10% Of Rupee Debt To Be Chanelled Into Joint Ventures
Speaking at the plenary meeting of the third session of Indo-Russia Joint Commission, Gujral said he hoped the meeting would frame guidelines for such investments by Russia in projects in India out of a portion of debt repayment funds.
He added India would welcome investment of such funds in the power, oil and gas sectors.
Indian officials from the ministries of finance and external affairs confirmed that New Delhi would limit the ceiling for such projects to 10 per cent, either as equity or debt to the Indian venture.
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Priority will be given to infrastructure projects, they said.
Asked why such a limit was being proposed, they explained the government wanted to protect Indian exports to Russia as long as possible. Under the original agreement signed in 1993, India will repay Rs 3,000 crore annually to Moscow, through goods purchased by Russian companies from India.
We must accept that there are a number of lobbies at work in India which do not want to let go such funds easily, one observer said.
Sources said part of the cost of Kudamkulam nuclear power plant, for which the Russians have offered credit worth about $2.74 billion, might be funded under this scheme.
Power secretary P Abraham told reporters that his ministry had identified four projects to be funded under the debt repayment scheme:
A 500 mw coal power plant in Muzaffarnagar, Bihar along with transmission lines, a 420 mw plant at Tenughat, also in Bihar, a 400 mw plant in Koteshwar, at Tehri and a 500 mw plant on the right bank of the Maithon which is a part of Damodar Valley Corp.
The Russians are been to use the large rupee debt for such projects, not only because they want to exhaust the debt as quickly as possible but also because it would help normalise bilateral trade as quickly as possible. Former Prime Minister P V Narasimha Rao had agreed in principle to the issue during his visit to Moscow in June 1994. Russian Prime Minis-ter Viktor Chernomyrdin, during his visit to India in December 1994, had raised the issue.
But the finance ministry was reluctant as it did not want western firms to use their Russian subsidiaries to form joint ventures in India because this could result in the loss of foreign exchange.