New Chapter Of Relationship Between India And Vietnam

In December 2020, India and Vietnam held a virtual summit between Prime Minister Modi and Prime Minister of the Socialist Republic of Vietnam, Nguyen Xuan Phuc.

Both the countries signed seven important agreements in various sectors such as defence, scientific research, nuclear power, petrochemicals, renewable energy and cancer treatment.

In addition, a ‘Joint Vision for Peace, Prosperity and People’ document was adopted, in the wake of China’s growing aggression at Eastern Ladakh, Indo-Pacific and South China Sea.

Considering the significance of the relationship, PM Modi termed Vietnam as one of the key pillars of India's Act East Policy and a vital ally of India’s Indo-Pacific vision.

The virtual summit is the culmination of a series of high-level meetings in 2020 between both countries such as the virtual meeting of the India-Vietnam Joint Commission on Trade, Economic, Scientific and Technological Cooperation, which was co-chaired by India’s External Affairs Minister S. Jaishankar and his Vietnamese counterpart Pham Binh Minh, and a meeting between Defence Ministers of both the countries.

Since the establishment of full-scale diplomatic relations between both the countries in 1972, the relationship has evolved multi-dimensionally with cooperation in areas ranging from defence and security, economy and trade to space, civil nuclear cooperation, education, development and water management.

The relationship between the two countries was elevated to a "Comprehensive Strategic Partnership" from a “Strategic Partnership” during PM Modi's visit to Vietnam in 2016.

The India-Vietnam relationship has assumed a new strategic dimension with both sides facing the heat of aggression from their common adversary, China.

China's increasing assertiveness in Eastern Ladakh and aggressive bullying in the South China Sea region has brought both the countries closer in the Indo-pacific region.

On the one hand, a military standoff continues between the Indian and Chinese armies in Eastern Ladakh, and on the other hand, the Chinese have deployed H-6J bombers in the Phu Lam (Woody) Island, a part of Vietnam’s Hoang Sa (Paracel) islands.

In light of this, both the leaders have emphasised the need for "peace, stability and prosperity in the Indo-pacific region".

The emergence of a new strategic dimension has given a renewed push to the defence relationship between both the countries.

Indian Defence Minister Rajnath Singh, during the meeting with his Vietnamese counterpart in November, had emphasised defence collaboration as "a key pillar of Comprehensive Strategic Partnership" between the two countries.

To ensure stability in the Indo-Pacific region, both sides have agreed to step up regular high-level and institutionalised exchanges, military-to-military exchanges, training and capacity building programmes across the three services and coast guards.

India has already extended a US $100 and US $500 million Line of Credits to Vietnam for strengthening Vietnamese defence systems and to facilitate procurements from India, respectively.

Under the $100million Line of Credit, the Indian firm, L&T, has an agreement with the Vietnam Border Guard Command to supply 12 High-Speed Guard Boats.

The boats will be used enhance coastal security and prevent illegal activities in Vietnam. Out of 12 boats, five are to be manufactured in India and the remaining seven will be manufactured in Vietnam under license from L&T.

One boat has been handed over to Vietnam during the December virtual summit.

Vietnam, however, is yet to come up with a plan for the utilisation of its US $500 million Line of Credit.

To counter China’s aggressive posture, Vietnam most likely will use the above mentioned Line of Credit for the procurement of India's Akash surface-to-air systems, Dhruv advanced light helicopters and the BrahMos supersonic cruise missiles.

The bilateral trade and economic relations between both countries are also witnessing continuous growth. Both countries had set a trade target of achieving US$15 billion bilateral trade by 2020.

During 2019-20, both the countries achieved a bilateral trade of US$12.34 billion. India is now among the top 10 trading partners of Vietnam. India has also made significant investments to the tune of US$ 1.66 billion in Vietnamese sectors such as energy, agro-chemicals, mineral exploration, agro-processing, sugar, tea, coffee, IT and auto components.

ONGC Videsh, the overseas arm of state-owned oil explorer Oil and Natural Gas Corp. Ltd (ONGC), has invested around US$56 million for hydrocarbon exploration in block no 128 of the troubled waters of the South China Sea.

As both Vietnam and India have become non-permanent members of the United Nations Security Council (UNSC) in 2020 and 2021, respectively, it opens a plethora of opportunities to strengthen the global and multilateral institutions.

With Vietnam being a non-permanent member of the UNSC at a time, together with India, its voice would be heard louder in pushing forward the UN reforms.

As the centre of gravity of international politics has shifted to the Indo-Pacific region, the success of both the countries during their tenure in the UNSC would be tested against their effective handling of China in the region and ensuring China respects international law including the 1982 UN Convention on the Law of the Sea.

However, it largely depends on the unity among the ASEAN countries and its combined weight in the fast-changing geopolitical situation.

And when the moment arrives, India should also be ready to throw its weight behind the block.

Rajan Kalsotra is Associate Fellow, Pahle India Foundation, and Raghavendar Devargatla is a Policy Consultant.