Source: 2000

International Narcotics Control Strategy Report -- 2000

Released by the Bureau for International Narcotics and Law Enforcement Affairs

Southwest Asia

India

I. Summary

India is one of the world's top producers of licit opium and is the sole producer of licit opium gum. It is a key heroin transshipment area due to its location between Southeast Asia and Southwest Asia, the two main sources of illicitly grown opium. India is a modest, but apparently growing producer of heroin for the international market. The government of India (GOI) continues to tighten controls to curtail diversion of licit opium, but an unknown yet significant quantity of licit opium finds its way to illicit markets. There was a significant increase in diversion of licit opium from the 1999 crop, but the 2000 crop suffered much less diversion. A small amount of illegal poppy is cultivated in the foothills of the Himalayas and northeastern India.

India continues to tighten controls on diversion and in 2000 agreed to a joint licit opium poppy survey (JLOPS) agreement with the U.S., a significant step in fighting diversion. The survey will provide a firmer scientific basis for minimum qualifying yields for farmers. India and Burma continue to cooperate on drugs regionally, holding regular working-level meetings on the border or policy level meetings in Rangoon or Delhi. Cooperation with Sri Lanka has been limited despite the apparent surge in heroin trafficking from southern India to Sri Lanka. India-Pakistan drug control cooperation has declined since the 1999 military coup in Pakistan, but border coordination meetings between the countries that address security issues including drug trafficking have continued.

GOI controls restrict access to acetic anhydride (AA), a chemical used to process opium into heroin. The chemicals n-acetylanthranillic acid, ephedrine, and pseudoephedrine and their salts are also fully controlled. The GOI reviews its chemical controls annually and updates its list of "controlled substances" as necessary. The U.S. has requested that the GOI control all 22 chemicals listed in the annex to the 1988 UN Drug Convention. GOI is willing to consider controls if provided with compelling evidence that legally produced Indian chemicals, such as potassium permanganate, are being diverted to illegal drug production. India participates in the multilateral potassium permanganate tracking program, "Operation Purple," and is co-chairing the AA tracking program, "Operation Topaz."

India is a party to the 1961 UN Single Convention on Narcotics Drugs and its 1972 Protocol, the 1971 Convention on Psychotropic Substances and the 1988 UN Drug Convention but has not yet enacted money laundering legislation in line with the 1988 UN Convention. The Indian parliament continues to consider draft legislation that would explicitly criminalize money laundering, impose reporting requirements on financial institutions and intermediaries, and provide for seizure and confiscation of assets related to the proceeds of crime. The bill has been referred to a select committee of the upper house of India's Parliament, which has made certain recommendations. These are currently under review by the executive branch.

II. Status of Country

India is the world's largest producer of legal opiates for pharmaceutical purposes and the only country that still produces opium gum rather than concentrate of poppy straw (CPS). The Central Bureau of Narcotics (CBN) oversees licit opium cultivation in India and regulates the export of precursor chemicals. Opium poppy is grown legally in the states of Madhya Pradesh, Rajasthan, and Uttar Pradesh. Under the terms of internationally agreed covenants, and to meet U.S. certification requirements, India is required to maintain licit production of opium and carry over stocks at levels no higher than those consistent with world demand, i.e., to avoid excessive production and stockpiling which could "lead" into illicit markets. India has complied with this requirement. In 1994, the GOI was unable to fill pharmaceutical companies' demands for opium because of an inaccurate inventory of opium stocks, and at the end of 1995, the chief controller of the factories estimated only five to ten metric tons (MT) remained in stock until the next harvest. This stagnation continued in 1996, but in 1997 sufficient rains combined with improved police enforcement and crop management techniques produced a sharp rise in the realized harvest to a record 1,341 metric tons (at 70 percent solid--the relatively "wet" opium collected by farmers).

Unfortunately, bad weather during the 1997-98 poppy growing season and a cultivator's "strike" which delayed planting led to a disastrous 1998 opium harvest of only 260 metric tons (at 90 percent solid). To fulfil domestic and international demand commitments the GOI "completely exhausted" its licit opium stockpile leaving no carryover stock from 1998. This precarious situation made an adequate 1999 harvest extremely important.

