With the common intention of establishing an integrated Iron and Steel Works in India and for collaboration towards that end, the
Government of India and the Government of the Union of Soviet Socialist Republics have entered into the following Agreement
The Soviet team of steel experts having examined the available information in consultation with the Indian experts and having prepared
a Preliminary Report, it is agreed that the Indian authorities and the Soviet organisations will, subject to the terms of this Agreement,
collaborate in the establishing of an integrated Iron and Steel Works of the capacity of one million tons of steel ingots with the
following general pattern of products, with provision for expansion to the capacity of one million tons of finished products besides
100,000 to 300,000 tons of foundry pig iron for sale:-
| || || Tons |
| (1) || Rails || |
| (2) || Heavy structurals including, if possible, broad flanged beanie upto 75,000 tons. || |
| (3) || Sleeper bars and crossing sleepers || |
| (4) || Merchant bars || |
| (5) || Billets || |
| || |
1. The works shall consist of the following principal departments (a) a coke oven plant with a capacity to produce the metallurgical
coke required; (b) a blast furnance plant and auxiliary equipment to produce the quantity of pig iron required; (c) a steel plant
with sufficient capacity to produce one million tons of steel ingots; (d) facilities for casting, handling and stripping ingots;
(e) spaking pits with a sufficient capacity; M mills and plants of sufficient capacity including a continuous billet mill if it is
decided to install such a mill; (g) a sintering plant of sufficient capacity; (h) plants for the production, supply and transmission
of water, power and gas for the Works and the township; (i) plants for the recovery of by-products; and (k) repair and other auxiliary
shops. The design of the Works and the component parts as well as the manufacture of the equipment shall be carried out by the Soviet
organisations on the best upto-date technical level.
2. The works shall be commissioned as follows : Three coke oven batteries, two blast furnaces, two open hearth furnaces, and a blooding
mill by the 31st December, 1958, and the rest of the departments of the Works by the 31st December, 1959.
1. The Soviet organisations shall within 9 months from the date of the selection and approval by the Indian authorities of the definite
Works site furnish to the Government of India a detailed Project Report for the establishment of the aforesaid Works. The Indian
authorities will supply within the shortest possible time of the signing of this Agreement details of the quantity and quality of
ores, coals and other raw materials as well as of ground conditions at the site.
2. The Indian authorities will also provide such information and data as are requested by the Soviet organisations and as are necessary
to enable the latter to carry out their duties within the scope of this Agreement, it being understood that the Soviet organisations
will advise on the collection of, and make their own arrangements for the testing and analysis of the samples of raw materials necessary
for the designing of the production departments of the Works. For all the necessary topographical and other works connected with
the site the Indian authorities will provide the necessary labour and also such laboratory facilities, specialists and instruments
as may be available. Should the information and the data made available to the Soviet organisation by the Indian authorities in addition
to their own observations and studies, prove that the ore, coal, limestone and other ra* materials and the ground conditions, water
supply, railway connections, traffic capacity and special wagons are inadequate for the speedy and successful completion of the Works
and its operation, the Soviet organisations shall in each case advise the Indian authorities of such short-comings in order to enable
the Indian authorities to take measures in good time to overcome such short-comings. Should the aforesaid information and data be
not supplied by the Indian authorities in the shortest time mutually agreed upon, the furnishing of the detailed Project Report will
be postponed correspondingly.
3. This detailed Project Report shall include particulars specified in the Schedule to this Agreement. Article I-V The Indian authorities
will consider the detailed Project Report prepared by the Soviet organisations and the prices quoted therein within three months
of the submission of the aforesaid report. For the purpose of considering the detailed Project Report and to enable the Indian experts
to study the type of the Works proposed and to acquaint themselves with the Works producing metallurgical equipment the Soviet organisations
agree to receive one or more Indian delegations to the U.S.S.R. before and/or after the submission of the detailed Project Report,
if so desired by the Indian authorities, and shall afford to the said delegations all reasonable facilities for the purpose aforesaid.
