India-Vietnam Relations

India supported Vietnam’s independence from France, opposed American involvement in the Vietnam War, and supported unification of Vietnam. India was one of the few non-communist countries to assist Vietnam during the Cambodian–Vietnamese War. In recent years, relationships between India and Vietnam have grown from warm friendship to comprehensive Strategic Partnership. Apart from mutual commercial interests, the two countries also have deepened defense and strategic cooperation.

Vietnam factor is also important in Sino-India relations especially in terms of defence relationship and position on the South China Sea.

India Vietnam Relations: Historical Background

The cultural and economic ties between India and Vietnam began as back as in the 2^nd century. Later, political ties gained centre stage when India condemned US action during the Vietnam War. India also assisted the country in the Cambodian-Vietnamese War as one of the few non-communist countries. Economic ties were extended in the year 1992 through agriculture, manufacturing and oil exploration. Diplomatic relations were established in 1972 with North Vietnam.

In 1975, India granted ‘Most Favoured Nation’ status to Vietnam. In 1993 the Indo-Vietnam Joint Business Council In 1997, the Bilateral Investment Promotion and Protection Agency was set up in 1997. In November 2007, a thirty-three points cooperation was entered into between the two countries which included the following areas: political, defence and security, economic cooperation, commercial arrangement, science and technology, cultural and multilateral and regional cooperation

What is the Current Status of the Relationship?

The current areas of extended relationship include oil, trade, defence and other economic engagements.

Oil

• The two countries have started venturing into oil resources in the South China Sea.
• The companies-ONGC and PetroVietnam Exploration Production Corp have signed an agreement to explore three oil blocks in the region.

Trade

• With an indication to boost strategic comprehensive partnership for the purpose of bringing in stability, prosperity and security, the Vietnamese government has suggested extending trade with India to a value of $15 billion by the year 2020.

Defence cooperation

• This is one of the major areas of cooperation between the two countries. India gives credit to Vietnam in order to buy Indian weapons and trains the Vietnamese sailors. India has also agreed to accelerate the production of patrol boats for enhancing naval training.
• A $500 million line of credit has been extended to the country. The plan is to jointly fight against global crimes like piracy, human and drug trafficking, insurgency, climate change etc. India has also promised to help in firstly modernizing the military force of Vietnam by monetary help in buying naval warships.
• It has decided to extend a money credit of US $100 million for purchasing of four Offshore Patrol Vessels. India is negotiating to sell its BrahMos cruise missile to Vietnam. India has also roped in training help for the military. The submarine training centre INS Satvahana has agreed to train upto 500 Vietnamese sailors in ‘comprehensive underwater combat operations.

Economic agreements

• One major contribution is the Mekong-Ganga Cooperation under which several developments are being agreed upon. These include: infrastructure, facilitation of trade, reduction in transaction costs, improving funding, interconnectivity of labour markets and most importantly, the expansion of the trilateral highway ( including presently, India, Myanmar and Thailand). The aim is to primarily increase connectivity between the corridors which will make clear all trade, transport and intellectual exchange routes.

The China Angle

India and Vietnam have signed the deal to explore oil in South China Sea. Vietnam is also looking forward to enhancing its relationship with India in the light of a rivalry that is arising between China and USA. It is trying to prevent itself from being caught in the middle of this rivalry. Further, India is a very good hub for defence cooperation for Vietnam. Not only is the country benefitting from the existing facilities but is also looking forward to getting access to the weapons technology that India possesses from Russia so that its stockpile can be upgraded. All this is being done to counter any claim by China. Although Chinese and Vietnamese trade stands at $95.8 billion I 2015, the country is nevertheless trying to boost its economic trade value with India at a faster pace as possible. In the light of the maritime sovereignty dispute, Vietnam seeks to reduce its dependence on the Chinese economy.

India too sees this partnership as an opportunity to counter China’s rising stake in major strategic regions. The recent disputes that have arisen can be solved through this mechanism.

Further Scope of Partnership

One could be developing signal intelligence and imaging, intelligence sharing, increased surveillance capabilities in the region, joint military exercises etc. in the defence sector.  In the economic sector, the trade percentage can still be improved from a mere 1.22% of total trade. There can be a realization of Free Trade Agreements in both services and investments through the ASEAN. The two countries are also having a good Foreign Direct Investment in the manufacturing sector, so they can make better and innovative deals in manufacturing capacities. India should further try to get integrated into the Regional Comprehensive Economic Partnership (RCEP) and then take advantages of bilateral economic relationships. It can also be done through development of greater direct bilateral connectivity and easing visa regulations for business individuals. India can include Vietnam in its ‘Ease of Doing Business’ list which will make economic agreements even easier. India can help in developing Vietnam’s shipping industry by constructing a viable maritime infrastructure with much needed investment and quality manpower.

Another huge potential lies in the development of renewable energy utilizing resources. These include investment in projects relating to solar power, hydropower, bio fuels, wind power and photovoltaics. This will add a lot not only to economic ties, but everlasting ties also relating to environment and climate change.