To meet India's share of anticipated world demand for licit opium in 2000 and rebuild domestic stockpiles toward an International Narcotics Control Board (INCB)-recommended level of about 750 metric tons (90 percent solid), the Indian government set a licit opium harvest target of 1,200 metric tons (90 percent solid) in 2000 (870 metric tons for export, 130 metric tons for domestic use and 200 metric tons for buffer stocks). To meet this goal, for the third consecutive year, the GOI continued to license a historically larger number of farmers and an increased area for poppy cultivation. For the 2000 opium harvest season, the GOI licensed 159,884 farmers to cultivate opium on 35,271 hectares.

The 2000 harvest yielded 1,302 metric tons at 90 percent solid (or 1,674 metric tons at 70 percent solid), the highest ever in Indian opium history. This was some 300 metric tons higher than the 1999 harvest of 971 metric tons from roughly the same amount of cultivated land and exceeded the GOI's target of 1,200 metric tons. Though the 1999 and 2000 harvests had identical weather conditions, enhanced enforcement during the harvest and weighing period prompted farmers to turn in higher yields in 2000. The average yield also showed an appreciable rise. The average yields in Madhya Pradesh, Rajasthan, and Uttar Pradesh (UP) were 55.79 kilograms, 53.82 kilograms and 44.77 kilograms respectively. The level of diversion from the licit opium crop, while always difficult to estimate, clearly declined from an alarming level in 1999, when up to 300 metric tons of opium gum may have been diverted to the black market. The success seen in 2000 appears due in large part to the more aggressive GOI drug control efforts during the harvest and collection period of the crop.

For the crop year 2001, the total licensed area has been reduced from 35,271 hectares to 25,375 hectares. Cultivators who had failed to achieve qualifying yields (at least 45 kilograms per hectare in Madhya Pradesh and Rajasthan) in the previous year were de-licensed. The GOI has not licensed any first time applicants for 2001.

While criminal elements produce heroin from both diverted legal opium and illegally grown opium, no reliable data are available on the extent of production. Poppies are grown illicitly in the Himalayan foothills of Kashmir and Uttar Pradesh, and in northeast India near the Bangladesh and Burmese borders in the states of Manipur, Mizoram, Nagaland, and Arunachal Pradesh. The quantities of illicit production appear relatively small, and there is little current indication that such opiates find their way into the export market for the United States. Heroin base ("brown sugar" heroin) is the domestic drug of choice. In the northeastern state of Manipur, injectable Southeast Asian heroin was common a few years ago and needle sharing spread the HIV virus. But since the mid-1990s the drug of choice in northeast India has been proxyvon, a painkiller in capsule form that is opened, the contents dissolved in water and then injected. Proxyvon is now the drug of choice as it costs about 34 cents per dose, compared to a price of $2 and higher for a dose of heroin.

"Brown sugar" heroin, originating in India, is available in Nepal, Bangladesh, Sri Lanka, and the Maldives. Since January 1999, Indian authorities have seized more than 337 kilograms of refined heroin, at least part of which was produced in India, destined for Sri Lanka.

India produces acetic anhydride (AA) for the legal domestic and international chemical markets. Locally, much of the licit AA is used by the tanning industry. A significant quantity of AA continued to be diverted to heroin laboratories throughout South Asia, but apparently at levels considerably lower than in previous years. Through November 2000 the GOI had seized a total of 687 liters of AA. In 1993 the GOI imposed controls on the production, sale, transportation, import, and export of AA. These controls have reduced the availability of the chemical to the illicit market. Nevertheless, illicit diversion of precursor chemicals from India continues to occur.

India is also a transit route for illicit heroin, hashish, and morphine base from Afghanistan, Pakistan, Burma, and to a lesser extent, Nepal. The amount of Indian-origin heroin or other drugs that enters the U.S. is not believed to be significant. Some trafficking in Indian produced methaqualone to southern and eastern Africa continues, but this trade may be in decline as methaqualone production in Africa grows. Cannabis smuggled from Nepal is mainly consumed within India, but some makes its way to western destinations.

