Customs Pact Finalised To Curb Switch Trade

The two sides have also readied agreements on the avoidance of double taxation, plant protection and quarantine.

A pact on operating a joint liner service between the port of Novorossisk on the Black Sea and a port in India will be signed in Moscow today as will a memorandum of understanding on information technology products.

Officials said the crucial customs agreement will envisage the exchange of documents between the customs authorities in both countries, so that they will be able to check whether the goods that left India indeed landed in Russia.

This will significantly control switch trade that has been taking place in recent years, which has led to a significant loss in foreign exchange, an Indian official said.

 

Explaining how switch works, he said goods meant for Russia, bought under the rupee-rouble agreement would be switched on the high seas and sent to third countries where they could be sold for higher profits in hard currency.

Not only did the goods never reach Russia, India also lost out on much-needed foreign exchange.

Switch in cashew has been one of the greatest sources of concern to the commerce ministry, with an official estimating that trade in this commodity was worth about Rs 90 crore in 1995-96.

In his inaugural speech at the joint commission yesterday, foreign minister I K Gujral spoke about Indias keenness in cooperating with Russia to bid for projects in third countries. Such cooperation could take place, he said, notably in the construction and operation of steel plants in third countries.

Indian official said both sides had been discussing the possibility of jointly bidding for projects in the former republics of the former Soviet Union, now called the Commonwealth of Independent States.

Gujral also sought to reinvigorate bilateral trade, a sentiment that was shared by Viktor Ilyushin, the first deputy prime minister of Russia.

Gujral said India had already provided a list of items of long-term import interest to India and that such an arrangement would lend dynamism to our commercial ties.

Sources said India wanted to go beyond the purchase of manufactured fertiliser, iron & steel and non-ferrous metals, and would like to import newsprint, wood pulp, aviation fuel, potash, sports goods, etc.

One of the decisions that has been taken to increase trade is to create consignment export facilities from India to Russia. Indian organisations like STC and MMTC can stock Indian goods in warehouses, thus reducing the time taken to market shelves here as well as obviating the long-winded procedure of first opening letters of credit before any goods can be procured from India.