Mr. Whitehead
Reference. FSE 6/548/9
2.
Cotton Textiles
Delhi Tel. 1469.
The announcement by the President of the BOT in Parliament on 22 July has not evoked a wholly rational or consistent (or realistic) response from either the Indians or our High Commission. Although the report which the BOT have very belatedly sent us pf the President's meeting with the Indian High Commissioner on 1 August shows that the High Commissioner was clearly told that "it was most unlikely that the British Government would consider altering their decision on the tariff solution in any significant respect" the. Indian Ministry of Foreign Trade are nevertheless now asking for a written assurance that the principle of the proposed tariff is still negotiable. And although Turpin in his letter of 31 July to me suggested that the extent by which Indian industry would necessarily lose from the decision was at least questionable, the High Commissioner is. now recommending that we should accede to the Indian request (in so far as he thinks it necessary that we should demonstrate that we are ready to have "genuine consultations with the GOI
enuine on this issue".)
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3. However, in view of the political climate at present prevailing in India, as indicated by Mrs. Gandhi's recent decision to nationalise the banks, and by, for instance, her intervention in the debate on the Bank Nationalisation Bill yesterday to declare that further nationalisation measures were under consideration (among possible targets are general insurance, and the import trade in essential industrial raw materials) and in view of the general tone of this Ministry of Foreign Trade interview with our Counsellor Commercial, I do not think we can take the warning in paragraph 5 of the telegram about possible retaliatory measures with as large a pinch of salt as we would have if the political atmosphere was less emotionally charged. Mrs. Gandhi may face a fresh attack from her opponents before long and may well feel the need for more support from the left.
4. It seems to me therefore that we should urge the BOT to consider the feasibility of concessions to the Indians in another sector of their export trade. While I understand that your department has reservations about the efficacy of conducting any sort of bilateral bargaining session with the Indians in this way, and while, of course, it will be up to the BOT to take the final decision as to whether any such concession(s) are possible, it does seem to me that, even though I believe the figures involved are very small, a decision to respond positively after all to the Indian request for the abolition of the present import duty on handwoven silk products would at least be a gesture in the right direction. This would evidently, if it were to have any effect, need to be accompanied by a much more valuable concession (possibly over Indian exports to the UK of jute goods or unmanu- Afumad Enhancc?) In my view the decree of
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