III. Country Action Against Drugs in 2000

Amendments to India's Narcotic Drugs and Psychotropic Substances (NDPS) Act of 1985, sought by the government since 1997, were passed by the upper house of parliament but are now under consideration before the Lok Sabha (the main parliamentary body). These amendments would: (1) streamline provisions relating to search and seizure by enforcement officials; (2) codify provisions for the civil forfeiture of the assets of drug traffickers; (3) simplify the procedures for controlled delivery enforcement operations; (4) reform sentencing guidelines to allow greater differentiation between minor and serious crimes to facilitate convictions of offenders; (5) clarify the application of bail for serious offenders more likely to disappear before trial; and (6) close various technical loopholes that hinder the prosecution and conviction of drug traffickers.

Chemical Controls. In recent years, the list of substances covered by the drug law has grown, and controls on precursor chemicals have been strengthened. To align Indian law more closely with recommendations of the UN Economic and Social Council and the UN Commission on Narcotic Drugs, the GOI has brought all substances included in schedules III and IV of the 1971 UN Convention on Psychotropic Substances under Indian import/export controls. In addition, the following new substances have been brought under controls: etryptamine, methcathinon, zipeprol, aminorex, brotizolam, and mesocarb. Regulations covering the precursor chemicals n-acetyl anthranillic acid and AA have been amended to require sellers to establish the identity of buyers before sales are vetted for approval. Besides these controlled chemicals, export of seven substances, namely, acetic anhydride, ephedrine, pseudoephedrine, 1phenyl2propanone, 3,4 methylenedioxyphenyl, 12propanone, methyl ethyl ketone and potassium permanganate require a "no objection certificate" (NOC) from the Central Bureau of Narcotics (CBN). Imports of acetic anhydride, ergometrine, ergotamine and heliotropin (piperonal) require an NOC from the CBN. These administrative controls are necessary because ergometrine, ergotamine and heliotropin (piperonal) are imported in India and could be misused for illicit manufacture of drugs.

The GOI reviews its chemical controls annually and updates its list of "controlled substances" as necessary. The U.S. has requested that the GOI control all 22 chemicals listed in the annex to the 1988 UN Drug Convention. The GOI is willing to consider controls if provided with compelling evidence that legally produced Indian chemicals, such as potassium permanganate, are being diverted to illegal drug production.

Accomplishments. India's various agencies involved in drug control work, particularly the CBN and the Narcotics Control Bureau (NCB), continued to take steps to curb drug trafficking and abuse in India during 2000. While CBN oversees the licit opium program and India's chemical industry, the NCB is responsible for counternarcotics efforts and law enforcement coordination. Efforts to advance India's commitment to meet international demand for licit opium and to control narcotics trafficking are noteworthy, as the following examples illustrate.

• Following the disastrous 1998 licit opium harvest and doubts concerning India's ability to meet its global licit opium commitments, India substantially increased the area to be licensed for cultivation to about 30,000 hectares and the number of licensed cultivators to 156,071. The 1999 harvest of 971 metric tons (at 90 percent solid) allowed India to meet world export requirements but failed to rebuild opium stockpiles to INCB-recommended levels. The 2000 harvest of 1,302 metric tons (at 90 percent solid) was sharply higher than the 1999 harvest and exceeded the GOI's target of 1,200 metric tons. This yield came from roughly the same amount of land under cultivation in 1999. As the 1999 and 2000 harvests had virtually identical weather conditions and came from roughly the same amount of land, the 300 metric tons increase in the crop would seem to be attributable to enhanced enforcement during the harvest. One measure was that the GOI augmented CBN staff by 70 officers from central Customs and Excise on a 60-day detail during the opium gum harvest. In addition the Department of State's Bureau for International Narcotics and Law Enforcement Affairs (INL) provided 50 motorcycles to CBN in 1999, giving investigators greater mobility to inspect opium fields during the 2000 growing season and harvest. An additional unexpected 20 motorcycles were provided to the CBN by the GOI in 2000.

