NEW DELHI, India: The Soviet leader, Mr. Mikhail Gorbachev, is to visit India again in November, his second visit in two years. At least two major agreements are to be signed while he is here to further promote Indo Soviet economic relations.

The first is an agreement on Soviet assistance to establish two giant nuclear power stations in South India, each of which will be of the size of 1,000 MW. The second is an agreement for a new line of credit 300 million roubles for the private sector so that Indian businessmen import Soviet machinery.

Both agreements are highly significant since they will take cooperation between the two countries to new areas. The Soviet offer to build nuclear power projects has finally been accepted despite opposition by the Atomic Energy Commission, which feels India has the ability to establish its own nuclear generation plants.

The Soviet offer for building nuclear power stations is at least 10 years old and was repeated by Mr. Gorbachev when he visited India two years ago. Because of objections by the Atomic Energy Commission, the offer was stalled particularly when the Chernobyl disaster cast doubts about the safety of Soviet designed plants.

The original offer by the Soviet Union was for a single nuclear power station of 500 MW. Far from being rejected, as seemed likely, until recently, the government has now decided to give the Soviet Union contracts for two plants, each of which will be twice this size. Both will be located at sites to feed to southern power grid.

A number of factors have gone into the decision to accept the Soviet offer, including the desire of the two countries to accelerate economic cooperation and boost their bilateral trade two and a half times to reach a two way turnover of Rs. 10,000 corers by 1992. The Soviet plants will also help achieve the target of setting up 10,000 MW nuclear generation capacities by 2000 AD.

But the clinching factors were the terms offered by the Soviets to set up the nuclear plants and their agreement not to press for safeguards on all Indian nuclear installations as required under international agreements. The plants are to be set up on a turnkey basis, but substantial Indian components will be used.

The financing terms are so favor able — including long repayment periods and low interest rates —— that the Soviets will effectively bear half the cost of the plants. This is important at a time when India is facing a serious shortage of funds for development projects,

The other major agreement to be signed! During Mr. Gorbachev’s visit is for a 300million robles line of credit to be routed through the Industrial Development Bank of India (IDBI) for the private sector. The Soviet Union has recently opened its economy to private businessmen and’ is keen also that Indian industrialists buy as much as possible from Soviet engineering undertakings. This line of credit will make this easier.

Article extracted from this publication >> July 8, 1988