Office of the Historian

263. Telegram From the Department of State to the Embassy in India1

Washington, July 28, 1960—7:07 p.m.

245. Embtels 42032 and 49.3 Deptel 67.4 B. K. Nehru saw Waugh and several Directors Ex-Im Bank this week re question of $150 million dollar line of credit. He was told that $50 million could be considered with 5 year moratorium and 10 year repayment period. Nehru indicated that this posed problems for him and suggested that consideration of loan be delayed until his return from India in early September in time for the IBRD Consortium meeting now scheduled for Paris September 12–14. His concern involved the extent to which India could undertake additional hard loan obligations for period involved and relation terms proposed to his efforts obtain better terms for loans from UK and European countries. Department informed GOI has been attempting to better its credit terms other countries and hoped to be able to use loan from US on favorable basis in support of its attempts.

Indian request for $150 million long term credit presents several problems for Ex-Im:

(1)
Credit would not extend to Indian purchasers who would be requested to pay cash.
(2)
Requested repayment period of 20–25 years has no relationship to commercial transaction with US suppliers or to useful life of purchased equipment and would establish an unfortunate precedent for other countries.
(3)
Bank prefers project loans.
(4)
Bank of course interested in assisting in sale of American equipment but must take into consideration repayment prospects.

[Page 549]

Ex-Im Bank remains ready consider a loan of some character and amount but further discussions will have to await return of B. K. Nehru, who is leaving for New Delhi this weekend. Letter enroute to Sherwood from Waugh.5

Herter
  1. Source: Department of State, Central Files, 891.10/7–760. Confidential. Drafted and approved by Kennedy and cleared in substance with Waugh.↩
  2. Document 261.↩
  3. In telegram 49, July 7, for Dillon and Waugh, Bunker again emphasized the great importance which he attached to the prompt provision by the United States of the means to finance India’s purchase of U.S. equipment which could not be handled on an individual project basis. He was eager to see the Export-Import Bank “step into breach,” and he hoped that the Bank could extend a second line of credit to India along the lines suggested in telegram 4203. (Department of State, Central Files, 891.10/7–760)↩

  4. Telegram 67, July 8, for Ambassador Bunker, reads in part as follows: “Appreciate force points your tel. 49 and you may be sure importance of general problems financing US equipment for India not being overlooked.” (Ibid., 891.10/7–760)

    On July 25, Dillon discussed the Indian request with Waugh over the telephone, expressing his hope that the Bank would not “totally discourage” Nehru. (Ibid., Secretary’s Memoranda of Conversation: Lot 64 D 199)

    ↩
  5. Not found.↩