Foreign Relations of the United States, 1969–1976, Volume E–7, Documents on South Asia, 1969–1972

280. Telegram 4078 From the Embassy in Iran to the Department of State¹ ²

Tehran, July 7, 1972, 2130Z

Subj:

• Secretary Connally Travel: Memorandum of General Conversation With Indian Prime Minister Indira Gandhi at Governor’s Residence, Simla, on July 5, 1972: Part IV of VII: Foreign Investment

1. At the end of one hour of private discussions, Ambassador Keating and Mr. Samuel Hoskinson of the NSC staff from our side, and Ambassador Jha and Mr. Haksar from the Indian side joined the discussions for another 40 minutes. This part of the meeting started with a discussion of India’s policies on foreign investments. I had previously told her I thought that much of our time in the next several years would be spent in trying to reshape the monetary fund and international agreements regarding trade. We had not, however, developed this at all in private meeting but had only alluded to complexity of problems. I had said President Nixon had spent a great deal of time on these matters in the last 18 months. I thought these economic and monetary problems would be of concern to world leaders more than before in coming months and years.

2. Against this background, I questioned Mrs. Gandhi concerning foreign investments. I noted first that she was prepared to take over some insurance companies. “We have taken them,” she said. I said, yes. I understood she had and was interested if this meant that India did not welcome foreign investments? Not at all, she said. When we need management or technology or products we cannot produce we will welcome foreign investments. Ambassador Jha added that when India nationalized its banks it did not nationalize foreign banks. Mrs. Gandhi added that she was criticized almost every week in Parliament because of that, too. Ambassador Jha then said that there were many things the Indians were capable of doing, both in terms of financial resources and management abilities and their technological progress, but also many things that they could not do and needed foreign assistance for. He said India would welcome that type of investment and noted that even India invested abroad in Australia, Nigeria, and Malaysia. How, he asked, could India therefore be against foreign investments? But, said Jha, we invest abroad not always under the conditions and in the companies in which we want to, but consistent with the regulations in the country in which we invest. That is what we will permit in India.

Connally

1. Source: National Archives, RG 59, Central Files 1970–73, POL 7 US/Connally. Secret; Immediate; Nodis. Also designated as CONTO 257. Sent with instructions to pass to the White House for Davis, and Treasury for Dixon.
2. Former Treasury Secretary Connally and Indian Prime Minister Gandhi discussed economic and monetary issues. Gandhi indicated that although her Government had nationalized a number of insurance companies operating in India, she still welcomed foreign investment in sectors such as banking, where India needed foreign investment and expertise.