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New Delhi, 7th February 1967

In pursuance of the provisions of Article 7 of the Agreement signed in New Delhi dated the 6th April, 1956 between the Government of U.S.S.R. and the Government of Republic of India, negotiations were held in New Delhi and Bombay between the 24th January and 7th February, 1967 between the delegations of the Ministry of Merchant Marine of the U.S.S.R. and the Ministry of Transport and Aviation of India. The discussions between he two Delegations related to the operation and further strengthening of the Indo-Soviet Shipping Service between the Soviet Black Sea ports and the ports of India.

The two Delegations reviewed the working of the Indo-Soviet Shipping Services and examined in detail both technical and commercial problems. They noted with satisfaction that since the inception of this service in 1956, substantial progress had been achieved in various directions. At the same time, the Delegations were of the view that the shipping service had to be strengthened further in order to transport on the principal of parity, cargoes in accordance with the volume of trade, stated in the Trade Agreement between the two countries.

Delegations were of the opinion that the operations of the joint service should be improved and should be conducted in full accordance with the volume of trade established by the Agreement between the two countries on the terms of parity and for the utmost satisfaction of the shippers and the characters. For achieving all these objectives, following decisions were taken :

1. Review of the working of the Indo-Soviet Service since the last meeting held in Moscow in June, 1965.

Parity between U.S.S.R. and Indian Liners in transportation of cargoes and in freight earnings :

The delegations reviewed the data relating to cargo lifting and freight earnings in eastbound and westbound directions by Indian and U.S.S.R. vessels. They noted that whereas in the westbound direction, the objective of realising parity had been achieved, there was room for further improvement in the east bound trade. The Delegations reaffirmed that this parity should be achieved in respect of both cargo tonnage as well as freight earnings in both directions. Similarly, there had to be equality of performance in respect of providing coverage of ports of loading and discharge.

Following the statement of the Soviet side the carriage forward of disparities from one year to the next year was impossible, both sides agreed on the following method of adjusting disparities during each year :

(1) Both sides will exchange statistical data promptly on the quarterly basis ; and

(2) The imbalances of one quarter should be rectified during the next quarter.

Since the final imbalances were to be adjusted in the 4th quarter itself, it was specially noted that statistical data should be carefully review in the month of October each year and the ship owners of the two countries might, if necessary, meet the representatives of Messrs. V/O Sovfracht either in India or in U.S.S.R. as may be mutually agreed.

II. Determination of Liner tonnage for 1967 :

In accordance with the cargo turn-over provided in the Trade Agreement between the Republic of India and the U.S.S.R. for 1967, both sides agreed to make 32 sailings each eastbound by vessels of about 10000 tons deadweight during the current year according the liner schedule (regarding preparation of schedule see clause III (a) of the Protocol) having phased these sailings from each side in the following manner :

1st quarter ... 7 sailings
2nd quarter ... 7 sailings
3rd quarter ... 9 sailings
4th quarter ... 9 sailings.

Although the cargo movement from India to the U.S.S.R. in 1967 is expected to be smaller than from the U.S.S.R. to India, the number of sailings in the west-bound direction will be maintained at a total of 32 from each side unless either side is permitted to reduce the number of sailings it may offer through mutual consultation and agreement as between Sovfracht and Sovinship.

Both sides further agreed that the determination of liner tonnage for 1967 as set out above should be applied as an experimental basis. These arrangements will continue in any case until the next meeting.

III. (a) Liner Schedule :

It was noted that the schedule had not been satisfactorily maintain despite the mutual decisions for strict adherence to the schedule taken during the previous negotiations. Both the Delegations agreed that it was essential to adhere to schedules in the operation of the Indo-Soviet Shipping Service so that the shippers and consignees of cargoes might be provided the satisfactory liner service to which they were entitled. It was also noted that the best possible way to adhere to schedules would be very bringing about closest possible co-operation and co-operation between the various agencies looking after the interest of the service at both ends, namely, the representatives of Sovfracht in India and the Indo-Soviet Secretariat, Bombay in respect of schedules at the Indian end and, Sovfracht, Moscow, Sovinship, Bombay and the Consulate of India at Odessa in respect of schedules at the Soviet end. In particular, the following procedure was agreed for formulating liner schedules :

1. In the quarterly joint schedule which is considered as preliminary the estimated dates of vessels’ readiness for loading are indicated with an interval of twenty days.

