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New Delhi, 16 October 1954

New Delhi, the 16th October, 1954

Dear Mr. IENGAR,

As a result of the discussions that have taken place recently between the Ministry of Commerce and Industry, New Delhi, and the Trade Delegation from the German Democratic Republic, certain conclusions have been reached which it is considered desirable to place on record. These conclusions are set out in the following paragraphs.

2. Both Parties desire to develop and strengthen the trade relations between the two countries on the basis of equality and mutual benefit. With a view to promoting closer economic relations, the two Parties agree to give full consideration to, and take decision on, the suggestions that may be made by either Party from time to time for stimulating the flow of trade.

3. Both Parties agree to give adequate facilities, subject to the laws, rules and regulations for the time being in force, for the import and export of commodities mentioned in the attached Schedules A and B. These commodities will be imported and exported on the basis of contracts concluded between importers and exporters. The import and export will take place in accordance with the Import, Export and Foreign Exchange Regulations in force from time to time in the two countries.

4. The two Parties also agree to giveadequate facilities for trade in items not mentioned in the attached Schedules. The trade in these items will also be carried out in accordance with the Import, Export and Foreign Exchange Regulations in force from time to time.

5. The German exporters are prepared to provide technical services for the installation and operation of the equipment that may be supplied by them to Indian importers under the present Arrangement. They are also prepared to provide technical services to the Indian importers for the planning and execution of the projects in which they might be interested. As the nature and the extent of such technical services are likely to vary in each case, these will have to be settled, as and when occasions arise for that purpose, by negotiation between the parties concerned.

6. All payments between the two countries of the nature described in paragraph 7 of this letter may be made in Indian rupees or in pounds sterling as may be mutually convenient. For this purpose, the Deutsche Notenbank, Berlin, will maintain one or more account(s) with one or more commercial bank(s) in India authorised to deal in foreign exchange. In addition, the Deutsche Notenbank, Berlin, will, if that bank considers this necessary, maintain another account with the Reserve Bank of India. All the transactions to be financed in rupees will take place through the account(s) maintained with the commercial bank(s). Payments permitted under the Indian Exchange Control Regulations to be made by residents of one country to residents of the other country will be effected by crediting or debiting, as the case may be, the amount of such payments to the above-mentioned account(s) of the Deutsche Notenbank, Berlin, with the commercial bank(s) in India.

7. The following payments may be effected in accordance with paragraph 6 above : (a) payments for the goods imported or exported under the present Arrangement; (b) payments connected with commercial transactions and covering technical services and insurance, freight, port charges, storage and forwarding expenses, loading, discharging and bunkering; (c) payments of the expenses connected with tours of commercial or cultural nature; (d) other non-commercial payments, including payments for expenses on delegations on which agreement may be reached between the Reserve Bank of India and the Deutsche Notenbank, Berlin;

(e) payments of the expenses on account of the Trade Representative in Bombay, the Trade Agent in Calcutta and their offices.

8. The account(s) will be replenished as necessary by one of the following methods, viz. : (a) by transferring from one account of the Deutsche Notenbank, Berlin, with a commercial bank to their account with another commercial bank;

(b) by remitting from the account of the Deutsche Notenbank, Berlin, with the Reserve Bank of India to their account(s) with commercial bank(s); or (c) by the sale of pounds sterling to the bank in question. Any balances of the rupee accounts arising in favour of the Deutsche Notenbank, Berlin, with the Reserve Bank of India or with another commercial bank authorised to deal in foreign exchange will be convertible into sterling at the usual banks' selling rate as fixed from time to time by the Indian Exchange Banks' Association. The above-mentioned balances will also be convertible into sterling after the expiry of the present Arrangement. 9. Every possible assistance will be given to enable importers and exporters, should they so desire, to ship by German or Indian ships, as large a proportion as possible of the goods that may be imported or exported under the present Arrangement. Mercantile ships of both countries while entering, staying in or leaving the ports of the other country will be accorded all necessary facilities that may be available under the respective laws, rules and regulations, except that any concession as made to ships engaged in the coastal trade of either Party shall not be admissible under this paragraph to ships of the other country.

10. A Trade Representative from the Foreign Trade Organisations in the German Democratic Republic will be located in Bombay. He will have a Trade Agent under him in Calcutta. The Trade Representative or his Deputy in Bombay will enjoy the facility of the cypher and the mail bag and will be accorded all the consideration necessary for the promotion of trade between the two countries. It will be open to the Trade Representative, his Deputy and the Trade Agent to visit other places in the country. The strength of these two offices at Bombay and Calcutta and their respective territorial jurisdiction will be agreed upon in further discussions at a later date.

11. Commercial transactions concluded in India in accordance with this Arrangement shall be subject to thejurisdiction of the Courts of India and the laws thereof, unless otherwise provided by agreement between the contracting parties to the said transactions. The Trade Representation shall be liable in execution of decrees and orders passed in respect of only such commercial transactions as are concluded or guaranteed by the Trade Representation. This liability will extend only to the goods, debt demands and other assets of the Trade Representation directly relatable to the transaction. The Trade Representation will not be responsible for transactions concluded without the Trade Representative's or the Trade Agent's guarantee.

12. The above arrangements will come into force with immediate effect and shall remain valid for one year from today. In case either Party does not declare its intention to terminate or modify these arrangements three months prior to the date of the expiry of one year, these arrangements shall continue to remain in force for one more year. It is, however, recognised that it might be necessary to revise the attached Schedules.

