India-Vietnam bilateral relations got a big boost during the regime of the UPA led government when both governments arrived at a strategic partnership including defence. This partnership is now one decade old and new possibilities have emerged to take the cooperation to a new high taking into account the changes that have taken place in both the economies. India is fetching big foreign investments in high tech areas from the developed countries while Vietnam is also looking for investments in key sectors where Indian companies have got high technology and expertise.

Vietnam is looking for investments from India in oil and gas, textiles, industrial components, pharmaceuticals, food processing, information technology, Infrastructure development and renewable energy. With Vietnam participating in twelve free trade agreements, the country has become a major gateway to exports into many large markets such as United States, Japan and European Union. Vietnam sources point out that Indian enterprises which invest in Vietnam and export to other countries, can enjoy a tariff of 0 per cent.

Indian side has to take into account this possibility because the Indian companies are presently having solid infrastructure and they are in a position to use Vietnam as a production base for exporting to third countries. Already, in oil and gas, India is active in Vietnamese waters though recently complications have arisen due to the controversy over maritime rights in South China Sea waters between Vietnam and China. India can invest in areas outside the purview of the present dispute. There is big scope for increasing bilateral trade which stood at US$ 7 billion at the end of 2015.The target for 2020 has been set at US$ 20 billion and this is achievable. Both the governments can even plan for a further hike in bilateral trade since new possibilities have opened up for stepping up the trade volume.

Indian companies have the appropriate technology to help the industrialization of Vietnam and Vietnam is also keen to get that. This opens up the big possibility of stepping up Indian investments which are quite low compared to the potential. Indian investment in Vietnam is put US$ 570 million at the end of 2015 ranking India 28th out of110 investors in Vietnam. This can be easily catapulted upwards and Prime Minister Modi is expected to discuss some new programmes to ensure that.

Prime Minister’s bilateral talks will focus on defence cooperation which assumes big significance now in the context of the strategic partnership between the two countries. Vietnamese defence minister visited India in May 2015 and in June 2016, Indian defence minister Manohar Parrikar visited Hanoi and had follow up discussions. Defence cooperation includes sale of military equipment, sharing of intelligence, joint naval intelligence, joint naval exercises and training in counter insurgency, India regularly deploys its warships for goodwill visits to Vietnamese seas. India is providing a US$ 100 million credit lie to Vietnam to buy four large patrol vessels to guard its waters.

The most delicate part of the discussions will relate to the exchange of views on the latest international ruling on South China Sea’s maritime rights castigating China. Prime Minister has to tread carefully in the discussions reiterating the consistent Indian position that the dispute should be resolved based on international law under the UN Convention of the Law of the Sea (UNCLOS).India has interests in South China Sea issue since about 50 per cent of its trade with Asia passes though this South China Sea maritime waters. Vietnam and China have conflicting claims in the area which include the Spratley and Paracel Island groups. Indian public sector ONGC Videsh’s explorations are located in South China Sea waters which are claimed by Vietnam but disputed by China.

PM Modi has to exercise his diplomatic skill in dealing this vexed South China dispute issue without antagonizing China on the eve of the G-20 summit when he is expected to meet the Chinese President. India needs the friendship of both Vietnam and China. It is unfortunate that the two socialist countries are at loggerheads for a long time on territorial issues and the United States is taking advantage of this. India should not be a party to any US game plan to corner China as a part of its Asian strategy. India should be dealing with Vietnam and China on its own based on tits national agenda. It is expected that the Prime Minister will be forthcoming at both Hanoi and Hangzhou reinforcing India’s strong positions on issues protecting national interests. (IPA Service)