FOREIGN AND COMMONWEALTH OFFICE TELEGRAM NO. 667 TO MOSCOW
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8..THE EFFECT OF THE NEW ARRANGEMENT SHOULD BE TO REDUCE IMPORTS
FROM THE DEVELOPED COUNTRIES WHICH HAVE BENEFITED MARKEDLY FROM THE EXISTENCE OF QUOTA RESTRICTIONS ON IMPORTS FROM THE DEVELOPING
COUNTRIES. THERE IS NO REASON TO THINK THAT, WITH THE EXCEPTION OF INDIA, THE DEVELOPING COUNTRIES OF THE COMMONWEALTH GENERALLY WOULD
BEABLE TO EXPORT LESS TO BRITAIN OVER A TARIFF OF THIS AMOUNT THAN
THEY WOULD WITH A CONTINUANCE OF THE QUOTA SYSTEM, SO FAR AS INDIA
IS CONCERNED, THE GOVERNMENT WILL, WHEN THE TIME COMES TO DETERMINE THE LEVEL OF AID TO INDIA AFTER 1972, TAKE INTO ACCOUNT, AGAINST THE BACKGROUND OF INDIA'S GENERAL AID REQUIREMENTS AT THAT TIME, ANY ADVERSE EFFECTS ARISING FROM THE TARIFF.
9..1 TURN TO THE QUESTION OF FINANCIAL ASSISTANCE TO HHE IDUSTRY.
HE TEXTILE COUNCIL PROPOSED THAT FIRMS IN THE TRADITIONAL TEXTILE
AREAS SHOULD BE OFFERED THE 40% RATE OF INVESTMENT GRANT WHICH IS
PAYABLE IN THE DEVELOPMENT AREAS. THE GOVERNMENT HAVE DECIDED AGAINS
THIS BOTH ON GROUNDS OF REGIONAL POLICY AND BECAUSE IN PRESENT CIRC- UMSTANCES, INCLUDING IN PARTICULAR THE POSITION ON PUBLIC EXPENDITURE WE WOULD NOT BE JUSTIFIED IN SINGLING OUT THIS INDUSTRY FOR FINANCIAL ASSISTANCE ON SUCH A SCALE.
10.THE COUNCIL ALSO PROPOSED THAT PLANT WORKED ON A MULTI-SHIFT BASIS SHOULD QUALIFY FOR A HIGHER THAN NORMAL ANNUAL ALLOWANCE FOR DEPRECECIATION, THE GOVERNMENT ATTACH IMPORTANCE TO ANY PROPOSAL
WHICH MIGHT INCREASE THE UTILISATION OF NEW MACHINERY, AND THEY ARE PREPARED TO CONSIDER AN APPLICATION BY THE TEXTILE COUNCIL FOR AN
· INCREASE IN THE DEPRECIATION ALLOWANCES ON TEXTILE MACHINERY ON THE LINES PROPOSED.
11. IN ADDITION, THE IRC, WHO ARE WORKING CLOSELY WITH THE TWO CONSU-
LTANTS WHOM I HAVE APPOINTED AND WITH THE B.0,T, MAY BE ABLE TO HELP WITH MODERNISATION AND RE-EQUIPMENT IN A NUMBER OF CASES WHERE
MERGERS BETWEEN MEDIUM AND SMALL-SIZED FIRMS ARE CONCERNED.
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