The continuance of this Agreement thereafter shall depend upon the acceptance of the detailed Project Report by the Indian authorities
without any modifications or with such modifications as are agreed upon between the Indian authorities and the Soviet organisations
and upon the settlement by mutual agreement of prices and other conditions. In case the detailed Project Report is not accepted by
the Indian authorities, the latter undertake to pay to the Soviet organisations all expenses in connection with the preparation of
the Project Report subject to a limit of 7 million Indian Rupees. On the acceptance of the detailed Project Report by the Indian
authorities, the parties hereto will, within two months thereafter, agree as to which part of the designing work and the drawings
will be done in India. Similar facilities for visits by Indian experts as those mentioned above in this Article will also be provided
after the acceptance of the detailed Project Report, as may be agreed upon from time to time.
The Soviet organisations shall associate at all stages of the work in India and in the U.S.S.R. pertaining to the planning, construction,
erection, operation and other matters relating to the Works and the township and the associated facilities, a sufficient number of
Indian nationals selected by the Indian authorities, with the object both of utilising the services of such Indians as well as for
training them in such work. The Soviet organisations shall carry out as much of the work in connection with the Project and the planning,
designing and drawing up of specifications as possible in India.
The division of work between the Indian authorities and the Soviet organisations pertaining to the designing of the construction of
buildings, roads, foundations, waterways and other similar things as well as pertaining to the erection of the Works will be decided
by mutual consultation and agreement from time to time.
Subject to this fulfilment of the guarantee regarding the efficiency of the Works and the observance of the time schedule, the Soviet
organisations shall ensure that as much use as possible is made of the metallurgical engineering and other industries in India for
the fabrication of the components of the Iron and Steel Works.
The Soviet organisations shall prepare a scheme for the training of Indian nationals on an appropriate scale specifying the number
of trainees and the type of training. They shall also provide qualified instructors at suitable centres of training in India and
the U.S.S.R. for training under that scheme Indian personnel, selected by the Indian authorities, for the operation and maintenance
of each department of the Works, and in particular afford such training in Works where the plant and equipment of the type selected
for the Works are in use. The question of the payment of the cost of such training shall be decided in mutual agreement after the
cost has been determined.
The Soviet organisations shall make available in India and the U.S.S.R. the services of such numbers of experts as may be mutually
agreed upon from time to time for all tasks necessary in connection with the establishment of the Iron and Steel Works, including
the township and the ancillary facilities, and also for the training of Indian personnel.-The tasks aforesaid shall include the planning
of the Project, preparation of the layout plans of the Works, designing of plant, machinery and equipment, preparation of the specifications
therefor, technical supervision of the construction of the foundations, buildings and other parts of the Works, erection and installation
of the plant and machinery, and advice on the planning and construction of the township and arrangements for water supply, sanitation,
electricity, service transport, rail transport and other facilities.
The Soviet staff employed in the Project will have the same status and facilities as those enjoyed by other foreign nationals not
of diplomatic status engaged in industrial and commercial activities in India. Likewise, the Indian nationals visiting or residing
in the U.S.S.R. in connection with the Project will have similar status and facilities.
It is estimated by the Soviet organisations that the cost of the plant, machinery and equipment to be supplied by them excluding a
sintering plant will be approximately 434 million Indian Rupees f.o.b. Black Sea and Baltic Sea Soviet ports as further detailed
in the Preliminary Report already submitted by the Soviet experts. Notwithstanding any such estimates, the actual price payable shall
be determined by mutual negotiations and agreements.
1. Credit shall be raised upon each consignment and in accordance with the price agreed upon each case upon delivery c.i.f. Indian
ports. The expression "delivery c.i.f. Indian ports" relates to the dates for the raising of the credit. The conditions
of delivery of the equipment will be provided for in the separate price contracts. The Credit so raised shall be repaid by 12 equal
annual instalments payable on or before the 15th day of March of each and every year following the year in which each such credit
is raised. Interest will accrue at 2 1/2% per annum from the date on which each particular credit is raised and will be similarly
paid on or before the 15th day of March of the following year. No interest shall accrue on such amounts of the credit as have been
repaid. Provided that if there is any delay on the part of the Soviet organisations in the commissioning of the entire Works by the
date agreed upon for such commissioning, the payments due after such commissioning shall be postponed by a corresponding period.
