With China watching, India, Vietnam to deepen economic embrace

In a clear signal that Vietnam is a special friend and strategic partner of New Delhi, India will be rolling out the red carpet for Prime Minister Nguyen Tan Dung Oct 27-28, a visit that comes just five weeks after President Pranab Mukherjee’s high-profile trip to Hanoi.

It’s rare to see a spate of two-way top-level visits between the two countries in the same year, but ever since the new Modi government has taken charge in Delhi, it’s been brisk business between the two countries, with India-Vietnam ties effortlessly building on robust foundation laid down in the last few years. India’s External Affairs Minister Sushma Swaraj travelled to Vietnam in August, followed by President Mukherjee in September. And now, Prime Minister Tan Dung will be in Delhi on a state visit that’s expected to galvanise multi-faceted economic ties between the two Asian economies which are poised for higher economic growth in days to come.

Announcing the visit on October 24, Syed Akbaruddin, the spokesperson of India’s external affairs ministry, described Vietnam as “one of our strongest and friendly countries in the ASEAN.”

The core focus of the visit will be economic as strategic and defence ties were dealt with exhaustively during President Mukherjee’s trip. The two countries have already exceeded their trade target of $7 billion set for 2015 ahead of schedule, and will be looking to map out new opportunities emerging in the economic arena. This economic focus will be reflected in the 50-strong delegation comprising a veritable who’s who of Vietnam’s business word the Vietnamese prime minister will be bringing with him to India.

Sanjay Bhattacharyya, joint secretary (south) in charge of Vietnam in India’s external affairs ministry, underlined that these focal areas of future economic cooperation will include textiles, chemicals (dyes and agro-chemicals), machinery, leather and footwear, finance, tourism and IT.

Infrastructure will be a major area of Indian investments. The big-ticket project will include the involvement of an Indian company in a big-ticket contract for managing and maintaining the Hanoi-Haiphong highway project, which is estimated to be worth $2 billion.

Placing the burgeoning economic ties against the larger backdrop, Bhattacharyya said: “This is a time when India and Vietnam are poised for sustained higher level of economic growth and Asia has emerged as a centre for global economic recovery.”

At the forthcoming talks between India’s Prime Minister Narendra Modi and his Vietnamese counterpart in New Delhi, the two sides are expected to announce a fresh trade target of doubling bilateral trade to $15 billion by 2020 and seal a pact for India’s involvement in the development of an industrial park in Vietnam.

The China factor

Although the focus of the forthcoming trip by Vietnam’s prime minister will be predominantly economic, the symbolic significance will not be lost on China, which has warily looked at the closer Delhi-Hanoi strategic and economic embrace with a distinct unease. China has repeatedly objected to Indian companies’ involvement in oil exploration in South China Sea, which it claims in entirety. But India has made it clear that its energy cooperation with Vietnam is strictly bilateral, and does not impact the interests of any third country. New Delhi reiterated this position again on the eve of the Vietnam prime minister’s visit.

“Vietnam has offered some oil blocks in South China Sea. We are examining it and if they are commercially viable for us we will take that into account and proceed further,” said Syed Akbaruddin when asked if China’s concern on India’s presence in the South China Sea will be an impediment in the country accepting Vietnam’s offer of five additional oil blocks to it. “India and Vietnam relationship is not contingent on other countries. Our relationship is a bilateral one and we focus on those bilateral issues,” the spokesperson stressed.

A Letter of Intent was signed between India’s state-owned oil major ONGC Videsh Limited (OVL) and Vietnam Oil and Gas Group (PetroVietnam) during President Mukherjee’s visit to that country last month.

Vietnam is an attractive hub for globally-bound Indian companies. India has already 68 operational projects in Vietnam worth around $1 billion. Indian investments encompass diverse sectors, including oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, IT, and agricultural processing.

India has positioned itself as a key development partner of Vietnam. New Delhi has extended 18 lines of credit worth 184 million USD for infrastructure projects. It has also agreed to earmark $ 100 million as Buyer’s Credit under the National Export Insurance Account.

People-to-people contacts, travel and tourism are poised for an upswing with Jet Airways (India) Ltd set to start direct flights connecting Delhi and Mumbai to Ho Chi Minh City on November 5. Vietnam Airways will start its operations to India under a code share agreement with Jet Airways early next year.

India is set to open a Cultural Centre in Hanoi later this year. The old linkages of the Cham civilization between India and Vietnam will acquire a new resonance, with the Archaeological Survey of India embarking on a conservation and restoration project to refurbish centuries-old Hindu temples at the UNESCO heritage site of My Son in Vietnam.

Author Profile

Manish Chand

Manish Chand is Founder-CEO and Editor-in-Chief of India Writes Network (www.indiawrites.org) and India and World, a pioneering magazine focused on international affairs. He is CEO/Director of TGII Media Private Limited, an India-based media, publishing, research and consultancy company.