India-Vietnam Ties: Looking beyond the China factor


Authors: Manish Vaid & Tridivesh Singh Maini

Recent years have witnessed a deepening of ties between India and Vietnam. While robust foundations were laid by India’s first Prime Minister Jawaharlal Nehru and Vietnam’s leader Ho Chi Minh in 1954, successive governments have sought to strengthen bilateral ties with the last decade having seen an acceleration of strategic and defense ties. PM Modi’s upcoming visit is important in this context.

The strategic and defense partnership is likely to be further expanded. Some of the key issues on the agenda in this context are:

The SCS Factor

The verdict of The Hague’s Permanent Court of Arbitration on July 12, 2016 went against China, though India came up with a nuanced response. During PM Modi’s visit the SCS issue is likely to figure high on the agenda given that India’s ONGC Videsh Limited (OVL) has been given an extension by Vietnam (fourth time) for exploration rights in deepwater block 128 for yet another year until June 27, 2017.

India’s strategic gambit

Some of the specific items on the agenda include sale of supersonic BrahMos missile made under India-Russia joint venture to Vietnam after indecision since 2011, the negotiation of which is expected to be concluded by the end of 2016. Second, the contract for supplying of patrolling boats to Vietnam under a $100 million credit line by India is likely to be signed during the PM’s visit.

To support India’s strategic foothold in Vietnam, later has allowed India to activate its new satellite monitoring station at Ho Chi Minh City in southern Vietnam. This step will allow India’s role in Southeast Asia, helping the countries of the region, primarily meant for civilian use such as agricultural, scientific and environmental applications.

Focus on economics

While the China factor is important in the bilateral relationship. It is important for both countries not to get bogged down in this and for India to remember that China, in spite of its strained political relations with Vietnam has a robust trade relationship. Bilateral trade between India and Vietnam is estimated to be $8 billion, which is now targeted to $15 billion by 2020, whereas Sino-Vietnam trade has already reached $95.82 billion in 2015. The bilateral trade between China and ASEAN have reached $472 billion in 2015, which is over six-times than that of India’s trade with ASEANregistering at $76.53 billion during 2014-15, which is now targeted to $200 billion by 2020. It is true that sections of the business community in Vietnam as in many other countries are beginning to explore other vistas and reduce their excessive dependence upon China – especially for sourcing raw materials.

Therefore, Modi’s Vietnam’s visit is also likely to focus on giving a strong thrust to economic and commercial ties which can double the current bilateral trade to $15 billion by 2020. This was well noted by the Vietnam Prime Minister while hosting new Indian Ambassador Harish Parvathaneni in Hanoi on August 23, who urged both the countries to step up cooperation in the fields of science, technology, finance, information technology and telecommunications.

Just as it has broadened strategic ties with Vietnam, India should look out to take new strides to cooperation in the field of economics and energy. In case of energy cooperation the Letter of Intent has already been signed between OVL and PetroVietnam during President of India’s visit to Vietnam in September 2014. This will consolidate energy cooperation between the two countries further. India should also look to increase the level of its investments, which is currently estimated at $1 billion and way below the actual potential.

Thus to strive for sustainable partnership India and Vietnam should have a long term outlook in to their trade relationship which is built upon their strategic intent while keeping in mind the bigger picture. Vietnam, while hosting Asia-Pacific Economic Cooperation in 2017 should invite India to join the grouping in case there is a consensus to lift the moratorium imposed on new joining.

In conclusion, India’s ties with Vietnam cannot be restricted merely to the strategic sphere for a truly meaningful relationship an expansion in economic ties is needed.

Manish Vaid is a Junior Fellow with the Observer Research Foundation having research interest in energy policy and geopolitics.

Tridivesh Singh Maini is a New Delhi based Policy Analyst with The Jindal School of International Affairs. His research interests include; India-China relations, The China Pakistan Economic Corridor and India’s Act East Policy.

Disclaimer: Views expressed in this article are those of the authors


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