2. All payments to be made by the Indian authorities as aforesaid shall be in Indian Rupees to a separate account in favour of the
Soviet organisations to be opened with the Reserve Bank of India. The Reserve Bank of India and the State Bank of the U.S.S.R. will
jointly fix technical procedure of settling this account. The amounts credited to this account may be utilised by the Soviet organisations
for the purchase of goods in India and/or be freely convertible into pounds sterling.
3. If the parity of Indian Rupee (0.186621 grammes of fine gold per one Indian Rupee) in terms of gold changes, the amount of the
above-mentioned account with the Reserve Bank of India will be ravalued proportionately to the changes which may take place.
1. The Indian authorities shall pay to the Soviet organisations for their services including the detailed Project Report, and the
cost of detailed working drawings of all plants and shops, communications within the Works boundary, power supply, water supply,
gas supply, buildings and foundations, and erection drawings and spare part drawings for the machinery and equipment, the sum of
25 million Indian Rupees The aforesaid sum shall be payable as follows-
| || || In million Indian Rupees |
| (i) || On submission of the detailed Project Report || |
| (ii) || On acceptance of the detailed Project Report || |
| (iii) || Annual payments thereafter for 4 years || |
| (iv) || On commissioning of the Works and completion of the guarantees || |
| || |
2. The cost of the salaries, travelling and other allowances and expenses of the Soviet personnel for rendering the technical assistance
and supervision in India will be determined additionally between the parties hereto according to the number of the Soviet specialists
required and the period of their work in India.
After agreement is reached on the detailed Project Report, the Indian authorities and the Soviet organisations will negotiate separate
contracts for prices and other conditions regarding the supply of equipment and for other common matters not covered by the terms
of this Agreement. Should the contracts be not concluded within three months after the acceptance of the detailed Project Report,
the prescribed dates for the commissioning of the Works will be postponed by a period corresponding to such delay beyond the said
The Soviet organisations agree without any payment in addition to that provided in Article XIII of this Agreement to hand over to
the Indian authorities all Project Reports, plans, drawings, specifications, blue prints and other documentary materials relating
to the Works. These will not be transferred to third parties, it being understood that the expression "third parties" will
not include the organisations to which the rights and liabilities are transferred as provided in Article XXII of this Agreement or
contractors engaged upon the Project.
1. The Soviet organisations will undertake the responsibility for the technical supervision of the construction of the Works, erection,
installation and commissioning of the plant, machinery and equipment provided that the detailed and exact obligation of the Indian
authorities and the Soviet specialists will bd mutually agreed upon by the parties hereto from time to time. Soviet organisations
will in particular be responsible for- (a) assistance in collecting the necessary data for the Works site; (b) preparation of the
detailed Project Report and working drawings, specifications and time schedules for delivery of the plant and equipment and for the
technically correct fulfilment of all the construction works including foundations, building and other works within the Works boundary;
(c) supply of plant, machinery and equipment from the U.S.S.R.; (d) technical supervision in construction, erection and commissioning
of the plant, machinery and equipment; and (e) training of Indian personnel in India as well as in the U.S.S.R. so as to provide,
subject to the provisions of sections 3, 4 and 5 of this Article, the satisfactory commissioning of three coke oven batteries, two
blast furnaces, two open hearth furnaces and a blooming mill by the 31st December, 1959. For these purposes the Soviet organisations
will provide a suitably qualified expert as a Chief Engineer of the Project assisted by an appropriate number of Indian engineers
and Soviet engineers appointed respectively by the Indian authorities and the Soviet organisations. The Chief Engineer will co-ordinate
in India all the activities of the Soviet experts in technical supervision and rendering of all kinds of technical assistance.
