Coll 29/104 'Appointment of an Indian to the Tehran Legation (First Secretary or Trade Commissioner)' [‎108r] (215/243)

E.&.0.2791/40 . 338 Group s.
Cypher Telegrciin from Secretary of State to Government of
India, External affairs Department, dated 28th June 1940.
Eepeated to H.E. Minister, Tehran.
XXX SECRET
IIvJPORTAET.
3372. Addressed by Secretary of State for India to
Government of India repeated to Tehran Do. 146. Your telegram No.
1622 of 21st Iday. Your suggestion for War Trade Agreement with
Iranian Government under which in return for supply of railway
material and other goods they would undertake to limit their exports to
Germany, has been carefully considered, but H.M.G. agree with view
expressed in Tehran telegram No. 147 of 23 th Nay that there is no hope
of its acceptance by Iran. Insofar as Iranian produce can reach
Germany via Black Sea or Russian railways we can deny it to Germany
only by providing alternative markets.
2. Negotiations for purchase of wool have now broken down.
The other Iranian commodity mainly in question is cotton. U.h. is at
present over-stocked with cotton and there would be shipping difficulties
in getting Iranian cotton here• Arguments for its pre-emption on
economic warfare grounds are less strong than in the case of wool since
cotton would be less useful to Germany. E.L.G. are therefore not
prepared to purchase it.
3* Proposed barter arrangement under which French contemplated
taking Iranian cotton has come to nothing, but it appears from secret
information that Japanese are in negotiation for 3*300 tons of next
year’s crop. Italy has purchased 8,0GC tons of Iranian cotton valued
at £600,GOO, payment to be ma.de by £130,000 in cash, 23,000 tons of
cement valued at £73,000 and piecegoods valued at £373,000. Italy’s
entry into the war will make it difficult to implement this agreement
and you may care to consider possibility of barter of Indian cement and
piecegoods against Iranian cotton.
4. I suggest you explore further the possibility of the
absorption in Indian market of Iranian and also Afghan cotton in
partial replacement of India's normal cotton imports especially American.
Natural market would seem to be India and I suggest you consider drawing
at any rate Afghan there as a permanent policy. You may also care to
consider possibility of stimulating the trade at the outset by
stipulating that such cotton should be used in some Government contracts
for piecegoods. I imagine that for political reasons you will wish to
give Afghan cotton preference and weight would also have to be given
to interests of some other sources from which India imports cotton, viz.
African Colonies and Egypt.
3» Other Iranian products of interest from economic warfare
point of view are cottonseed, leather and gum tragacanth. Is there
any possibility of market being found in India for these commodities?