India-Vietnam ties strengthen with seven signed agreements

New Delhi and Hanoi are strengthening their bilateral trade, defence and geo-strategic ties as both nations face a strong military threat from a common enemy watching these developments from Beijing.

Neither side mentioned China when Indian Prime Minister Narendra Modi met his Vietnamese counterpart Nyugen Xuan Phuc in a virtual summit on December 21, but the shadow of Beijing always loomed ominously over the meeting.

The joint statement issued by the two sides said it all. It said: “… Both leaders further called for the full and effective implementation of the Declaration on the Conduct of Parties in the South China Sea in its entirety and the substantive negotiations towards the early conclusion of a substantive and effective Code of Conduct in the South China Sea (COC) in accordance with international law, especially UNCLOS, that does not prejudice the legitimate rights and interests of all nations including those not party to these negotiations.”

The summit took place at a time when both countries are locked in tense territorial disputes with China – India has been locked in an eyeball-to-eyeball military stand-off with China in Ladakh, while Vietnam is battling Chinese claims on even those parts of the South China Sea that Hanoi considers its sovereign territory.

Modi called Vietnam “an important pillar of India’s Act East policy and an important ally of our Indo-Pacific vision… We see our relationship with Vietnam from a long-term and strategic view. Peace, stability and prosperity are our common objectives in the Indo-Pacific region. Our partnership can contribute significantly to maintain stability and peace in the region”.

Vietnam hedging its bets?

Vietnam, many foreign policy experts noted, was hedging its bets. “Specific Southeast Asian states are now seeking to diversify their strategic partnerships, beyond a binary choice between Beijing and Washington,” leading US think tank, Council on Foreign Relations, said in a 2018 note, adding that a key element of that strategy was to work with India “as a more forceful counterweight to China and hedge against a declining United States”.

The South East Asian country, for example, is increasingly looking at New Delhi as a partner on a range of issues, from its dispute with China over the South China Sea to oil exploration, defence cooperation and closer economic ties. India, too, has belatedly entered the game that Great Powers play and made Vietnam the fulcrum of its Act East Policy to expand its economic and geo-strategic footprint across East and South East Asia.

Seven agreement signed

The seven agreements signed during the summit bear the unmistakable imprint of this. They cover diverse strategically important sectors such as defence, nuclear power, petrochemicals, renewable energy as well as the treatment of cancer. “We are also taking new initiatives in the area of our development cooperation and cultural conservation. All this shows the expansion and potential of our growing mutual cooperation,” Modi said.

China has vehemently opposed ONGC Videsh’s attempts to drill for oil and gas in Vietnamese waters in the South China Sea, claiming it to be its own. India has said more than once that ONGC’s exploration efforts are a commercial operation and have nothing to do with China’s bilateral dispute with Vietnam. But oil exploration in the South China Sea by any country other than China invariably raises Beijing’s hackles.

Defence ties deepening

In this context, the cooperation in the field of defence between the two countries is a significant step forward for the traditionally reticent Indian foreign policy establishment – and very much in keeping with Modi’s bold re-ordering of India’s priorities in the region.

Even as talk of India initiating steps to export the Indo-Russian supersonic cruise missile Brahmos to Vietnam refuses to die down, the initiative to supply Hanoi with 12 naval patrol boats, under the Modi government’s $100-million line of credit, is proceeding apace.

Vietnam offers a market for Indian companies

According to official data, bilateral trade during 2019-20 was at $12.4 billion, still short of the $15-billion target the two countries had set in 2013 but an improvement, nonetheless, over the figure of $9.2 billion in 2014-15. The shortfall, however, shows there is still massive scope for increasing trade between the two countries.

At a time when India Inc. is struggling with sluggish consumption at home and rising competition abroad, markets like Vietnam offer hope.

Indian companies are executing projects worth almost a billion dollars in Vietnam in the oil and gas, minerals, sugar, agro-chemicals, IT and agricultural processing sectors.

Riding the close ties between the two countries, many leading Indian business houses such as the Tatas, Reliance Industries, Aditya Birla Group, ONGC Videsh, Tech Mahindra, Godrej, NIIT and Ranbaxy, among several others, have set up operations in Vietnam.

Strong message in joint statement

Modi and his Vietnamese counterpart released a vision document to deepen, broaden and expand this burgeoning bilateral relationship during 2021-23. “This joint vision for peace, prosperity and people will send a strong message to the world about the depth of our relationship,” Modi said.

It doesn’t take a rocket scientist to figure which country that message was aimed at.