2. Not later than the tenth of the preceding month the schedule for the next month is prepared, ascertaining the dates of placing the ships for loading with an interval of ten days within the period provided in the quarterly schedule.

3. A review of the actual performance of sailings against schedules framed would be undertaken each quarter and data would be exchanged between Sovfracht and Indo-Soviet Secretariat about the actual performance.

4. Both sides agreed not to apply the charges for failure to adhere to the schedules in 1967 as was provided in the protocol dated 26th June, 1965.

5. If the experimental order of tonnage determination in 1967 which is scheduled in clause II of this Protocol does not show results in maintaining the schedule charges at an agreed rate will be introduced after the next negotiations on this question.

(b) Special berths for the vessels of the Indo-Soviet Shipping Services :

Having regard to the growing cargo movement between the ports of the U.S.S.R. and India, since the inauguration of the services in 1956 and to the Trade Agreement for 1966-1970, the Soviet side considered it necessary to assign, on the terms of reciprocity, special berths for the ships working on the line, in the ports of both countries, aiming at shortening of vessels’ delays in the ports. In the opinion of the Soviet Delegation, the first step on the way to solve the problem should be nomination of one berth for liner ships both in Bombay and Odessa. The Indian side referred to its international obligations regarding maritime ports and to the present paucity of berths but agreed to examine the proposal further in all its aspects in an endeavour to arrive at a satisfactory solution.

(c) Shifting of Soviet vessels at Indian ports :

The Indian side stated that the provision of Article 7(a) of the June 1965 Protocol was brought to the notice of the various Port Authorities in India. It was noted with satisfaction that the position had improved considerably during the past few months. It was agreed, however, that the matter be referred to the Port Authorities again with a view to reducing the shiftings of vessels of Indo-Soviet Liner Service still further, specially in Calcutta.

IV. Re-routing of cargoes to Kandla instead of Bombay

The Indian side stated that the provision in he Protocol of June 1965 regarding diversion of cargoes from Bombay to Kandla had already been brought to the notice of the various Ministries of the Government of India. The main difficulty in the way of diversion of cargoes to Kandla was the absence of broad gauge railway link between the port and the hinterland. It was understood that a broad gauge railway line was already under construction and that the same would be completed for the movement of goods traffic by the end of 1969, according to present planning. It was agreed that the Soviet side would be informed if there was any major deviation from this Schedule. The Indian side also undertook to ascertain from the parties at the Indian end regarding their willingness to have their cargoes shipped through Kandla instead of Bombay and to transmit this information to the Soviet side.

V. Fumigation of cargoes at the Soviet ports :

The Indian side stressed the fact that while fumigation of cargoes might be inevitable at the Soviet ports in accordance with the quarantine regulations, it might be possible to expedite this process by discharging the fumingable Cargoes into barges wherever the quantity of such cargoes on board a ship was less than 1000 tons.

The Soviet side stated that discharge of fumigable cargoes into barges could be arranged, provided the owners would pay three Roubles 80 Kopecks per tonne (subject to a minimum charge for 200 tonnes).

The Indian side noted this information for possible use on future occasions but pointed out that the tariff being on FIO terms there appeared to be no scope for ship owners to bear the lighterage expenses on fumigable cargoes.

The Indian side requested that delays due to fumigation should be reduced to the minimum and that effective steps may be taken to that end.

The Soviet side stated that there were some practical difficulties but agreed to examine the matter further.

It was agreed that wherever possible fumigable cargoes might be segregated.

It was also agreed that the Soviet Authorities and the Indian Consul at Odessa would together examine ways and means for arranging suitable accommodation for the personnel of the ships during the period of ships undergo required fumigation.

VI. (a) Application of freight rates on “weight tonne” instead of “weight/measurement tonne” on machinery, machine tools, equipment and passenger motor cars :

As a result of discussion regarding application of “weight tonne” rates instead of “weight/measurement tonne” rates for machinery, machine tools, equipment and passenger motor cars, the sides found considerable discrepancies in data relating to the average “weight tonne” rates presented by both sides for the said cargoes.

Both the sides agreed on the following principles to serve as guidelines for arriving at an agreed decision on this issue :

(a) The conversion of the freight rates in the tariff presently on “weight/measurement tonne” to “weight tonne” should be on the basis of “no gain no loss” to the ship owners and charterers.

