AGREEMENT BETWEEN THE GOVERNMENT OF INDIA AND THE UNION OF SOVIET SOCIALIST REPUBLIC FOR COOPERATION IN ESTABLISHING INDUSTRIAL ENTERPRISES
New Delhi, 9 November 1957
With the common intention of further promoting friendly relations and developing economic co-operation between both countries, the
Government of India and the Government of the Union of Soviet Socialist Republics have entered into the following Agreement
The Soviet Organisation and the Indian Authorities will cooperate in establishing in India : A Heavy Machine Building Plant of a capacity
at the first stage for manufacturing 45,000 tons of machinery items per annum. : A Coal Mining Machinery Plant of a capacity of upto
30,000 tons of machinery items per annum.; An Optical Glass Factory of a capacity of 200 to 250 tons of ophthalmic and optical glass
per annum; A Thermal Power Station in Neyveli (based on lignite) of a capacity of 250,000 KW; Enterprises in the Korba Coal Field
for mining and treating 2.5 million tons of coal per annum. (coal mines, a Coal Open Cast Mine, a Coal Washing and Pressing Plant)
as well as a Central Mechanical Repair shop for repairing the equipment of the coal enterprises of the same coal fields with an over
all output of 4 million tons of coal per annum. All the above industrial enterprises are hereinafter collectively referred to as
the Industrial Enterprises.
In pursuance of the co-operation mentioned in Article I the Soviet Organisations shall :
1. Workout on the dates to be mutually agreed upon the detailed project reports and working drawings of the Industrial Enterprises;
however, the detailed project report of the heavy Machine Building Plant shall be worked out for the full projected capacity of the
Plant, namely 80,000 tons of machinery items per annum; the contents and the scope of the detailed project reports of the Industrial
Enterprises are stated in the Schedule which is an integral part of the present Agreement..
2. Deliver for the Industrial Enterprises the equipment machinery and spare parts in quantities and on dates to be mutually agreed
upon, as well as any other materials which the Indian Authorities may desire for establishing these Enterprises, if the same are
not indigenously available in time in India.
3. Render technical assistance (a) in selecting the construction sites; (b) in collecting the initial data necessary for designing
and in the preparation by the Indian Authorities of memoranda of instructions for preparing the detailed project reports for the
Industrial Enterprises by the Soviet Organisations; (c) in establishing these Enterprises by carrying out designer's inspection;
(d) in the erection (supervision of erection); and (e) in setting up and putting into operation the equipments delivered from the
Soviet Union. For these purposes Soviet Specialists will be deputed to India in numbers and of professions and qualifications and
for the periods and on terms and conditions to be mutually agreed upon ;
4. Depute to India, on terms and conditions to be mutually agreed upon, Soviet specialists as consultants on the matters connected
with the establishment of the Industrial Enterprises. 5. Work out and hand over to the Indian Authorities, on dates to be mutually
agreed upon, the schemes and plans for shop-floor training of Indian nationals having in view the aim of training the specialists
and skilled workers necessary for the operation of the Industrial Enterprises; the types of training as well as the number of specialists
and skilled workers to be trained for each Industrial Enterprise will be -indicated in these plans schemes; 6. Depute Soviet specialist
instructors in numbers and for periods and on terms and conditions to be mutually agreed upon, for the purpose of rendering assistance
to the Indian Authorities in training in India specialists and skilled workers required for the operation of the Industrial Enterprises;
7. Receive in numbers and for the periods to be mutually agreed upon, Indian specialists and skilled workers for the shop, floor training
at the enterprises of corresponding type in the USSR, as well as receive Indian specialists for participation in designing the Industrial
Enterprises in corresponding Soviet designing organisations;
8. Hand over to the corresponding Indian Authorities in volumes and on dates to be mutually agreed upon, drawings, and technological
processes for equipment and items to be produced at the Industrial Enterprises provided that the licences and technical documents
handed over to the Indian Authorities, be used exclusively at the enterprises in India and be not transferred to any other country;
deviations from this provision may be admitted with the consent of the Soviet Party in each separate case;
9. Upon putting the Industrial Enterprises into operation, render technical assistance to the Indian Authorities in reaching the projected
capacities of these Enterprises by deputing Soviet Specialists to India in the number and of professions and qualifications as well
as for the period and on terms and conditions to he mutually agreed upon.
The terms and conditions of the fulfilment of the obligations of the Soviet Organisations under this Agreement, in respect of each
Industrial Enterprise will be separately defined in the relevant contracts to be entered into or by exchange of letters between the
Soviet Organisations and Indian Authorities as may be agreed upon. It is understood that the contracts for the deliveries of the
equipment and materials for each of the Industrial Enterprises shall be concluded within four months from the date of submission
of corresponding quotations by the Soviet Organisations.
In pursuance of the co-operation mentioned in Article I the Indian Authorities shall :
1. Hand over to the Soviet Organisations the memoranda of instructions for preparing the detailed project reports for the Industrial
Enterprises, as well as all the initial data necessary for designing, on dates to be mutually agreed upon.