2. All communications regarding technical matters connected with the Project will be in English and will pass through the Chief Engineer.
The Soviet organisations will also provide in India representation of the Ministry of Iron and Steel Metallurgy of the U.S.S.R. as
the general suppliers for the necessary contacts with the management of the Project.
3. The Indian authorities will in particular be responsible for (a) collecting all necessary data for the Works site; (b) levelling
of site; (c) drilling and other work necessary for proving suitability of sites for foundations; (d) building foundations to the
specifications provided by the Soviet organisations; (e) the administrative supervision of the construction, erection and commissioning
of the Works including all relations with the workers, technical personnel and other employees; (f) the fulfilment of all the time
schedules as may be agreed upon from time to time for delivery of bricks, cement and other materials, and fulfilment of the contracts
with builders and contractors for the construction, erection and commissioning of the Works; (g) the unloading from ships and transport
to the site of the Works of all imported materials, plant, machinery and equipment from Indian ports; (h) construction of buildings,
roads and railway tracks; 0) town planning and construction of houses and buildings, towns and other similar works in the township;
(k) all power and water connections and supply up to the boundary of the Works; (1) financing the project; and (m) fabrication of
steel work and the supply of plant, machinery and equipment to the limited extent that capacity is available in India. For these
purposes the Indian authorities will set up an organisation with a suitably qualified Chief of the Project assisted by the necessary
number of Indian personnel.
4. The Indian authorities will provide for the proper implementation of the suggestions, advice, recommendations and requirements
given by the Soviet technical supervisors in respect of quality of the construction, erection, and commissioning of the Works as
well as in respect of time schedules for the construction, labour, transport and other matters referred to above.
5. The Indian authorities shall also take steps necessary for the development of sources of cooking coal, steam coal, iron ore, limestone,
dolomite and other raw materials required for the operation of the Works.
6. The Soviet organisations undertake on their part to bring to the notice of the Indian authorities from time to time the need for
such action as may be necessary in respect of the development of these ancillary services and sources of raw materials together with
suggestions for the assistance in the implementation of the undertaking by the Indian authorities.
7. The detailed division of duties between the Indian authorities and the Soviet organisations will be settled by mutual agreement
between the parties hereto from time to time.
8. The Soviet organisations will make arrangements in agreed period of time in each case to export from the U.S.S.R. to India the
necessary equipment and to bring the necessary technical personnel as may be required by the Indian authorities towards the completion
of the Works.
The Soviet organisations shall provide a team of experts to furnish technical assistance and technical supervision as also recommendation
and advice on all technical matters relating to the establishment of the Works. These experts shall generally undertake all such
duties as are commonly within the scope and functions of consulting engineers and shall be responsible for their recommendations,
advice, suggestions and technical supervision.
The Soviet organisations shall guarantee that the performance of the plant, machinery and*equipment supplied from the U.S.S.R. will
be according to their respective stated capacities. The guarantee will be fulfilled by the operation of each individual item of plant,
machinery and equipment for a period of 2 months as well as by the integrated operation of the complete Works for a minimum period
of 6 months. Both the above kinds of trial operation will be conducted under the technical supervision of the Soviet experts. Should
the guarantee be not fulfilled to the satisfaction of the Indian authorities in accordance with the accepted detailed Project Report
and the contracts for the supply of the plant, machinery and equipment (the Indian authorities may for this purpose obtain such technical
advice as they consider necessary), the Soviet organisations undertake at their own cost to correct the defects pointed out or to
replace such plant or machinery as may be found unsatisfactory; or alternatively, re-imburse to the Indian authorities the cost of
such rectification or replacement as the case may be.
The Soviet organisations shall post at their own cost a sufficient number of experts for a period upto 3 years after the Works go
into full operation for the rendering of such technical supervision and consultant services as may be required by the Indian authorities.
The number of such experts shall be decided by mutual agreement from time to time.
