Reds in India

From the copper mines of Sikkim to the oilfields of Assam, Russian traders and technicians traipsed through India last week, offering cut-rate rubles, big-brotherly advice and back-scratching barter deals. Czech engineers mapped roads in the mountainous north. East German technicians scouted sites for India's first raw film factory. In central Bhilai, Russian specialists supervised construction of a steel mill for which Russian moneymen had advanced some $100 million at 2 1/2%, about half the interest rate proposed by Western lenders.

Socialist Sympathy. While Western businessmen watched with apprehension, the Soviet Union in less than two years has succeeded in penetrating virtually every key industry in India. Yet Moscow contributes little to India's economy: barely 1% of India's imports in the past year has come from the Iron Curtain countries v. 25% from Britain, 8% from West Germany. While the U.S. has handed Nehru's government $500 million in gifts and loans since 1950, Russia has doled out farm machinery and one Ilyushin-14 airliner, worth in all no more than $2,000,000.

How then does Russia earn its welcome? Though private enterprise still has a vital stake in India's backward economy, the government is heavily committed to state ownership of industry and natural resources. Thus Russia, the first socialist state to emerge as a major industrial power, is solicitously helpful in mapping a nationalized economy for India. U.S. pharmaceutical firms have long been anxious to build plants in India, but have balked at the prospect of investing money and technical secrets in a government-controlled industry. Last week the government announced that a ten-man Indian delegation would leave soon for Moscow to get Russian help in developing its domestic drug industry.

"Negative Attitude." What worries U.S. and British industrialists--who have $800 million invested in India--is that Moscow's profits-be-damned business philosophy may eventually squeeze out all free enterprise. Oil companies, with a greater investment than any other foreign industry, are already seeing Red. Russia has offered to lend India 250 oil geologists, says it wants no oil rights in return. Though British and U.S. companies, e.g., Burmah Oil, Standard Vacuum, have spent years and millions of dollars to develop new oil resources in India, Russian surveys have encouraged the Indian government to look for oil on its own. Last May, with Rumanian crews and equipment, the government started exploration work in Bengal and test-drilling in Punjab.

In the face of this growing problem, both the British and the U.S. have begun to apply pressures of their own. The British, who still control more than 80% of all foreign capital in India, have warned Nehru's government that the Soviets may use economic penetration as a powerful political lever. U.S. industrial leaders have pointed out that India desperately needs $1.5 billion in foreign capital to push through her second five-year development program, and have added a pointed comment. In a memorandum released last week, the World Bank mission tempered praise for the young nation's "new buoyancy and hope" with a warning to the Indian government against its "negative and grudging attitude'' to legitimate investors. Cautioned the bank, which has lent India more than $200 million: "At this stage of development, India certainly needs the contribution which can be made by foreign technology, private capital and management."

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