``The issue of dues to the Indian tea companies was taken up by CII president, Rahul Bajaj with Kazakhstan deputy prime minister K Tokaev on Tuesday. He assured to pay the principal amount and sought tea companies agreement for flexibility on the interest payment,'' they said.

An official of Russik Woodworth Ltd one of the firms involved in the deal, said they were ready to negotiate the interest part of the agreement.

Kazakhstan was now expected to respond to the tea firms agreement for the flexibility on interest payment, he said.

When contacted, external affairs minister Jaswant Singh said the issue came up during his talks with Tokaev.

``But complexity arose on the payment. It is being addressed,'' he said withoutelaborating.

Industry sources said the complexity could be relating to the flexibility sought by Kazakhstan on the interest part of the dues.

``Maybe, it (complexity) could be on the method of payment,'' they said.

Tokaev gave the assurance on the payment of dues to Bajaj when the latter told him that Indian investment into kazakhstan was being hindered by the non-payment of the dues.

``Bajaj asked the Kazakh minister how could the Indian industry invest in his country when a sovereign guarantee extended by his government was not being honoured,'' industry sources said.

The four Indian tea companies, including Tata Tea and Assam Brookes besides Russik Woodworth, had exported the tea consignments to Kazakhstan in September and October 1993 after it appealed for international help during its period of distress.

The tea consignments were delivered after Kazakhstan gave a sovereign guarantee towards the purchases.

The four firms had come forward to sell tea to the central Asian republic in order tosave the face of government, which could not extend credit to Kazakhstan for purchase of agriculture commodities.

Though the total value of the consignments was 5.14 billion dollars, the total dues have now crossed 11.13 billion dollars on accrual of interest.

``Even in these dues, we had agreed to cut off part of the interests in May 1996. After that, Kazakhstan prime minister issued a decree for payment of the dues but the amount was utilised to meet the financial expenditure in that country,'' the Russik Woodworth official said.

The issue of the payment of dues has been figuring in all Indo-Kazakh joint council meeting.

However, industry sources said government had failed twice to press its point once during the visit of president KR Narayanan to Kazakhstan when he was the vice-president and recently during oil and petroleum minister Vazhapadi K Ramamurthy's visit to that country.

Though Kazakh officials have time and again been assuring that the dues would be paid, the issue was beingprolonged.

In view of the non-payment of dues by Kazakhstan, the Export Credit and Guarantee Corporation of India (ECGC) has stopped extension of any cover to Indian exporters for exports to Kazakhstan.

Since issuing the decree, three deputy prime ministers had confirmed and reconfirmed the obligations without any payment being made.

``This is one of the factors stopping Indian business community from expanding its activities in Kazakhstan,'' the sources said.

During the intervening period when Kazhakstan had been dragging its feet on the payment, it had paid ``hundreds of million dollars of other foreign debt,'' they alleged.

The issue has also been taken up with the International Monetary Fund by Tata Tea.