Should any existing patent or other rights subsisting in respect of any of the items of the plant or machinery supplied.by the Soviet
organisations or made according to specifications provided by the Soviet organisations be deemed to have been infringed in any part
of the world and should any civil suit or action result therefrom, the Soviet organisations shall indemnify and keep the Indian authorities
sufficiently indemnified against any claims, demands or liabilities arising therefrom. All costs, charges and expenses on account
of such proceedings shall also be borne by the Soviet organisations.
The Indian authorities and the Soviet organisations shall give each other all information and assistance which may reasonably be required
by either party in relation to this Agreement and shall in particular furnish to each other progress reports or other information
as may be required with regard to the programme or work of the Project referred to above and any matter connected therewith.
The Government of India and the Government of the U.S.S.R. will as soon as possible after the signing of this Agreement inform each
other as to which organisations will be authorised by them to implement this Agreement. The Government of India and the Government
of the U.S.S.R. reserve the right to transfer all rights and liabilities arising from this Agreement to such organisations as they
may respectively consider necessary for the purpose. The credit raised will in any case continue to be guaranteed by the Government
If the performance of this Agreement is interfered with for any length of time by wars, enemy action, embargoes, blockades or any
other cause beyond the reasonable control of either party, the representatives of the Government of India and of the Government of
the U.S.S.R. shall immediately consult with each other and agree upon the action to be taken provided that if such agreement cannot
be reached within a reasonable period the Indian authorities may complete the project and the Works in such manner as may be deemed
necessary and in such an event the rights and liabilities of the parties arising under this Agreement till then shall remain in force.
In case any dispute or difference arises between the Indian authorities and the Soviet organisations relating to any matter arising
out of or connected with this Agreement, the representatives of the Government of India and the Government of the U.S.S.R. shall
immediately consult with each other and endeavour to arrive at a mutual agreement on the said dispute or difference.
DONE on the second day of February, 1955, in New Delhi in triplicate, in Hindi, Russian and English, each of the texts being equally
authentic, the English text being the operative one.
On behalf of the Government of India.
On behalf of the Government of the Union of Soviet Socialist Republics.
The detailed Project Report referred to in Article III of the Agreement shall include :-
(i) An outline of the lay-out of the Works, a detailed description of each department of the Works with drawings and specifications;
(ii) Arrangement of drawings of the plant and equipment;
(iii) Complete technical specifications for the iternised machines and equipment;
(iv) A statement of the price, in Indian Rupees c.i.f. Indian port of all the plant, equipment, spares and other similar items to
be supplied by the Soviet organisations. The statement shall contain details of description (specification and capacity) of every
unit of the Works or components of every unit of the Works in all the sections and departments concerned and the price in Indian
Rupee c.i.f. Indian port of each such unit;
(v) Details of total costs of the plants;
(vi) An estimate by quantities and by value in as much detail as possible of the materials to be purchased for the fabrication and
the other Works to be executed in India;
(vii) An estimate of man hours required for the erection and construction of the Works and the works appurtenant thereto;
(viii) Scheduled times of delivery, construction and erection as well as initial operation of the plants;
(ix) The process to be employed and an estimate of the man power needed for the operation and maintenance of the Works; U.S.S.R. Technical
Co-operation 2 Feb. 1955 305
(x) Consumption figures for raw materials and auxiliary materials, electric power, steam, water and other similar balance-sheets of
material and power, based upon materials which are actually available;
(xi) Cost calculations for the determination of the economic prices of end products; and
(xii) The value in Indian Rupees of all the services to be rendered by the Soviet organisations whether in India or in the U.S.S.R.
for the completion of the Project as detailed as herein provided, including the services rendered during the preliminary investigation
upto and including the preparation of the detailed Project Report. The approximate number of the persons engaged in rendering the
services aforesaid shall also be indicated.
The detailed Project Report shall be in English and the specifications and the drawings shall be shown in the metric system. The detailed
Project Report will include all the departments, shops and divisions, railways, water and power communications such as the township,
water supply and sewers, power supply, railways and other similar matters outside the Works boundary will be designed by the Indian
authorities, if necessary in co-operation with the Soviet experts.