Trade agreement restricts payments to non-convertible rupees, RBI manages

This is a Trade and Payments Agreement between the Government of India and the Government of the Polish People's Republic, signed on 21 December 1974, aimed at expanding and strengthening economic and trade relations by ensuring balanced trade volumes and facilitating payments in non-convertible Indian rupees.

Who it concerns: The agreement involves the Government of India (Ministry of Commerce) and the Government of the Polish People's Republic (Ministry of Foreign Trade and Shipping). It affects Polish Foreign Trade enterprises, Indian juridical and physical persons (including state-owned organizations), and the Bank Handlowy W. Warszawie SA.

What was agreed

• Total value of imports must equal the total value of exports for each country during the agreement's validity.
• Both parties grant each other Most Favoured Nation (MFN) treatment in commercial relations in accordance with GATT provisions.
• Trade is conducted based on commodity lists agreed upon for every calendar year, which can be modified by mutual consent.
• All commercial and non-commercial payments are to be made in non-convertible Indian rupees.
• The Bank Handlowy W. Warszawie SA will maintain a Central Account with the Reserve Bank of India and accounts with authorized Indian commercial banks to facilitate these payments.
• Goods traded are intended for use only in the respective countries and shall not be re-exported.
• The agreement comes into force on 1 January 1975 and remains valid for three years, with an option to terminate after six months' notice on or after 1 July 1976.

Also in the document

• Payments are restricted to non-convertible Indian rupees, managed through specific banking channels involving the Reserve Bank of India and the Bank Handlowy W. Warszawie SA.
• A mechanism is established for liquidating outstanding rupee balances or debts within 12 months after the agreement expires, with a further 6-month consultation period if balances remain.
• The agreement mandates that goods traded must be internationally competitive in quality, price, and delivery terms.