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Indo-Soviet Trade: Moscow’s New Tricks

[This brief article is reprinted from Peking Review, Vol. 19, #21, May 21, 1976, p. 30.]

The Soviet Union’s tactics to profit itself at the expense of India in trade with the latter have proved to be increasingly impracticable. This was revealed most clearly in the course of negotiating the 1976-80 long-term trade agreement signed recently between the two countries.

Despite India’s painstaking efforts over the past year, the new five-year trade accord, signed on April 15, has added few commodity items to be exchanged between the two countries. India’s demand for increased imports of such urgently needed items as kerosene, chemical fertilizers, non-ferrous metals and newsprint was turned down by the Soviet Union which prefers to sell them in the world market for convertible currencies. Likewise, the Soviet Union’s urge to dump its civil planes and cotton in India also met with disapproval.

For a long time, the Soviet Union has dumped a large amount of high-priced, poor-quality machinery and equipment in India in exchange for cheap primary goods, chiefly agricultural products. With opposition of the Indian public, the Soviet authorities, aware of the growing handicaps in continuing such a pattern of exploitation and plunder, have devised a so-called “production co-operation” to boost Indo-Soviet trade. In the eyes of the Soviets, this kind of “co-operation” means continued selling of Soviet machinery and equipment to India, opening factories there to take advantage of India’s cheap labour and raw materials and sending the products back to the Soviet Union as repayment for its investment.

Referring to these new Soviet tactics, Indian papers have warned against further Soviet encroachment on Indian interests. The Hindustan Times pointed out editorially on April 14: “This means a dovetailing of certain sectors of the two economies for meeting the Soviet Union’s demand.” The Hindu remarked in an editorial on April 17: “The Soviet willingness to set up projects in India, where labour is cheap, will be the application on the ground of the theory of ‘division of labour’ in relation to developing countries.” “The imperial powers practised their own form of ‘division of labour’ in their colonies to the great detriment of regions which have now become the vast disarray of less developed countries. Much adroit handling is necessary,” the paper said, “to ensure that the weaker partner does not once again become subject to economic exploitation.”

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