CONFIDENTIAL
FCO TELNO.114 TO BERNE
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FROM THE EXISTENCE OF QUOTA LIMITATIONS ON IMPORTS FROM THE RESTRICTED COUNTRIES. THERE IS NO REASON TO THINK THAT, WITH THE EXCEPTION OF INDIA, THE DEVELOPING COUNTRIES OF THE COMMONWEALTH GENERALLY WOULD BE ABLE TO EXPORT LESS TO THE U.K. OVER A TARIFF OF THIS AMOUNT THAN WITH A CONTINUANCE OF THE QUOTA SYSTEM. SO FAR AS INDIA IS CONCERNED, THE GOVERNMENT WILL BE PREPARED, WHEN THE TIME COMES
TO DETERMINE THE LEVEL OF AID TO INDIA IN 1972-73, TO TAKE INTO ACCOUNT, AGAINST THE BACKGROUND OF HER GENERAL AID REQUIREMENTS AT THE TIME, ANY ADVERSE EFFECTS ON HER EXPORTS ARISING FROM THE IMPOSTION OF THE TARIFF.
9.
THE GOVERNMENT INTEND TO ENTER INTO DISCUSSION WITH GOVERNMENTS IN THE COMMONWEALTH PREFERENCE AREA WHICH HAVE RIGHTS TO DUTY-FREE ENTRY IN THE NEAR FUTURE
WITH A VIEW
TO SECURING THEIR ACCEPTANCE OF THE INTRODUCTION OF A TARIFF ON THIS BASIS. THE OBJECTIVE IS TO GIVE THE INDUSTRY A REASONABLE TIME TO PREPARE FOR THE CHANGE.
19. I TURN NOW TO THE QUESTION OF FINANCIAL ASSISTANCE TO THE INDUSTRY TO ENCOURAGE RE-EQUIPMENT. THE TEXTILE COUNCIL PROPOSED THAT FIRMS IN THE TRADITIONAL TEXTILE AREAS SHOULD BE OFFERED THE HIGHER RATE OF INVESTMENT GRANTS PAYABLE IN THE DEVELOPMENT AREAS. THE GOVERNMENT HAVE DECIDED AGAINST THIS ON GROUNDS OF REGIONAL POLICY AND BECAUSE IN PRESENT CIRCUMSTANCES, INCLUDING IN PARTICULAR THE POSITION ON PUBLIC EXPENDITURE, IT WOULD NOT BE POSSIBLE TO JUSTIFY GIVING THE IDUSTRY MORE MONEY FOR RE-EQUIPMENT.
11.
THE TEXTILE COUNCIL ALSO PROPOSED THAT PLANT WORKED ON A MULTI-SHIFT BASIS SHOULD QUALIFY FOR A 25 PER CENT ANNUAL ALLOWANCE FOR DEPRECIATION, AND IN CERTAIN INSTANCES 30 PER CENT, INSTEAD OF THE PRESENT 20 PER CENT. THE GOVERNMENT ATTACH IMPORTANCE TO ANY PROPOSAL WHICH MIGHT
MACHINERY AND THEY HELP TO INCREASE THE UTILISATION OF NEW
ARE PREPARED TO CONSIDER AN APPLICATION BY THE TEXTILE COUNCIL FOR AN INCREASE IN THE ALLOWANCES FOR DEPRECIATION ON TEXTILE MACHINERY ON THE LINES PROPOSED.
CONFIDENTIAL
/IN ADDITION