India, Vietnam sign defence deal, ink six other pacts

In a sign of an increasingly pragmatic foreign policy, India has cemented strategic partnership with Vietnam by extending a $100 million export credit to Vietnam for defence deals and consolidated energy ties. The two countries also underlined their joint commitment to ensuring maritime security and called for “freedom” of navigation in the South China Sea, a by-now standard diplomatic formulation that is aimed at cautioning China against escalating assertiveness in the disputed water body.

Two days ahead of China’s President Xi Jinping’s maiden trip to India, New Delhi also signed seven pacts with Hanoi, which has challenged China’s claims on South China Sea with increasing vigour.

These agreements were signed on the second day of India’s President Pranab Mukherjee’s visit of Vietnam. Mukherjee held wide-ranging talks with his Vietnamese counterpart Truong Tan Sang, and also engaged with Mr. Nguyen Phu Trong, General Secretary of Vietnam Communist Party, Vietnam’s Prime Minister Nguyen Tan Dung.

Steeping up defence ties proved to an important outcome of the latest round of high-level engagement between India and Vietnam. “The leaders agreed that defence and security cooperation was an important pillar of the strategic partnership between the two countries,” a joint statement said after the talks.

Vietnam is expected to buy patrolling vessels from India from the new line of credit.

The two sides also agreed to “consolidate” energy cooperation. A Letter of Intent (LoI) was signed between the ONGC Videsh Limited (OVL) and Vietnam Oil for oil exploration in each other’s countries.

These new agreements underline the closeness that has developed between New Delhi and Hanoi. Vietnam has emerged as a key pillar of India’s Look East policy.

Both countries affirmed their commitments to “strengthen and deepen bilateral cooperation on the basis of the strategic partnership with focus on political, defence and security cooperation, economic cooperation, science and technology, culture and people-to-people links, technical cooperation and multilateral and regional cooperation,” said the joint statement.

The trade between the two countries has been on an upswing. Between 2010 and 2014 trade grew from 3.4 billion USD to around $6.2 billion. The two countries have set to target to expand bilateral trade $7 billion at the end of 2015, and $ 15 billion by 2020.

Taking a long-range view of their blossoming relationship, the two countries called for freedom of navigation and agreed to work closely to ensure “peace, stability, growth and prosperity in Asia.”

“The leaders reiterated their desire and determination to work together to maintain peace, stability, growth and prosperity in Asia. They agreed that freedom of navigation in the East Sea/South China Sea should not be impeded and called the parties concerned to exercise restraint, avoid threat or use of force and resolve disputes through peaceful means in accordance with universally recognised principles of international law, including the UNCLOS-1982,” said the joint statement.

The pacts also included extending a dollar credit line between Vietnam and EXIM Bank of India, agreement on co-operation and mutual assistance in customs matters, MoU on animal health, MoU on setting up of Pangasius breeding and farming in India, MoU on operating and jointly promoting direct air services between Vietnam Airlines and domestic Indian air carrier Jet Airways and MoU on cooperation in youth affairs and skill development.

The two countries also agreed on a new air connectivity deal, under which India’s Jet Airways and Vietnam Airlines will operate daily flights connecting Delhi, Mumbai and Ho Chi Minh city starting November 5.

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