The government periodically raises the official price paid to farmers to increase incentives to licit cultivators for declaring and selling to the government all licitly grown opium. This price raise is related to the export price the U.S. and other countries are willing to offer in the international market for Indian opium. The GOI has been increasing the procurement price of licit opium by 20 to 25 percent annually in the last three years. For the crop year 2000, the price schedule (opium yield per hectare and price per kilogram at 70 percent solid) was:

• Up to 44 kilograms/hectare (ha)--Indian Rupees (Rs.) 630 (U.S. $ 13)
• More than 44 kilograms/ha and up to 52 kilograms/ha--Rs. 650 (U.S. $14)
• More than 52 kilograms/ha and up to 60 kilograms/ha--Rs. 800 (U.S. $17)
• More than 60 kilograms/ha and up to 80 kilograms/ha--Rs. 1100 (U.S. $23)
• More than 80 kilograms/ha and up to 100 kilograms/ha--Rs. 1200 (U.S. $25)
• More than 100 kilograms/ha--Rs. 1400 (U.S. $29)
• This graduated scale of payment to licensed farmers is designed to encourage greater productivity and prevent diversion to the black market, where opium can fetch prices as much as 25 times higher than the base government price of Rs. 630 per kilogram. The GOI has decided not to raise the procurement price for the crop year 2001.
• Licit opium diversion controls introduced in 1999 have been continued in 2000 to include re-surveys of plots after the planted crop reaches a particular stage of growth to ensure that the area under cultivation matches that licensed. Cultivation more than five percent above the licensed amount is destroyed, and the cultivator is liable to prosecution. Controls during the poppy lancing period at harvest have also been strengthened. To increase control over licit opium production, offenses relating to cultivation and embezzlement of opium by licensed cultivators continue on par with the other trafficking offenses. Convictions can result in ten to 20 years imprisonment and fines up to USD 6,000.
• The GOI has continued a systematic program to combat illicit opium cultivation, especially in the north of India, by combining remote sensing information with raids and the destruction of illicit crops as well as crop substitution programs. Indian authorities are also studying the feasibility of establishing a continuous aerial/satellite based system for monitoring of licit and illicit opium cultivation nationwide. Small-scale illicit cultivation of opium has existed for years in areas of India's northeast, usually along the region's border with Burma and China. Cultivation in easily accessible areas of Mizoram, Manipur, and Nagaland was successfully eliminated in the early and mid-90s, according to CBN officials. The bulk of India's illicit cultivation is now confined to Arunachal Pradesh, the most remote of northeastern states, with no airfields and few roads.
• The CBN began organized poppy eradication campaigns in Arunachal Pradesh four years ago. In the first campaign, the 1997 opium crop, CBN destroyed 35 hectares. This increased to 95 hectares in 1998, and 248 hectares in 1999. In 2000, 153 hectares were destroyed. In order to staff the force of 60 necessary for the annual eradication campaigns, the CBN office of ten is assisted by national customs officers from throughout the northeast. The Ministry of Finance has provided CBN with funds for fuel, camping gear and stipends for this force. According to veterans of past eradication efforts, most of the illicit opium is grown to meet consumption needs of local addicts, a sizeable population. CBN, however, is concerned that production is rising, with an increasing percentage for commercial purposes, for local sale or to heroin producers across the Burma border. Current rough estimates by the local drug control officials put opium cultivation in Arunachal Pradesh at 1,500 to 2,000 hectares. With funding from the UNDCP and the UN Development Program (UNDP), CBN will begin a two-month survey in November to get a more precise figure on production, before starting the annual eradication campaign. Estimates of opium gum yields are nonexistent, but CBN officials believe that the illicit production in Arunachal Pradesh yields at least ten kilograms per hectare.
• INL has recently funded the purchase of portable mowing devices to assist CBN staff with the annual illicit opium eradication campaign in Arunachal Pradesh.
• India participates in the multilateral potassium permanganate tracking program, "Operation Purple," and India's Narcotics Commissioner is co-chairing the AA tracking program, "Operation Topaz," scheduled to begin March 1, 2001. The NCB reports that cooperation from industry in controlling the availability of precursor chemicals continues to be strong. A series of meetings by NCB with the industry in 1996 produced a voluntary code of conduct among firms that is aiding the enforcement effort. NCB says that seizures of shipments of illegal precursor chemicals remained low in 1999, apparently because of the reduced illegal supplies available. Prices of precursor chemicals have risen.
• Indian authorities continued to work closely with the drug enforcement agencies of other countries. In February 2000 cooperation between Indian authorities and the United Kingdom Customs Service led to the arrest in Mumbai of an alleged drug trafficker and the seizure of six kilograms of Indian produced heroin found in his possession and bound for the United Kingdom.
• To decrease the backlog of case, the GOI works with special state courts for narcotics matters, which are 50 percent funded by the federal government. Federal narcotics enforcement officials meet quarterly with their state government counterparts to share information and provide training, and federal efforts have spurred the formation of specialized narcotics units in state and metropolitan police agencies. The NCB, as the GOI's "nodal" agency for drug control efforts, has organized several nationwide or regional coordination meetings. In August, the NCB organized the first conference to discuss with state governments in the northeast coordination of drug control efforts in the region.
• In 1999, India hosted the 34th meeting of the UN Subcommission on Illicit Drug Traffic in the Near and Middle East, which produced the "Lucknow Accord" on precursor chemical control. The NCB also worked with the UNDCP on studies on drug demand reduction and precursor chemical control in South Asia. To learn more about India's own drug problem, the Ministry of Social Justice and Empowerment and the UNDCP have embarked on a comprehensive survey of narcotics addiction nationwide. The first results of the survey, initially expected in early 2000, are still awaited. Under the "Scheme for Prohibition and Drug Abuse Prevention" begun in 1985, the GOI funds 90 percent of the costs of 340 NGOs in maintaining 425 drug treatment centers nationwide. The GOI is also working with the ILO and the UNDCP to implement community based rehabilitation and workplace prevention programs. Despite new initiatives, both the CBN and the NCB continue to face financial constraints in conducting a strong counternarcotics program.
• India also participates in bilateral efforts to counter narcotics trafficking. Under the auspices of the UN and with U.S. encouragement, meetings between counternarcotics officials of India and Pakistan which began in 1994 have continued. Periodic meetings also take place with Burmese officials along the border, most recently in November 2000, to exchange narcotics information and coordinate enforcement operations on either side of the Indo-Burma border. India and Sri Lanka have held "operational level talks" since 1997 and continue to do so to coordinate counternarcotics efforts. India also maintains close liaison with other South Asian countries through the South Asian Association for Regional Cooperation (SAARC) drug offenses monitoring desk in Colombo that facilitates collection of data on drug seizures in SAARC countries. India has entered into bilateral agreement with 13 countries for sharing of strategic and operational intelligence and holds regular meetings at various levels with drug enforcement organizations.

