RECENT INDO-SOVIET ECONOMIC AND MILITARY AID RELATIONS (S-4144)

Created: 2/9/1972

OCR scan of the original document, errors are possible

92

MEMORANDUM

SUBJECT ;i Itocont Xhdo-Soviot Eccsiooilo and MilitaryRe lotions

Attached iaHho^awnBaiy-jjf recent rndo-Soviot economic on'd military aid re lotions 'vhich you requested,.

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Indian relations with the USSR1 were highlighted by the signingyear Treaty of peace, Friendship and Cooperation in August and by Soviet support for India in the latter'slict with Pakistan. Despite tho closer political ties that evolved, however, Soviet economic aid activities continuedelatively low level. India has received, no' new commitments of economic assistance froa the USSR6 nor have any rajew projects beonJinitiatcd'.underiold agreements in recent years. Work on projects already.under construction continuededuced, ratend -thd^ number of Communist economic technicians In India remained virtually-unchanged Indian trade with the Communist countries, however, nay have increasedf the pattern of tho last several years was sustained.11

Drawingsommnnist economic aid probably fell again Mostho-drop';wnn Idue to Moscow's refusal to allow tho diversion of unused credits to"honproject use and Indian restraints on the expansion of heavy industry. New Delhi's conservative fiscal and import policies restricted the amount of governscnt spending for heavy industrial projects In the public sector, while Labor-management problems and raw material shortages slewed theof projects already under construction. Theseworeonsequence of Indlo's confrontation with Pakistan;

0 is the last year for which trade data are available.

they pro-dated the eonrUot. The reduction of public industrial investment in India atoms from on Indian decision to use existing plant capacity more fully during the present five-year plan before adding new plants and to limit additions toew critically short areas. The plants wanted by India (such as petrochemicals and fertilizer plants) arc ones that tho USSR Is not willing to provide.

The Dokero steel plant, being built with Soviet credits extended lns the only major heavy Industrialcurrently,being constructed)with SovietTassistance. irst stage, which will-have ah ingot capacityillion tons, has fallenonths behind schedule and there ls speculation that the revised target date of3 also will not be mot. work was begun on tho peeond^stogo, which will bringupillion tons. '

Progress-on other. Soviet assisted projects was slow andmillion-'of Soviet credits extended0 remained virtually undrawn. The Indians continued to press for application of surplus credits to raw materials and equipment required for its established Industrial plant, but Moscow still Is not willing to allow thisof credits.

India's arms acquisition program was accelerated following tho onset of civil war in East Pakistan. The USSR and India Dlgned new

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military aid agreements

Soviet military old during the year apparentlyto continue to fulfill India's long-term militaryas well be to meet its immediate needs. aval aid accordpatrol lass submarines, which had been under negotiationond which were scheduled for delivery sometimefor abox' elicopters, some of whichdeliverednd accordsignificant nuaberarmored-personnel carriers, artillery, and ant J

The voluoe of Soviet military shipments to India0 level. They included SU-7

fightcr-bonbers, possibly somerainers, and some of the grcund force cqui]ment contracted for mall-scale Soviet airlift to New Delhi conducted late in October nay bave carried spare parts for aircraft and air defense equipment0 accord. During the first four monthsndia receives

Soviet Oso-class guided missile patrol boats, whichwere used against the Pakistani navy and Karachi shore facilities in the December war. These boats, aloneaRubmarine rescue vessel which arrived io Tndia in November, were purchased9 military aid accord.

-SEGfiF

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