In South China Sea, India’s concern relates to its trade since half of its trade passes through the South China sea water and Vietnam’s agony relates to its maritime right, which was overpowered by China’s claim of sovereignty. In 2014, a dispute erupted in between Vietnam and China over the maritime right when a Chinese oilrig company conducted oil drilling inside the Vietnam’s Exclusive Economic Zone (EEC). Country wide anti-China protest raged Vietnamese, resulting 21 deaths in the country. This caused a bitter relation between Hanoi and Beijing since then.

After the UN arbitration ruling and China’s defiance to it, India was at loggerheads with its off-shore oil drilling in Vietnam territorial water. In 2006, ONGC of India was awarded two oil blocks in Vietnam territorial water. One of them was relinquished by ONGC. The remaining Block 128 got entangled with the dispute, when Chinese company, China Off-shore National Company (CNOOC) invited global bids for nine blocks, which are located in the Vietnam EEC. Of these, two oil blocks overlap half of ONGC’s Block 128.

Even though China is the biggest trade partner of Vietnam, it could not make a dent in the preference list of Vietnamese. India is much above China in the Vietnamese choices, despite the economic relations between the two countries is at low ebb and the country is ruled by communist regime (Communist Party of Vietnam).

According to Pew Research Centre, USA of its Global Attitude survey, (covering 1000 opinions), 66 percent of Vietnamese have favourable opinion about India, against 19 percent for China. Further, 56 percent of Vietnamese have confidence in Modi’s leadership for driving the world affairs in right direction, compared to 20 percent in favour of Chinese President Xi Jinping.

The survey also found that a higher proportion of Vietnamese, 60 percent, were much concerned about territorial disputes with China.

Modi’s visit to Vietnam after the UN arbitration raised a hope for Vietnam to strengthen its arm to put pressure on China. Vietnam did not put direct pressure on Beijing, fearing China’s political and military clout. It was sending signal of its concerns through mustering the support of other powerful countries opposing the Chinese defiance. India is one of them.

To this end, Modi’s visit to Vietnam was a shot in the arm. It beamed a ray of hope for revamping the relation between the two countries. The ten-year-old strategic partnership status between India and Vietnam was jacked up to a Comprehensive Strategic partnership, unleashing a deeper meaning of all round cooperation between the two countries. The Joint Statement, asserting to build the Plan of Action of Comprehensive Strategic Partnership to reality in all areas of cooperation, caught the attentions of global strategists. In this respect, India’s commitment for line of credit worth US $ 500 million for procurement of defence equipment and implementation of India-Vietnam Defence Relations of May 2015, can be treated counterweight to China’s military clout.

India is among the ten trading partners of Vietnam. Currently, the total trade between the two countries is about US $ 8 billion. In terms of India’s global trade it is insignificant. It accounts for 2 percent only. Modi’s visit enhanced the target to US $ 15 billion by 2020.

Even though Vietnam is not a major trading partner of India (28th rank), it offers ample opportunities to the Indian investors to penetrate in the emerging global biggest free trade block. Currently, Indian investment in Vietnam is worth US $ 1 Billion. Vietnam offers a gateway to TPP (Trans – Pacific Partnership). TPP is a biggest Pacific nations’ free trade block, comprising of USA, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

India is not the member of TPP. Neither India is interested to become member of TPP. Paradoxically, the countries, who play major role in ushering Modi’s Act Asia policy, are prominent members of TPP. Vietnam is one of them, besides Singapore and Malaysia. Given the opportunity of Vietnam to accelerate its trade relations with global majors utilizing the TPP free trade block, Indian investment in Vietnam can reap bigger opportunities to enhance trade with these global majors.

Textile is a case in point where the Indian investors in Vietnam can reap the opportunity. India and Vietnam are complimentary in textile exports.

emerged as the biggest threat from Vietnam for trade diversion from India after TPP became reality in 2015. Vietnam is the second biggest exporter of readymade garments to USA (after China). It accounts for 12 percent of USA imports of garment.

Textile is the single major item of India’s world export and USA accounts for 40 percent of India’s total export of textiles. With the duty preferences provided by USA to member countries under TPP, threats loom large over the fate of India’s export of textiles to USA.

With Modi’s visit to Vietnam and setting up a template of Comprehensive Strategic Partnership, India’s opportunity to invest in Vietnam enhances. By investing in textile industry in Vietnam, India can regain its lost paradise of textile export in the world.

In summing up, Modi’s visit to Vietnam rejig the relationship between the two countries for culminating Act Asia policy and threw a counterweight against Chinese hegemony in South China Sea. (IPA Service)