Law Enforcement Efforts. More focused GOI efforts are resulting in increased seizures and fewer arrests. In 2000 an estimated 1,089 kilograms heroin were seized, up 27 percent from 1999 (861 kilograms) and 66 percent over 1998 (655 kilograms). Opium seizures totaled 2,218 kilograms, up from 1,635 kilograms in 1999 and 2,031 kilograms in 1998, occurring mostly in the poppy growing areas. Hashish seizures totaled 3,258 kilograms (versus 3,391 in 1999) and morphine totaled 24 kilograms (versus 36 kilograms in 1999). Through November 2000, 2,129 persons were convicted for drug trafficking:

India Law Enforcement Statistics (1996--2000)

Determining the geographic origin of heroin seized in India is often not possible with current forensic capabilities. Nevertheless, the GOI was able to determine that at least 353 kilograms of heroin (32 percent) came from Afghanistan or Pakistan. The percentage of heroin locally produced within India appears to be growing and seems bound for the international market. Over 200 kilograms of heroin were seized either bound for Sri Lanka or seized in Sri Lanka and determined to have originated in India.

Corruption. Allegations of corruption among law enforcement personnel and elected politicians continue to be aired in the Indian media. The USG receives reports of narcotics related corruption, but lacks means to assess the overall scope of drug corruption in India. Both the CBN and the NCB have periodically taken steps to punish corrupt officials within their ranks. The CBN frequently transfers officials in key drug producing areas and has increased the transparency of paying licensed opium farmers to prevent corruption.

Agreements and Treaties. India is a party the 1961 UN Single Convention on Narcotic Drugs and its 1972 Protocol, the 1971 UN Convention on Psychotropic Substances and the 1988 UN Drug Convention. India meets most of the requirements of the three UN drug conventions to which it is a party through the NDPS Act of 1988, though India has yet to meet the money laundering requirement of the 1988 UN Drug Convention. A new extradition treaty between the U.S. and India entered into force July 21, 1999, replacing reliance on the 1931 U.S.-UK Extradition Treaty.

