2008 Mumbai attacks.  The Headley 
case continues to dominate media coverage in India, with ever 
wilder conspiracy theories getting play, including most 
recently speculation that Headley was a CIA double agent. 
 
¶7. (SBU) Viewed from Delhi, Pakistan's post-Mumbai law 
enforcement actions against Pakistani nationals suspected of 
involvement in attacks against India has thus far been 
ineffectual and appears focused more on show than substance. 
Pakistan's arrest of seven Mumbai suspects was clearly a step 
in the right direction, but the in camera trial has been 
delayed multiple times over the course of many months and is 
now on its third judge. The August 3 Pakistani court decision 
to adjourn indefinitely on a legal technicality a criminal 
case against LeT/JuD leader Hafiz Saeed -- a man perceived by 
Indians in much the same way as Osama bin Laden is perceived 
by Americans -- the alleged Mumbai attack mastermind, was 
 
NEW DELHI 00002529  003 OF 007 
 
 
clearly a step backward.  We also continue to hear a drumbeat 
of reports that future spectacular Mumbai-style attacks 
against India may be in the offing.  The GOI must also factor 
lingering public anger over Mumbai into its calculus in 
re-engaging with Pakistan.  However much PM Singh would like 
to resume the dialogue, he must be wary of getting too far 
out in front of public and political-class opinion, as 
occurred following the Sharm joint statement.  The July 23 
Sharm agreement was met with media outrage and significant 
dissent from some within the ruling coalition and Singh's own 
Congress party who felt the agreement was precipitous and a 
sign of Indian weakness.  The fall-out might have toppled a 
weaker and more fragmented government.  PM Singh will need 
political cover to resume the dialogue. 
 
Civil Nuclear Cooperation 
- - - 
 
¶8. (SBU) India viewed the signing of the U.S.-India Civil 
Nuclear Cooperation Agreement as an historic event and an 
essential part of transforming our relationship.  India has 
since followed through on its nonproliferation commitments by 
signing its IAEA Safeguards Agreement and concluding an 
Additional Protocol with the IAEA.  We are working with the 
government to implement commercial cooperation, providing 
U.S. firms access to an estimated USD 150 billion market and 
leading to the creation of thousands of high-skilled jobs, as 
well as providing India's growing economy with access to 
clean energy.  The Agreement no longer dominates the 
headlines, but the goodwill it generated has contributed to 
our improved relationship across the board and to India's 
gradual movement toward the nonproliferation mainstream. 
 
¶9. (SBU) The Indian government made substantial progress on 
implementing commercial cooperation ahead of PM Singh's visit 
to Washington, though some important hurdles remain.  In 
recent months, India announced two favorable reactor park 
sites for U.S. firms in the states of Gujarat and Andhra 
Pradesh, and submitted its declaration of safeguarded 
facilities to the IAEA. We have held five rounds of 
reprocessing consultations pursuant to the 123 Agreement, and 
hope to conclude negotiations soon.  The government responded 
to our request for Part 810 license assurances on the eve of 
Singh's visit, a top priority of U.S. industry, and we await 
clarification on two issues.  The cabinet approved draft 
liability legislation, a top priority for U.S. firms, but 
Parliament was not able to pass the legislation in the 
just-concluded session. 
 
The Defense Relationship 
- - - 
 
¶10. (SBU) The U.S.-India defense relationship has progressed 
rapidly since sanctions were removed in 2000 following 
India's 1998 nuclear test.  Today's relationship is focused 
on bilateral exercises, Subject Matter Expert Exchanges 
(SMEEs), and personal exchanges at schools, conferences and 
seminars.  Billion-dollar defense sales are a growing 
component and a superb opportunity to expand the 
relationship.  Exercises are the most visible of the 
activities between our two militaries.  In October, the Army 
completed its most ambitious exercise with the deployment of 
17 Strykers to India for a two week exercise which included 
live firing of a combined mechanized task force for the first 
time. Simultaneously, the Air Force had five transport 
aircraft participating in exercise COPE INDIA held in Agra 
that included a Special Forces component.  The Navy conducts 
an annual exercise, Malabar, that has been conducted both 
bilaterally and multilaterally.  The Marines hold an annual 
exercise with the Indian Army, Shatrujeet, which focuses on 
amphibious operations.  The Indians have been cooperating 
 
NEW DELHI 00002529  004 OF 007 
 
 
with the Joint POW/MIA Accountability Command for recovery of 
remains from downed Second World War planes in the 
politically sensitive state of Arunachel Pradesh.  To date, 
we are still working on obtaining permission to repatriate 
all of the remains so as to properly identify and recover 
lost Airmen. 
 