(b) The revision of rates on above-mentioned cargoes to “weight tonne” should be directly related to the actual freight realised by the ship owners under the existing tariff structure based on “weight/measurement tonne”.

(c) Any change in the tariff rates should take effect from the date of signing of the Protocol stating such new rates.

Having regard to the above principles, both partners agreed to exchange additional data on the freight earned on the above-mentioned cargoes (showing the break-up of freight earned on “weight tonne” basis and “measurement” basis) for the years 1964, 1965 and 1966 within the next six months. Such data would be furnished on an agreed proforma.

On the basis of the information so exchanged, the sides will work out mutually agreed new tariff rates on weight tonne basis. Until a revised freight structure was formulated on this cargo, the existing tariff rate would continue to apply this cargo, the existing tariff rate would continue to apply.

(b) Rates on Trucks/Tractors :

After detailed considerations, the sides decided not to change the rates on trucks and tractors for the present.

(c) Freight rates for D.D.T.

Both sides came to agreement that the freight rates for D.D.T. will be Rs.65.00 (pre-devaluation) or Rs.102.00 per ton after devaluation with effect from the date of signing of this Protocol.

For D.D.T. transportation in past period, it was agreed that V/O Sovfracht would make a recomputation basing on the rate of Rs.129.00 per ton for shipments made before the date of the first notification to Sovinship by V/O sovfracht regarding the refusal of the charterers to pay this rate and their demand for the fixation of new rate. The actual date of the first such notification made by V/O Sovfracht and the receipt of the same by Sovinship would be determined between Sovfracht, Moscow and Sovinship. Freight for shipment after the date of first such notification by V/O Sovfracht would be paid at the rate of Rs.52.00 per tonne (pre-devaluation).

(d) Freight rates for Metals

(1) Taking into consideration the point of the Protocol of Negotiations regarding the operation of the joint line between the ports of U.S.S.R. and India dated 26th June, 1965 when the system of rebates for the side of cargo parcels was established, both sides came to agreement that the special rate of Rs.40.00 (before devaluation) or Rs.63.00 (after devaluation) for size of more than 3000 tons present tariff would be eliminated. There will, therefore, be one rate only for metal in this tariff i.e. Rs.42.00 (before devaluation) or Rs.66.00 (after devaluation). The same rate will apply for pig iron.

(2) Taking into consideration the fact that this tariff provides separate rates for metals and pig iron, it is agreed that while determining freight rebates, as per above mentioned protocol dated June, 1965, metals and pig iron would be considered as two different cargoes.

(e) Conversion of the tariff into liner terms :

As a result of the discussion on the question of converting the tariff from F.I.O. terms to liner terms both sides agreed that it was not advisable to do so.

Both sides agreed to exchange data within the period of 6 months covering the actual stevedoring costs for the period of 1964-65-66.

VII. Rebate :

Both sides noted that there had been a genuine misunderstanding about the interpretation of the word “shipper” used in the Annexure to the June 1965 Protocol. Whereas the Indian side understood by this term the party actually tendering the cargoes for shipment, the Soviet side understood by this term the charterer who used the tonnage and paid the freight.

It was agreed that wherever the word “shipper” occurred in the annexure to the June 1965 Protocol, it should be substituted by the word “charterer”. In other words, it was agreed that rebates would be computed on the total quantity of the same nature of cargoes provided the charterer was one even though the shippers might be many. It was agreed further that the computation of rebates, each item listed in the tariff would be treated as a separate cargo except that raw june, jute cloth and jute bags would be treated as cargo of the same nature.

VIII. Revision of freight rates on certain items in the present tariff :

The Indian side drew the attention to the fact that cost of transportation of such cargoes as tobacco, goatskins and case cargo (garments, shoes, freight juice etc.) had grown considerably because of the increase of their cubic volume and, therefore, there appeared a necessity to revise the rates for the said cargoes. The Indian side promised to submit a complete list of such cargoes and also to give certain figures confirming the change in their cubic volume.

After considering this figure, the matter of reconsideration of rates should be examined by the Representative of V/O Sovfracht and Sovinship.