Cultivation and Production. The 2000 crop was cultivated by 159,884 licensed farmers on 35,271 hectares in Rajasthan, Madhya Pradesh, and Uttar Pradesh. Licensed farmers are allowed to cultivate a maximum of 20 ares (one fifth of a hectare) of opium poppy. Upon completion of the harvest season in March/April, licensed farmers in Rajasthan and Madhya Pradesh were expected to remit to CBN (responsible for controlling and collecting India's licit opium gum production) at least 54 kilograms of opium gum per hectare of cultivation at a 70 percent solid consistency. Licensed farmers in Uttar Pradesh were each expected to submit 44 kilograms of opium gum per hectare. The GOI's Ministry of Finance each year announces these "minimum qualifying yields" at the beginning of the opium cultivation season in September or October, and they are based on historical yield levels from licensed farmers during previous crops.

India produces opium by traditional methods, extracting the opium gum by hand by lancing the capsules. India's licit opium gum is high in morphine content and has other alkaloids such as thebaine now favored by international narcotics raw materials importers. Other legal producers of opium alkaloids, such as Turkey, France and Australia, produce concentrate of poppy straw (CPS), harvesting unlanced poppy capsules and using a chemical extraction process.

India's traditional style of harvesting opium gum has an inherent weakness in controlling diversion. Each year over a million farmers and farm workers come into contact with the poppy plants and their lucrative gum. Closely policing these farmers operating on privately held land scattered throughout three of India's largest states is a considerable challenge for the CBN. The GOI recently explored the possibility of converting to the more sophisticated CPS harvesting method to curtail licit opium diversion but there are no current plans to make this expensive transformation.

Though no reliable estimate of diversion from India's licit opium industry exists, observers and drug enforcement officials have estimated diversion at ten to 30 percent of the crop. There was international concern that diversion in 1999 was at record levels but most observers believe that diversion was greatly curtailed in 2000. A ten percent rate of diversion would put some 130 tons of opium gum into the illicit narcotics market and make India the world's fourth (after Afghanistan, Burma, and Laos) largest producer of illegal opiates.

GOI heroin seizures data during 2000 may point to increased illegal production of heroin within India from opium gum diverted from the licit fields. Some heroin locally produced from diverted opium gum was bound for the international market, including the United Kingdom and Sri Lanka.

Drug Flow/Transit. India is a transit area for heroin from Afghanistan and Pakistan and from Southeast Asia (Burma, Thailand, and Laos). Seizures of heroin made in India from these two regions continue to provide evidence of India's transshipment role. Most heroin transiting India appears bound for Europe. Seizures of heroin made at New Delhi and Mumbai airports reinforce this assessment. There appears to be no significant level of heroin trafficking directly to the United States from India.

Demand Reduction. Reliable estimates of drug abuse in India are elusive. GOI and UN sources continue to cite a range of one to five million opium users and one million heroin addicts, though some NGO's working on drug abuse believe the true number of heroin addicts is much higher. Anecdotal reports from key drug abuse "hot spots" in northeast India and urban centers suggest that heroin abuse is increasing.

In 1999, the UNDCP and the Ministry of Social Justice announced plans to conduct a joint survey of drug abuse nationwide, but this survey is now expected in 2001. The UNDCP in 2000 embarked on two demand reduction projects in India. One targets northeastern India where drug abuse rates and drug related HIV/AIDS cases are the highest in India. A lack of international donor funding for these projects, however, has postponed their full implementation.

IV. U.S. Policy Initiatives and Programs

Policy Initiatives. The GOI took a number of steps in 2000 to improve its antidrug policies and programs. The GOI added ephedrine, a methamphetamine precursor, to the list of controlled chemicals under its Narcotic Drugs and Psychotropic Substances (NDPS) Act and increased CBN resources to fight the diversion of licit opium and licitly produced chemicals. In December 2000, the GOI placed an amendment to the NDPS Act before parliament to grant judges greater flexibility in sentencing drug violations.

Bilateral Cooperation. The U.S. and India expanded drug control cooperation in 2000, with several new initiatives launched. Agreement was reached to conduct a U.S.-India joint survey of licit opium yields, which will begin during the 2001 opium crop season. INL commodities and training assistance to Indian drug enforcement agencies increased, with a $200,000 project signed with the Ministry of Finance in September 2000. This package of assistance will boost the drug enforcement capacities of various Indian agencies, providing equipment to the 11 NCB units operating throughout India and to the Mizoram state government to counter drug and chemical trafficking across that state's border with Burma. Cooperation between the DEA and Indian drug enforcement authorities is expanding, particularly in investigations into precursor chemicals smuggled from India to key drug production areas.

