Office of the Historian

255. Memorandum From the Deputy Director of the Office of South Asian Affairs (Adams) to the Assistant Secretary of State for Near Eastern and South Asian Affairs (Jones)1

Washington, March 30, 1960.

SUBJECT

  • Trombay Fertilizer Plan

Indian production of nitrogenous fertilizer is about 200,000 tons annually, nearly all of it produced in State-owned plants. India’s yearly requirements of nitrogenous fertilizer are almost one million tons. During the current Second Five-Year Plan (1956–61) and for the forthcoming Third Plan, the Government of India has plans for the construction of several nitrogenous fertilizer plants to meet the country’s requirements. These have been listed in the Five Year Plans as available to the private sector for investment and operation.

One of the proposed fertilizer plants is that which is to be built at Trombay. It is a Second Plan project and has been open for private sector consideration since the beginning of the Plan in 1956. Because there was no private company interested in building the plant, the GOI, believing the Trombay plant to be of very priority, decided early in 1959 to shift it to the public sector. A State enterprise, Hindustan Fertilizer, undertook the necessary engineering work and in June 1959 the GOI issued world-wide invitations to bid on the construction of this plant. These bids are to be submitted to the GOI not later than next week (April 8). The GOI submitted an application to the DLF in July or August 1959 for assistance in financing the Trombay plant in the public sector.

On March 14, 1960, representatives of two U.S. firms, the International Mineral and Chemical Corporation and Spencer Chemical, indicated to DLF an interest in building and operating the Trombay fertilizer plant provided it were a joint venture with private Indian and GOI participation. For this reason and because of the DLF policy to encourage private participation in revenue-producing projects, DLF advised the Indian Embassy here on March 18 that it would consider the Trombay fertilizer plant for financing only in the private sector.

It was at this point that SOA, through Mr. Martin of E, requested Mr. Dillon to consider an approach to DLF for the financing of the Trombay plant in the public sector. Telegrams were sent to New Delhi [Page 535] advising the Embassy of the status of the GOI application to the DLF and asking for the Embassy’s views as to whether it was possible for the GOI to change its plans at this point and shift the Trombay plant back to the private sector.2 The Embassy’s reply (Telegram 3221, attached)3 recommends that DLF give favorable consideration to the Trombay project as a GOI public sector plant, and that the interested American companies consider investing in any of the remaining proposed fertilizer plants which continue to be available to the private sector in India. SOA supports Ambassador Bunker’s recommendation and has so informed Mr. Martin, who is discussing this case with Mr. Dillon.4

  1. Source: Department of State, Central Files, 891.3972/3–2860. Confidential. Drafted by Robert W. Adams and Spielman.↩
  2. Telegram 3661 to New Delhi, March 18, and telegram 3771 to New Delhi, March 22. (Ibid., 891.3972/3–1860 and 891.3972/3–2260)↩
  3. Dated March 28, not printed. (Ibid., 891.3972/3–2860)↩
  4. In telegram 3881 to New Delhi, April 1, marked “for Amb from Dillon and Brand,” the Department responded to telegram 3221. The Department suggested that if the Board of the DLF approved the Trombay loan, the cooperative spirit between the Indian and U.S. Governments and U.S. industry might be demonstrated by a simultaneous announcement that the Indian Government had approved a letter of intent to IMC-Spencer or other U.S. companies to proceed with other specific fertilizer projects in the private sector. (Ibid., 891.3972/3–2860)

    The Embassy responded in telegram 3372 from New Delhi, April 7, which reads in part as follows: “Greatly encouraged by reference telegram. If we follow course indicated we can avoid what might have been serious controversy and misunderstanding with GOI.” (Ibid., 891.3972/4–760)

    The question of the Trombay fertilizer loan was not settled during 1960. Extensive documentation on the matter is ibid., 891.3972.

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