India an 'in' for West with Soviet trade
New Delhi — A convenient back door has opened up to the Soviet market for American and West European companies: a passage through India.
Xerox, for instance, will start making copiers next year in India in a joint collaboration with the family business house of Modis. Some copiers will then be exported to the Soviet Union.
The Soviets get cheaper and sometimes restricted Western technology; Indian industries boost exports and stage themselves for eventual domestic markets; and Western companies can gain a foothold in the Soviet Union.
This Indian connection, however, deepens somewhat the Indian-Soviet relationship at a time when Prime Minister Indira Gandhi is trying to regain a strong position of nonalignment among developing nations, which means improving Western ties and playing down India's closeness to the Soviets.
The Soviet Union overtook the United States last year as India's best export market, and now buys 17 percent of India's exports, compared with a US share of 13 percent. Overall, the Soviets have become India's leading trade partner.
So far, only a small part of the Indian exports come from foreign collaborations, such as the 40 percent equity holding of Rank Xerox of the United Kingdom (an affiliate of Xerox Worldwide Inc.) with the Modis.
''Soviet consumers are willing to take inferior Indian products that no European would want, such as pots, shoes, and textiles,'' says a Western diplomat in New Delhi.
Soviet-Indian trade will likely expand an estimated 50 percent more this year. One reason is the semi-barter arrangement that helps both countries avoid loss of foreign exchange - of which they are in short supply at present.
Soviet courting of India through military and industrial assistance extends back 35 years, bonding the two nations to the point that Mrs. Gandhi publicly justified the Soviet invasion of Afghanistan in 1980. But as India raises the curtain of protectionism for its companies and actively seeks superior Western technology, the Soviets are naturally concerned over a weakening in its presence on the subcontinent.
Although Indian officials disclaim any loosening of Soviet ties, they concede that some Western officials perceive India as a Soviet ally. The Soviets have not gained favor in New Delhi by recently boosting economic aid to Pakistan, such as for a steel plant in Karachi, or by buying some Indian goods, such as oil cakes, and exporting them to the West. Moscow's concern was reflected in the April visit of top Soviet military commanders and some 30 generals to New Delhi.
Lack of friendly relations with the US has hurt India when it has sought aid from the World Bank.