The Road Ahead. The GOI has tightened controls over licit opium cultivation and looks to increased USG cooperation for combating drug trafficking and narcoterrorism. The Ministry of Finance, the GOI lead for policy on drug control, is more actively shaping and coordinating drug control strategies among India's various drug enforcement agencies and will continue to be the U.S.' focal point for cooperative antidrug efforts. The GOI is increasingly concerned over the nexus between drug trafficking and terrorism. The GOI has recognized the need for stronger drug control efforts nationally but in the northeast in particular. The U.S. will continue to explore opportunities to work with the GOI in addressing drug trafficking and production and other transnational crimes of common concern.

Chemical Controls

India

The Indian chemical industry includes large-scale manufacture, consumption and export of chemicals required for illicit drug manufacture. India is a party to the 1988 UN Drug Convention, but it does not have legislation meeting all the Convention's chemical control provisions or covering all 22 chemicals in its annex.

Indian chemical control initiatives concentrate on the chemicals most likely to be diverted, acetic anhydride for heroin manufacture in Afghanistan and neighboring Burma, and ephedrine and pseudoephedrine for amphetamine-type-stimulants in Burma.

Exports of seven important precursor chemicals, including potassium permanganate, used in cocaine manufacture, acetic anhydride, and ephedrine and pseudoephedrine, require a certificate of no-objection from the Central Bureau of Narcotics. Imports of four important chemicals, including acetic anhydride, also require no-objection certificates.

India has made significant progress in controlling the production and export of the chemicals currently regulated. Indian authorities and DEA have a good working relationship. The Indian authorities have been very cooperative with DEA in sharing information from no-objection certificates and verifications of end-users, especially regarding ephedrine and pseudoephedrine and potassium permanganate. India continues to notify DEA of seizures of Indian produced chemicals and to provide samples of seized heroin for analysis as part of DEA’s Heroin Signature Program.

India is a participant in the potassium permanganate tracking program, Operation Purple, and co-chairs the steering committee for Operation Topaz, the acetic anhydride tracking program scheduled to begin March 1, 2001.

Money Laundering

India (Primary)

Money laundering is a growing concern in India because of its large population and emergence as a regional financial center. The hawala (or hundi) alternative remittance system reportedly is used by criminals to launder money generated from drug trafficking, alien smuggling, corruption, and financial fraud.

The Narcotic Drugs and Psychotropic Substances Act (NDPSA) of 1985, amended in 1988, calls for the tracing and forfeiture of assets that have been acquired through narcotics trafficking, and prohibits attempts to transfer and conceal those assets. This legislation seems to have the effect of criminalizing drug money laundering. The Code of Criminal Procedure, 1973, Chapter XXXIV (sections 451-459) establishes India's basic framework for confiscating the proceeds of crime. The Criminal Law Amendment Ordinance (CLAO) of 1944 allows for the attachment and forfeiture of money or property obtained through bribery, corruption, criminal breach of trust, or theft, and of assets that are disproportionate to an individual's known sources of income.

The Indian Parliament continues to consider draft legislation that would explicitly criminalize money laundering, impose reporting requirements on financial institutions and intermediaries, and provide for seizure and confiscation of assets related to the proceeds of crime. The bill was referred to a select committee of the upper house of India's parliament, which has made certain recommendations. These are currently under review by the executive branch.

The GOI does not have a financial intelligence unit (FIU); and legislation currently before the parliament does not call for the establishment of an FIU. The Central Economic Intelligence Unit (CEIB) is the Government of India's (GOI) lead organization for fighting financial crime. Other organizations such as the Directorate of Revenue Intelligence, Customs and Excise, and the Reserve Bank of India also play a role in the enforcement of India's anti-money laundering laws.

India is a party to the UN 1988 Drug Convention, and is a member of the Asia/Pacific Group on Money Laundering.

The GOI should adopt comprehensive anti-money laundering legislation, and create an FIU that would analyze suspicious transactions reports and cooperate with FIUs from other countries.