Bilateral Relations: India Laos Relations

India has enjoyed longstanding, friendly and mutually supportive relations with Lao People´s Democratic Republic (PDR). This relationship is based upon profound historical and civilizational foundations. Lao PDR admires the historic role played by India in Indochina towards promoting national liberation movements, the independence of colonized countries and the safeguarding of the newly acquired freedom. Pandit Nehru displayed considerable sensitivity and support for Laos when the latter found itself torn between foreign intervention, cold-war machinations and internal conflict. He paid a visit to Laos in 1954, which was later reciprocated by Lao leaders. The role played by India as Chairman of the International Commission for Supervision and Control (ICSC) on Indo-China is still appreciated and remembered with gratitude by the Lao leadership.

Political Relations:

There exist excellent political relations between India and Lao PDR. On account of this, the Lao PDR has been supportive of major issues of regional and international concerns to India, including our claim for permanent membership of the UN Security Council. Diplomatic relations between Government of India and the Government of Laos were established in February 1956. Since the establishment of diplomatic relations between India and Laos, a number of high-level visits have taken place between the two countries which include visit by the first Prime Minister of India, Pandit Jawahar Lal Nehru to Laos in 1954 and by the first President of India, Dr. Rajendra Prasad in 1956 followed by the visit of Prince Souphanouvong, commonly known as the Red Prince to India in 1975. Shri Atal Behari Vajpayee, the then Prime Minister of India visited Laos in 2002. Dr. Manmohan Singh, Prime Minister of India visited Laos in 2004. In recent times, the President of the Lao PDR H.E. Mr. Choummaly Sayasone visited India in August 2008. The President of India, Smt. Pratibha Devisingh Patil paid a State visit to Laos in September 2010. Dr. Thonglin Sisoulith, Deputy Prime Minister and Foreign Minister visited India in September, 2012 to attend the sixth Mekong-Ganga Cooperation (MGC) Ministers Meeting held in New Delhi. Shri Salamn Khurshid, External Affairs Minister visited Laos in November 2012 to attend the 9th Asia Europe Meeting Summit (ASEM 9) held in Vientiane. In December 2012, the Prime Minister of the Lao PDR, H.E. Mr. Thongsing Thammavong visited India to attend ASEAN-India Commemorative Summit. Dr. K. Chiranjeevi, Minister of State for Tourism visited Laos to attend ASEAN-India Tourism Ministers´ Meeting held in Vientiane on January 21-22, 2013.

The 55th Anniversary of the establishment of diplomatic relations between the two countries was celebrated during February 2011- February 2012. The First Foreign Office Consultations between India and Lao PDR were held in Vientiane on May 2, 2012. The Indian side was led by Shri Sanjay Singh, Secretary (East) and the Laotian side was led by Mr. Bounkeut Sangsomsak, Vice Minister in the Ministry of Foreign Affairs of Lao PDR.

Commercial Relations:

In pursuance of the announcement made by the Prime Minister India in April 2008, India has accorded the Duty Free Tariff Preference Scheme (DFTP) to Least Developed Countries. As of September, 2009 Lao PDR was one of 17 countries that sent a Letter of Intent, becoming beneficiary under the scheme. The Scheme grants Laos duty free access to 94% of India´s total tariff lines. On August 13, 2009 India and ASEAN signed the Trade in Goods Agreement. India and ASEAN are negotiating Agreements on Trade in Services and Investment, expected to be concluded by August, 2010. India has intimated all ASEAN members about the completion of its internal requirements for notification of India-ASEAN Trade in Goods Agreement with effect from 1.1.2010. Laos notified the completion of its internal procedures on December 31, 2010.

India´s bilateral trade with Laos was US$ 9.52 million in 2008-09 with exports at US$ 9.00 million and imports at US$0.52 million. There was dramatic escalation in trade to $37 million in 2009-10. The trade balance which had been overwhelmingly in favour of India turned towards Lao. This development stems primarily from India´s purchase of copper ores and concentrates of $19.7 million from Lao. India´s exports have increased on account of surge in sales of electrical and electronic equipment and pharma products to Lao. However, during 2010-11, the exports were reduced to US$ 14.06 million while imports were practically non-existent at US$ 0.22 million. The Top five exports to Laos include electrical and electronic equipment, articles of iron and steel, aluminium and products, pharmaceuticals and boilers and machinery.

India-Laos Business Forum was organised in Vientiane on September 13, 2010 during President of India´s visit to Laos from September 9-13, 2010. A total of 250, including 158 businessmen from Laos attended. President of India delivered the keynote address and called for greater exchanges between business delegations, participation in trade fairs and operationalisation of the India-ASEAN FTA to increase trade and investment.