2. Undertake the preparation of the detailed project reports and working drawings for townships, approach and other roads, transport,
power and water supply, sewerage systems and other creations situated outside the areas of the Industrial Enterprises, which are
necessary for their regular operation, data for which will not be included in the detailed project reports prepared by the Soviet
3. Prepare the detailed project reports and working drawings for such units located within the areas of the Industrial Enterprises
as may be mutually agreed upon; It is hereby understood that the Indian Authorities shall be responsible for ensuring that the working
drawings prepared by them comply with the requirements of the detailed project reports of the Industrial Enterprises;
4. Ensure the consideration of and the decision on the detailed project reports of the Industrial Enterprises within the periods to
be mutually agreed upon;
5. Be responsible for the execution, within the period to be mutually agreed upon, all the construction and erection works involved
in the establishment of the Industrial Enterprises, for providing the construction sites with the necessary building and other materials,
power and water supply as well as for the construction in due time of approach and other roads, station, railway tracks and sidings
and all the other erections situated outside the areas of the Industrial Enterprises. Article V
1. The Government of the USSR will extend credit to the Government of India for 500,000,000 (five hundred million) roubles (one rouble
equal to 0,222168 grammes of fine gold) to cover the following expenditures, connected with the establishment of the Industrial Enterprises;
(a) the cost of the detailed prcject reports, working drawings and technical documentation to be carried out by Soviet Organisations;
M the cost of equipment, machinery and spare parts, to be supplied in quantities and nomenclature to be mutually agreed upon in contracts
on the basis of the specifications of the detailed project reports, as well as steel structurals, reinforcement steel, pipes, fittings
and refractories to be supplied from the USSR to India, c.i.f. Indian ports; it is hereby understood that the price of equipment
and materials will be fixed by mutual agreement on the basis of the world market prices; (c) the expenses of deputing Soviet specialists
to India for rendering technical assistance in all matters connected with the construction and putting into operation of the Industrial
Enterprises, as well as for training of the Indian personnel, (including the cost of preparation of the training schemes) excluding
expenditure in India in rupees; (d) the expenses connected with the training of Indian specialists and skilled workers at Soviet
enterprises, excluding expenditure in India in rupees.
2. The credit will be used in 1957-1961. The dates of supply of equipment and materials and at this connection, the dates for rendering
technical assistance by Soviet specialists in the establishment of the Industrial Enterprises, as well as the periods of training
Indian specialists and skilled workers at Soviet enterprises, and consequently the dates of use of the credit can be prolonged by
mutual agreement between the parties. .
3. The credit shall be raised in the following manner (a) for the cost of technical services and assistance referred to in (a), (c)
and (d) of clause 1 above at the end of every three months to the extent of the total expenditure incurred during that period; (b)
for the cost of each consignment of equipment and materials referred to in (b) of clause 1 above thirty days from the date of the
bill of leding.
4. The Government of India shall repay the credit used for each Industrial Enterprise in twelve equal annual instalments, The first
instalment shall be paid a year after the completion of deliveries for each Industrial Enterprises of the machinery and equipment
(necessary for the commissioning of the Industrial Enterprise) to be supplied from the USSR in accordance with the contracts entered
into under the provisions of Article III. Each subsequent instalment shall be paid after twelve months following the previous one.
Interest at the rate of 2.5% per annum will accrue from the date of the use of the corresponding part of the credit and shall be
paid at the time of repayment of the main debt. No interest shall accure on such amounts of the credit as have been repaid.
5. For the purpose of keeping records of the credit used and repaid as well as the payment of interest accruing thereof, the State
Bank of the U.S.S.R. and the Reserve Bank of India shall open credit accounts in rupees in favour of each other and shall establish
by mutual agreement the procedure for settling these accounts.
6. Payments to cover the credit and interest accrued thereof shall be effected in Indian rupees (one rupee equals to 0.186621 grammes
of fine gold) and charged to a separate account which will be opened with the Reserve Bank of India in favour of the State Bank of
the U.S.S.R. Roubles shall be recalculated into rupees basing on the aforesaid gold parity of the rouble and the rupee. The amounts
credited to this account may be used by Soviet organisations for the purchase of goods in India on the terms and conditions of the
Soviet-Indian Trade Agreement in force and/or may be freely converted into pounds Sterling.
