ARTICLE 31

Termination

The Convention is to remain in effect indefinitely, unless terminated by one of the Contracting States in accordance with the provisions of Article 31. Either Contracting State may give the other Contracting State through diplomatic channels written notice of termination at any time on or before June 30 in any calendar year which begins after the expiration of a period of five years from the date of the Convention's entry into force. Thus, if, for example, the Convention enters into force on May 1, 1990, either State may give notice of termination during the period beginning January 1 and ending June 30 in any calendar year after 1995. If notice is given on or before June 30 of any calendar year beginning after the expiration of the five-year period, the termination will have effect as follows:

(1) In the United States, with respect to taxes withheld at source, the Convention will cease to have effect for amounts paid or credited on or after January 1 of the calendar year following the year in which the notice is given. With respect to other taxes, the Convention will cease to have effect for taxable periods beginning on or after January 1 of the calendar year following the year in which notice is given.

(2) In India, the Convention will cease to have effect for income arising in any taxable year beginning on or after April 1 of the year next following the calendar year in which the notice of termination is given.

Nothing in Article 31, which relates to unilateral termination by a Contracting State of the Convention, should be construed as preventing the Contracting States from entering into a new bilateral agreement that supersedes, amends or terminates provisions of the Convention either prior to the expiration of the five-year period or without the notification period.

PROTOCOL

A Protocol accompanies and forms part of the Convention. The provisions of paragraphs I through V of the Protocol are discussed above in connection with Articles 5, 7, 10, 11, 12, 15,

and 23 of the Convention.

DIPLOMATIC NOTES

In diplomatic notes exchanged at the time the rest of the Convention was signed, the two governments confirmed their understandings with respect to several points. First, with respect to the United States position on tax sparing credits, it was agreed that, if the United States amends its laws to authorize such credits or grants such a credit in a tax treaty with another country, the Convention will be amended to incorporate such a credit The amended Convention would be subject to ratification. Second, as discussed above in connection with paragraph 4(c) of Article 5 (Permanent Establishment), the two governments confirmed their understandings with respect to the circumstances in which a person shall be considered to secure orders in a Contracting State wholly, or almost wholly, for an enterprise. Finally, as discussed above in connection with Article 12 (Royalties and Fees for Included Services), the two governments confirmed their understanding of the purpose of the memorandum of understanding developed and agreed upon by the negotiators, relating to the scope of included services under Article 12.

June 14, 1990