A number of projects have been supported through Indian Lines of Credit (LOC) over the past few years. The Government of India has extended LOC amounting to US$ 132.89 during 2004-11 of which US$ 97.64 has been disbursed so far. In addition, a number of projects were undertaken through grant assistance. Some of the recent projects under LOC include:

(i) In June 2004, India provided a Line of Credit of US$ 10 million for a 115 KV Transmission Line from Ban-Na in Champassak to Attapeu. The project was completed in 2006.

(ii) In August 2008, during the visit of President Choummaly Sayasone, an agreement was signed to provide a US $ 33 million loan for 3 projects. The three projects are:

(a) Supply of equipment for rural electrification worth US $ 4 million. This was completed in September 2009.

(b) The Paksong-Jiangxai-Bangyo transmission line project worth US $ 18 million. The project was commissioned on September 10, 2010 by the two Presidents.

(iii) A US $ 17.34 million loan agreed upon for the development of irrigation schemes in Champasak province, the agreement for which was signed in May 2009. WAPCOS is developing the project. A contract worth US $ 4.3 million has been awarded to Kirloskar Brothers and another worth US $ 10.17 million to Angelique International. The third component worth US $ 1.03 million is in the bidding stage.

(iv) On September 13, 2010, a loan agreement between Exim Bank and the Ministry of Finance was signed in Vientiane in the presence of the two Presidents for a US $ 72.55 million loan for the following two projects: (i) 230 KV Double Circuit Transmission Line from Nabong to Thabok and sub stations worth US $ 34.68 million; and (ii) 15 MW Nam Boun 2 Hydropower Project worth US $ 37.86 million.

Some Major Indian investments in Laos include:

Birla Lao Pulp and Plantation, established in June 2006, is committed to investing US $ 400 million in a Eucalyptus pulp and plantation project in Savannakhet province. This is the biggest Indian FDI in Laos. 13619 hectares have been planted in Savannakhet and Champasak provinces till Feb 2012. The company has spent US $ 31 million up to March 2012.

The Lao SPG CMC Mining Company Limited, a subsidiary of GIMPEX India, obtained a license for an iron ore mine in 2008, with a commitment to invest US $ 10 million, out of which US $ 7.7 million has been spent. This is a 200 hectare iron-ore mine at Ta En village, Viengxay district, Samneua province. As of March 21, 2011, the mine has produced 60,717 metric tonnes of iron-ore, of which 56,408 metric tonnes have been exported to China.

The HSMM Group has invested US $ 13.8 million in agarwood plantations and two factories in Vientiane and Xaysomboun, Vientiane province. It has a US $ 800,000 iron ore mine in Sekong province in partnership with Mineral Enterprises Limited, and a US $ 100,000 iron ore mine in Khammuan province.

Cultural Relations:

Lao PDR and India have signed several agreements over the past few years. These agreements lay down the essential framework for bilateral cooperation. Agreements on cultural cooperation include:

(i) A Cultural Exchange Programme for the years 2011-13 was signed in 2010.

(ii) An MOU was signed with the Ministry of Information and Culture in May 2007 for the restoration of the world heritage site at Vat Phu. The work on the project began in June 2009. India has sanctioned a grant assistance of US$ 4.1 million (Rs. 18.49 crores) on the project over an eight year period.

Under human resource development, the Government of India has been providing over 210 scholarships to Lao nationals through the Indian Technical and Economic Cooperation [150 slots], the TCS Colombo Plan [40 slots], the Mekong-Ganga Cooperation Scholarship Scheme [12 slots] and the General Cultural Scholarship Scheme [8 slots for higher studies]. So far, under ITEC, GOI has trained more than 1000 Lao nationals.

India set up an IT centre in Vientiane in November 2004, as well as a National Data Centre in May 2006. Ten Rural Telecommunication Centres were set up, seven in provinces and three in the Ministry of Health, the Prime Minister´s Office and the office of the Governor of Vientiane.The LICELT [Lao India Centre for English Language Training] was set up in Vientiane on June 12, 2007 under the India-ASEAN Cooperation framework. The LICELT is one of our assistance projects in human resource development and capacity-building.

To culminate the celebration of the 55th Anniversary of the establishment of diplomatic relations between India and Laos, an Indian Film Festival was organised from January 28-30, 2012. A number of Bollywood films were screened during the festival.

Indian Community:

The 150-strong Indian community has grown in profile, particularly after the formation of the Indian Chamber of Commerce in the Lao PDR in September, 2010. The Indian community is engaged in jewellery trade, the restaurant and hotel industry, manufacturing, garments, mining, plantations and agarwood. A few members work for international organizations, multinationals, consulting organizations and private businesses. Kirloskar Brothers, the Aditya Birla Group, WAPCOS, Angelique International, Lao-SPG CMC Mining (P) Limited and HSMM Group have offices in Lao PDR.

(January, 2013)