INDIAN TRADE SCHEME LIKELY TO SNOWBALL

Press, Volume CVIII, Issue 31781, 11 September 1968, Page 1

INDIAN TRADE SCHEME LIKELY TO SNOWBALL

(From Out Oicn Reporter)

WELLINGTON, September 10.

Reciprocal trade arrangements between India and New Zealand are likely to expand into a long-term project involving other Asian countries. It is expected that sales of milk powder and other items by the Dairy Board to India will treble within a few years.

Last year’s sales of milk powder to India constituted a record of 6000 tons. A reciprocal trade arrangement with India earlier this year involved pipes for the Kapuni natural gas project, and 4000 tons of milk powder.

The project was carried further forward by the visit to New Zealand of the Prime Minister of India (Mrs Gandhi).

Early last month the general manager of the board (Mr A. H. Ward) and a Colombo Plan adviser, Mr H. A. Foy, who is a Government

nominee on the board, went to Delhi to discuss proposals with the purchasing organisation set up by the Indian Government.

The Dairy Board asked the permission of the Prime Minister (Mr Holyoake) late in June to take action to counter the damage being done to New Zealand trade prospects by the action of some European countries.

The result has produced a complex trade arrangement which is described by officials close to the present negotiations as “certainly the most unusual” in New Zealand trade history. The actions by some Europeans countries since negotiations began are given as providing sufficient reason for an official reticence on advice about an operation which is believed to have a tremendous value for New Zealand.

There are four key elements in the scheme, now in its final stages. Undisclosed European rivals have been matched, mainly because India now prefers long-term arrangements with nations prepared to offer what Indian Government sources in Wellington tonight referred to as “a rounded long-term trade arrangement rather than short-term gifts of milk powder at uneconomic prices.” The key elements are:. —

Direct aid in the form of gifts of milk products coupled with technical assistance at milk reconstitution plants already built in India by New Zealand. Help towards the building of India’s own dairy industry.

Purchases by reciprocal arrangements when mutually advantageous. The granting of some credit, understood to be interestfree, to permit a substantial increase in multilateral trade. The original suggestion was for the arrangement to run for three years. This period has now been advanced to five, possibly more. This is because of the apparent non-involvement of the New Zealand Government,

which will let the Dairy Board carry on negotiations through the Reserve Bank. Both the Indian and the New Zealand Governments will have to continue in full support of the scheme for it to be successful. The only factor limiting sales by New Zea land will be the availability of foreign exchange. Top-level Government participation has been obtained at both ends, on terms which are unlikely to be released until possible competitors have withdrawn.