¶11. (SBU) Defense sales are growing quickly from roughly one 
billion USD in 2008, to over two billion so far this year. 
There is good potential for over four billion in sales next 
year, especially with the recent Ministry of Defense approval 
to pursue the C-17.  For the first time, India can afford 
(politically and financially) to purchase front line U.S. 
equipment.  They recognize the quality of U.S. systems and 
have been astounded by the mission capable rates quoted for 
U.S. aircraft compared to their older Russian inventory. 
They are becoming increasingly sophisticated in their 
analysis of costs and now use life-cycle cost instead of cost 
on delivery for some purchases, giving U.S. products an 
opportunity to beat cheaply made competitors. Most important, 
the July 2009 agreement on End Use Monitoring (EUM) has 
opened the door for FMS sales at a time when there is growing 
frustration with Russia - previously India's supplier of 
choice.  The near doubling in cost and extensive delays in 
delivery of the ex-Russian aircraft carrier GORSHKOV, issues 
with transfer of technology on the T-90 tank, and universal 
problems with spare parts have convinced the GOI that new 
sources of supply are needed to balance Russia.  Given an 
opportunity, we ask that you endorse Indian purchases of U.S. 
equipment as an important part of our defense relationship 
and support our ongoing sales efforts. 
 
Economic Ties 
- - - 
 
¶12. (SBU) The U.S.-India economic relationship, for decades 
practically nonexistent, has grown rapidly and has 
significant potential to expand further.  At the same time, 
India is an increasingly important player at the table in 
multilateral economic fora, from the WTO Doha Round 
negotiations and the G-20, World Bank and IMF to the UNFCCC 
negotiations in Copenhagen.  While India was seen in the 
United States as a spoiler when the World Trade Organization 
Doha Development Agenda talks broke down in July 2008, 
India's new Commerce Minister showed leadership and 
significantly improved the tone of discussions when he hosted 
a Doha "Mini-ministerial" meeting in September, attended by 
U.S. Trade Representative Kirk. 
 
¶13. (U) The United States is India's largest trading partner 
in goods and services and one of its largest foreign 
investors.  Investment has surged between our countries in 
recent years, prompting agreement to launch negotiations on a 
bilateral investment treaty.  U.S. exports to India has 
increased five-fold from USD 3.6 billion in 2000 to USD 17.7 
billion last year.  Two-way merchandise trade grew to a 
record USD 44.4 billion in 2008, a 76-percent increase from 
¶2005.  Reflecting the global economic downturn, exports to 
India fell 9.7 percent in January-September 2009 (to USD 8 
billion), but Indian exports to the United States fell more 
sharply.  Thus, the U.S. trade deficit with India fell 43.8 
percent to just USD 3.2 billion in January-September 2009. 
Despite the size of its economy, India was only the United 
States' 18th largest trading partner in 2008.  One of the 
major goals of the U.S.-India Trade Policy Forum is to 
resolve barriers to trade and investment to improve this 
ranking. 
 
¶14. (U) India was somewhat shielded from the global economic 
downturn due to its conservative central bank and 
SEC-equivalent restricting many of the derivative innovations 
 
NEW DELHI 00002529  005 OF 007 
 
 
linked to the global financial crisis, and its relatively low 
reliance on exports. However, although India's "Wall Street" 
was less affected, its "Main Street" bore the brunt of the 
downturn, with slower growth, tighter access to credit, 
declining exports, higher unemployment, and less investment. 
In response, India's central bank and SEC-equivalent relaxed 
many of its restrictions on foreign capital inflows and 
investment procedures and the GOI enacted several fiscal 
stimulus programs, both pre- and post-election, to boost 
economic growth. 
 
