India to pay Czechs $20 million as trade debt

Export of goods and services gave way to free foreign exchange regime after the Soviet Union's collapse in 1991.

India is to pay $20 million to the Czech Republic to resolve a trade dispute dating back to the Cold War.

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The move was announced at the end of the three-day visit by Czech President Jiri Paroubek.

India owed the money after former Soviet republics demanded payment, instead of exports of goods and services, for trading debts that had built up during the days of the Soviet Union.

"India will take expeditious measures to complete the required budgetary procedures to transfer Rs 872 million ($20 million) to the Ceskoslovenska Obchodni Banka in full settlement of the outstanding balance," said a statement.

India, which was the Soviet Union's largest ally outside the socialist bloc during the Cold War, had paid its trading debts to Communist countries by way of export of goods and services.

After the Union's 1991 collapse, former Soviet republics called off the soft barter system and linked trade with India to a free foreign exchange regime, which left a huge burden on New Delhi.