IX. A. Expeditious issue of final out-term reports by Port authorities and settlement of cargo claims relating to Soviet vessels at Indian ports and imposition of penalties by Customs authorities on short landings of cargo ex-USSR vessels :

The Soviet side stated that in their view, since customs penalty duty for cargo shortages was not imposed on Indian vessels in Soviet ports, it was appropriate that Soviet vessels should not be subjected to Customs penalty duty on short landings at Indian ports. The Indian side stated, however, that according to existing Indian law, the Indian side were not able to comply with this suggestion.

The procedure in force at the Indian ports is as follows :

(a) Tally sheets (i.e. the primary documents prepared by the port authorities showing leading marks and numbers of cargoes landed) are made available by the port authorities to the ship or ship’s agents in any case within three days of discharge.

(b) The out-term reports are prepared as expeditiously as possible.

(c) Penalties are levied by the customs normally 8 to 10 months after comp-letion of discharge. There would be no penalty in respect of items appearing in the port tally sheets even if such items are found missing in the final out-turn report but missed in tally do not attract penalty duty.

(d) The ship owners are given three months time after levy of penalties to claim refund. Such refund can be obtained on application after satisfying the customs authorities about the actual discharge of the cargoes alleged to have been short-landed or traced later.

B. Cargo claims :

Consignee has the right to submit the claim for short-landing of the cargo in accordance with the established international procedure if it is confirmed by outterm report, but, in any case, this short-landing should not exceed the short-landed pieces indicated in the tally sheets.

As regard the past claims, it was agreed that the matter would be settled by correspondence.

X. Dispatch of Bills of Lading

The delegations agreed that every effort should be made to hand over three copies of Bills of Lading to the Masters of the ships before vessels sail from Indian ports for Soviet ports. It was further agreed that in respect of sailings from ports on the West Coast of India, this procedure should be introduced as expeditiously as possible. In respect of ports on the East Coast of India, the practice in regard to the issue of Bills of Lading was somewhat different but in respect of these ports also efforts should continue to be made to hand over three copies of Bills of Lading to the Masters of the vessels, if possible.

Additionally, it was agreed that two copies of Bills of Lading and manifests should be despatched immediately after a vessel sailed for U.S.S.R. ports, to the address of Inflot, Odessa, having in view that these documents should reach Inflot, Odessa, prior to the vessel’s arrival. It would be the responsibility of Inflot, Odessa, to forward the Bills of Lading as well as manifests to other ports on the Black Sea coast if vessels were diverted to these latter ports.

XI. Information regarding new tonnage dues at Soviet Ports :

In connection with the introduction by the Government of U.S.S.R. from 1st January 1965 the new order of charging tonnage dues, both the sides agreed about the following change of wording of clause 4 of Agreement between the Government of U.S.S.R. and the Republic of India concerning the establishment of a regular shipping service between the ports of the Republic of India and the ports of the Union of the Soviet Socialists Republics dated the 6th April 1956 :

“Indian vessels in the Soviet ports and Soviet vessels in the Indian ports shall upon their entry into, stay in and departure from the ports, enjoy the most favourable conditions allowed by the corresponding laws, rules and regulations applicable to those parts.

All the dues on the vessels assigned to the service shall be levied at the ports of India and at the ports of the U.S.S.R. in accordance with the laws and regulations which are in force at the ports of the two countries.

No income tax shall be levied or collected by the Government of India on the freight earnings at Indian ports of Soviet ships and no income tax shall be levied or collected by the Government of the U.S.S.R. on the freight earnings of Indian ships at Soviet ports.”

XII. Miscellaneous

Customs penalties on liquid cargo :

Following the request of the Soviet Delegation to increase the present percentage of the natural loss for liquid cargo on which no customs penalties are levied, upto 1.5 per cent, the Indian side confirmed that this percentage would be raised upto a maximum of 1.3 per cent.

Accepting this change the Soviet side might revert to the question of further increase of this percentage again after studying analyses of future tanker operations.

Both the sides agreed to continue their mutual efforts in securing further improvement and strengthening the friendly shipping relations and developing economic collaboration between the two countries.

SIGNED in New Delhi on the 7th day of February, 1967.

Sd/- Sd/-
Deputy Minister of Merchant Marine, Deputy Minister for Transport
U.S.S.R. and Aviation, Government of India
Leader of the Soviet Delegation Leader of the Indian Delegation

India Bilateral

Ministry of External Affairs, India

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