¶15. (SBU) The Indian economy continues to be one of fastest 
growing economies in the world, even as the global slowdown 
and financial crunch moderated GDP growth from nine percent 
in fiscal year (FY) 2007-08 to 6.7 percent in FY 2008-09, 
which ended March 31.  Growth in the second quarter was 7.9 
percent and growth in fiscal year 2009-10 is now expected to 
be in the seven percent range.  The Commerce Ministry 
announced December 15 that it expects to see a return to 
positive export growth soon.  With the expected return of 
higher growth rates, rising inflation, and the highest fiscal 
deficit (approximately 11 percent of GDP) in 20 years, the 
GOI has begun to reverse some the measures it enacted during 
the financial crisis and has announced plans to decrease 
subsidies and increase disinvestment. Lagging agricultural 
productivity and poor -- but improving -- infrastructure 
continue to constrain growth.  Accordingly, the top Indian 
economic priorities remain physical and human infrastructure 
development and spreading economic benefits into rural India. 
 
¶16. (U) The United States continues to have concerns about 
agricultural trade with India.  The recently released Senate 
Finance Committee Report on Indian agricultural trade 
barriers -- a U.S. ITC investigation -- highlighted the 
essentially defensive agricultural trade policy long promoted 
by the Indian government.  The United States is particularly 
interested in gaining marketing access for U.S. dairy 
products which are blocked due to a series of non-scientific 
GOI rules.  Discussions are ongoing, but the effort to 
resolve long-standing agricultural trade issues is a Mission 
priority. 
 
U.S. Assistance:  Health, Education, Energy, Water and 
Sanitation, Agriculture, Law and Human Rights 
- - - 
 
¶17. (U) Although India's economy has been growing 7-9 percent 
annually since 2004, this significant and impressive growth 
is only part of the story.  India has an estimated 456 
million people, or 42 percent of its population, living below 
the official poverty line of USD 1.25 per day, and a 
staggering 828 million people, or 75.6 percent of the 
population, living on less than USD 2.00 per day.  This puts 
India's poverty levels above those of sub-Saharan Africa 
where 74 percent of the population lives on less than USD 
2.00 per day.  The rural and urban poor in India do not have 
the education, work force skills, social capital or access to 
primary health care and basic infrastructure, including 
water, sanitation and electricity, to participate fully in 
and benefit from India's economic growth.  They are generally 
not the focus of private investment.  Deep rooted gender 
inequities further undermine India's potential to convert its 
economic growth into human development.  According to the 
World Economic Forum's Gender Index, India ranks 113 out of 
130 countries and is in the bottom five countries for 
economic participation and opportunity, and health and 
survival.  The GOI and the private sector are eager for 
international best practices that U.S. foreign assistance 
offers to address this glaring economic disparity.  The U.S. 
assistance program builds the capacity of local partners 
including government institutions, private sector, and civil 
 
NEW DELHI 00002529  006 OF 007 
 
 
society/non-governmental organizations by promoting 
replicable models and engaging in policy dialogue that leads 
to higher development impact and improved resource 
allocations.  U.S. foreign assistance, coupled with 
Government of India and private sector resources, improves 
India's ability to achieve sustainable growth and reduce 
poverty. 
 
¶18. (U) Health:  India's growing population of more than one 
billion strains resources and complicates disease prevention. 
 More than two million Indian children under age 5 die every 
year, most from preventable causes, while avoidable 
complications during childbirth kill approximately 78,000 
Indian women every year.  Family planning choices are 
limited, with more than two thirds of women opting for 
sterilization as their method for family planning.  The 
health of the urban poor is considerably worse than the urban 
middle and high income groups and is as bad as that of the 
rural population.  2.47 million people in India are estimated 
to be HIV positive.  Although eradication efforts are 
promising, India remains one of four countries where polio 
continues.  One fourth of the world's TB cases are in India, 
which is now the number one high-burden country for Multi 
Drug Resistant (MDR) TB.  The U.S. assistance program, 
through USAID and the Department of Health and Human 
Services, works in close collaboration with the Government of 
India and state governments in many health activities 
designed to increase access to family health care, nourish 
needy mothers and children, fight infectious diseases, and 
prevent HIV/AIDS. 
 
¶19. (U) Education:  India has achieved significant progress 
in increasing access to basic education.  However, improving 
the quality and relevance of education remains a major 
challenge for the public education system.  Despite massive 
government investment in the sector, student learning levels 
continue to be alarmingly low across most schools in the 
country, leading to large numbers of children dropping out of 
school.  Approximately 50.8 percent of children in India drop 
out at the elementary level, while at the secondary level, as 
many as 62 percent drop out.  Enrollment in higher and 
technical education is only about 11 percent.  High drop out 
rates at all levels negatively impacts long term employment 
opportunities.  U.S. assistance to India, through USAID, 
provides quality education to marginalized children, 
including Muslim minorities, promote the use of technology to 
improve the teaching and learning, and support interventions 
that link education to employment.  In the area of higher 
education, India continues to lead the world as a source of 
foreign students studying in the U.S.  Our governments are 
working to support the rapid expansion of formal linkages 
between American and Indian institutions of higher education, 
as well as focusing on expanding the role of community 
colleges and other programs linking education to employment 
opportunities throughout India, particularly in traditionally 
under-served communities. 
 