7. In case of a change in the gold parity of the Indian rupee, with the exception of cases when a change in the gold parity of the
rupee is brought about by a change of the official price of gold in U.S. dollors (the price of one troy ounce of gold equals to 35
U.S. dollors), the balance of the account with the Reserve Bank of India on the date of such change will be revalued proportionately
to the change of the gold parity of the rupee. 8. Upon the completion of the detailed project reports of the Industrial Enterprises
the parties shall estimate on the basis of these project reports the amount of credit necessary to cover the expenditure stipulated
in this Article. If this amount is less than 500,000,000 roubles, the two Governments shall further consider the question of co-operation
in establishing some other enterprises within these limits of the free balance of the credit. If the aforesaid expenditure exceed
the amount of 500,000,000 roubles, the Government of the U.S.S.R. shall extend to the Government of India an additional credit equal
to the said excess amount on terms and conditions of the main credit. Article VI The Soviet Organisations will guarantee (a) the
detailed project reports on the Industrial Enterprises prepared by them will conform to the production capacities stipulated in the
(b) the plants, machinery and equipment supplied from the USSR will be in conformity with the above detailed project reports; (c)
the performance of the plants, machinery and equipment will be in accordance with their stated capacities and efficiencies. The periods
of guarantees, the order of their fulfilment and other terms and conditions will be provided for in the contracts or agreements to
be concluded separately in respect of each Industrial Enterprise under the present Agreement. Should the guarantee be not fulfilled
in accordance with the accepted detailed project reports and the contracts for the supply of the plant, machinery and equipment to
the satisfaction of the Indian Authorities, the Soviet Organisations undertake at their own cost to rectify the defects pointed out
or to replace such plant or machinery as may be found unsatisfactory; or alternatively reimburse to the Indian Authorities the cost
of such rectification or replacement as the case may be. Article VII In case an infringement of existing patent and other rights
subsisting in respect of any part of a unit or machine supplied by the Soviet Organisations or of the equipment manufactured according
to the specifications submitted by the Soviet Organisations is revealed in any part of the world, and in case it results in legal
proceedings, the Soviet Organisations shall indemnify the Indian Authorities from any claims, demands and liabilities arising in
this connection. All costs, charges and expenses connected with such proceedings shall be reimbursed by the Soviet Organisations.
Soviet Organisations and Indian Authorities 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 of work of establishing the Industrial Enterprises and any matter connected therewith.
The Government of India and the Government of the USSR, after signing the Agreement, shall in the shortest possible period inform
each other as to what Soviet Organisations and.Indian Authorities respectively will be authorised for the implementation of the present
Agreement; it is understood that the said Governments may authorise for each Industrial Enterprise one or more Organisations or Authorities.
In case it is subsequently necessary to substitute the Organisations or Authorities for the implementation of the present Agreement,
such substitution shall be made. The Government of India and the Government of the USSR reserve the right to transfer any or all
rights and liabilities arising from the Agreement to such Indian Authorities and Soviet Organisations as the respective Governments
may consider necessary for each of the Industrial Enterprises. Article X If the performance of the present Agreement is interfered
with for any length of time by war, enemy action, embargoes, blockades or any other cause beyond the control of either party, the
representatives of the Government of India and the Government of the USSR shall immediately consult with each other and coordinate
measures to be taken and if such agreement cannot be reached within an acceptable period of time, the Indian Authorities may complete
the designing and the establishment of the Industrial Enterprises in such manner as may be deemed necessary but even in that case
the rights and liabilities of the parties, arising under the present Agreement till then shall remain in force.
In case any dispute or difference occurs between the Soviet Organisations and Indian Authorities with regard to any matter arising
out of the present Agreement or connected with its implementation, representatives of the Government of India and the Government
of the USSR shall immediately consult with each other and endeavour to arrive at a mutual agreement on the said dispute or difference.
All correspondence relating to matters connected with the implementation of the present Agreement shall be in English. DONE on the
Ninth day of November 1957 in New Delhi, in Hindi, Russian and English, each in duplicate; texts in Hindi and Russian being equally
authentic. The English text is the operative one.
On behalf of the Government of India.
On behalf of the Government of the Union of Soviet Socialist Republics.
1. The detailed project reports will be prepared in such detail as will be sufficient ; to determine and assess all the main technical
and economic data for each of the Industrial Enterprises as a whole and for the shops and erections in each of them; to justify the
technical decisions arrived at in the detailed project reports; to order main equipment; and to prepare working drawings in the subsequent
2. The detailed project reports will also contain; explanatory notes, calculations and drawings on the following divisions technological,
architectural and civil engineering, power and water supply, sanitary engineering, transport, economics and general layouts of the
Industrial Enterprises, as well as summary statement on the preliminary estimates and quantities of civil engineering and erection
works, summary statement of the main building and structural materials with estimates of cost in Indian Rupees and summary of equipment
recommended in the project reports with essential technical characteristics and indication of preliminary total cost of equipment
in Indian Rupees. recommendation on the order of priority of construction and erection of equipment; data on the cost of the whole
Industrial Enterprise and cost price of its production calculated on the basis of consolidated indices; data as detailed as possible
on the cost in Indian Rupees of all services to be rendered by the Soviet Organisations in the USSR and in India as well as data
on approximate strengths of the personnel to be engaged in rendering the services.
NOTE : The detailed project reports will be submitted in English and will adopt the metric system.