13. I shall be grateful to have your confirmation that this letter correctly sets out the understanding reached between us.

Yours sincerely,

H.V.R. IENGAR, Esquire, I.C.S., Secretary to the Government of India, Ministry of Commerce and Industry, New Delhi.



1. Tea. 2. Coffee. 3. Tobacco and tobacco manufactures. 4. Pepper. 5. Spices. 6. Rum. 7. Fruit jirices. 8. Fruits, dried. 9. Walnuts and cashew kernels. 10. Hydrogenated oil. 11. Chrome ore. 12. Ilmenite. 13. Iron ore. 14. Kyaniteore. 15. Manganeseore. 16. Linseed oil. 17. Essential oil. 18. Cottton, raw. 19. Hemp, raw. 20. Silk waste. 21. Wool, raw or washed. 22. Sundry timbers. 23. Goat and sheep skins, raw. 24. Raw furs. 25. Animal bristles and hair. 26. Asbestos. 27. Bees wax and other insect waxes, crude. 28. Bircifeathers. 29. Palm fibre and yarn. 30. Coir and coir manufactures. 31. Kapok. 32. Crushed bones. 33. Fish meal. 34. Gums and resins. 36. Homs. 36. Magnesite. 37. Mica. 38. Shellac. 39. Tanning substances including myrobalan, myrobalan extracts and catechu. 40. Vegetable fibres for brushes and brooms. 41. Chemicals. 42. Drugs and herbs. 43. Glycerine, crude. 44. Naphthalene, raw. 45. Trupentine oil, crude. 46. Cotton piecegoods. 47. Jute yarn and fabrics. 48. Other textile products. 49. Silk fabrics. 50. Woollen fabrics. 51. Animals, living including wild anim,4a. 62. Cinematographic films, exposed. 53. Cordage and ropes. 54. Hides and skins (tanned). 56. Indian handicrafts and cottage industry products, e.g., Handloom (cotton and silk), artistic silver, brass and bidri products, ivory articles, wood carvings, etc. 56. Leather and leather manufactures. 57. Linoleum. 58. Pearls, polished. 59. Precious stones and semi-precious stones cut and polished including diamonds. 60. Printed matter including books and periodicals. 61. Sports goods.



1. Accessories for stationary steam engines and power plants. 2. Air-compressors with diesel drive and electric drive. 3. Air-conditioning plants. 4. Bakery and confectionery machines, various machines for the production of toffees, bonbons and chocolates. 5. Cranes, all varieties. 6. Diesel aggregates. 7. Drilling and milling machines. 8. Earth-drillere. 9. Electric furnaces. 10. Electric motors. 11. Equipment for rolling mills. 12. Gas producing furnaces. 13. Grain mills. 14. Grinding machines. 15. Lathes (facing lathes, vertical turret lathes, turret lathes). 16. Locomotives, electric, diesel and steam. 17. Machinery for cigarette industry. 18. Machinery for oil industry. 19. Machines and equipments for chemical and pharmaceutical industries. 20, Mining machinery. 21. Conveying equipment, including passenger lifts. 22. Equipment and machinery for civil engineering. 23. Office machines (portable and miniature typewriters, calculating machines, accounting machines). 24. Petrol and kerosene engines. 25. Plant and equipment for cement production. 26. Plant and equipment for sugar production. 27. Pneumatic tools, electric tools, household implements. 28. Printing machinery. 29. Pumps driven by diesel motors or electricity. 30. Refrigerating machines. 31. Refrigerator vans. 32. Road building machinery. 33. Short and long-shape planers. 34. Stationary diesel motors, diesel motors for ships. 35. Steam engines other than locomotives. 36. Textile machinery and spare parts. 37. Tractors with spare parts. 38. Transformers. 39 Ventilation equipments. 40. Water purifying equipments. 41. Welding machines. 42. Apparatus and instruments for medicines and dentistry. 43. Clinical thermometers. 44. Electrical equipments, fitting and accessories. 46. Electro-medical apparatus and appliances. 46. Measuring and testing appliances. 47. Musical instruments and accessories. 48. Optical and scientific instruments and appliances. 49. Photographic cameras and lenses. 50. Sound recording equipment. 61. Studio and cinematographic apparatus and equipment. 62. Telegraph and telephone equipment. 53. Wireless communication equipment. 54. Chemicals. 55. Laboratory chemicals. 56. Soda ash, soda bicarb and caustic soda. 57. Textile and leather auxiliaries. 58. Drugs and medicines including sera and vaccines. 69. Plaster of Paris for medical use. 60. Newsprint. 61. Writing and printing paper. 62. Household glassware. 63. Jena laboratory and technical glass. 64. Laboratory glassware. 65. Beer. 66. Books. 67. Playing cards. 68. Cinematographic films, exposed. 69. Crude montan wax. 70. Education toys and aids. 71. Electrical multiple unit stock (electric coaches) and rail-cum-road vehicles. 72. Hunting weapons and ammunition. 73. Raw film. 74. Sanitary earthenware. 75. Prefabricated houses. 76. Seeds. 77. Sugar. 78. Underframes for coaching stock. 79. Wall tiles.


New Delhi, the 16th October, 1954

I write to acknowledge receipt of your letter of today's date which reads as follows :- (Not printed) I confirm that the above correctly expresses the understanding reached between us.

Yours sincerely,
(Sd.) H.V.R. IENGAR.


Leader of the Trade Delegation

from the German Democratic Republic, New Delhi.

India Bilateral

Ministry of External Affairs, India

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