¶20. (U) Energy and Climate Change:  India is a major producer 
of Green House Gas (GHG) emissions, with the power sector the 
largest single contributor.  Even as it takes domestic steps 
to reduce emissions, India's focus on development and poverty 
reduction leads it to resist in international climate 
negotiations any CO2 emissions targets that could retard its 
economic growth. Indian power stations, characterized by old 
equipment, inefficient technologies, poor maintenance 
practices, and low quality coal, are some of the highest GHG 
emitters in the world.  The key challenge therefore is to 
move India towards a low carbon development path with an 
emphasis on renewable energy and the latest technologies for 
cleaner coal.  Nearly 20 percent of villages and 32 percent 
of households do not have access to electricity.  Development 
 
NEW DELHI 00002529  007 OF 007 
 
 
of an efficient and modern energy system is also necessary to 
sustain India's economic growth and social development.  U.S. 
assistance is designed to significantly advance India's quest 
for better infrastructure by reducing electricity 
distribution losses, improving end-use efficiency, and 
advancing market-based solutions for the co-management of 
energy and water. 
 
¶21. (U) Water and Sanitation:  For many Indian cities and 
towns facing the challenges of growing populations and urban 
expansion, providing direct access to clean, affordable, and 
reliable drinking water is a significant challenge. 
Currently, only a fraction of the urban population has direct 
access to clean piped water, often because of inadequate and 
inefficient supply systems.  The delivery of water and 
sanitation services in cities is particularly important 
because of their direct impact on human health and 
productivity.  To help address the urgent need for investment 
in water and sanitation infrastructure across the country, 
USAID is testing two sustainable models for providing 
affordable and equitable access to safe drinking water and 
sanitation. 
 
¶22. (U) Agriculture:  Addressing the challenges of food 
security requires a renewed effort on developing agriculture 
in India.  The country is one of the largest producers of 
food grains in the world, but agriculture's share of Gross 
Domestic Product is only 17 percent and falling. 
Inefficiencies in the agriculture sector include lack of 
scientific information and adoption of new technologies and 
poor linkages between farmers and markets.  Indian farmers 
are pre-occupied by falling water tables and the need to 
irrigate over 40 percent of arable land.  These problems 
disproportionately impact farmers and rural laborers, which 
have particularly high rates of malnutrition and poverty. 
Improving agricultural productivity in India helps raise the 
incomes of poor rural farmers and helps mitigate global food 
shortages and volatile pricing.  Of particular concern at the 
moment, is food price inflation caused by a delayed 2009 
monsoon and a series of clumsy GOI policy steps that have led 
to reduced food supplies on the open market.  The 
just-concluded Parliament session was disrupted by sugar 
farmers' protests and opposition accusations that the 
government was not doing enough to "control" 19 percent food 
price inflation.  The USG is in discussions with the GOI on 
an Agricultural Dialogue which would focus on some of the 
longer-term issues surrounding agricultural productivity and 
marketing bottlenecks, as well as nutrition. 
 
¶23. (U) Law and Human Rights:  Deep-rooted gender 
inequalities continue to undermine India's potential to 
translate its economic growth into inclusive development. 
Despite progressive laws and policies, much more remains to 
be done.  One in three Indian women faces some sort of 
domestic violence, the sex ratio of female to male children 
is one of the lowest in the world, and almost 50 percent of 
girls marry before the legal age of 18.  There are an 
estimated three million commercial sex workers, of which, 
approximately 40-45 percent are children, largely girls. 
India is ranked 113 out of 130 countries by the World 
Economic Forum's (WEF) 2008 Gender Gap Index, and is among 
the ten worst gender biased economies in the world.  USAID's 
access to justice program works with Indian NGOs to advocate 
for legal and institutional reforms; shift popular attitudes 
on issues like dowry and sex selective abortion; and increase 
access to legal rights information and redressal services. 
 
 
ROEMER