India will be sending a high powered business delegation to the meeting and the companies will represent the major sectors of the economy including oil and gas refining, petrochemicals, power, infrastructure, steel, mining, real estate, food & beverage and information technology. Collaboration in oil and gas is a major area of discussions but Chinese Government’s warning to India on its proposed exploration activities in Vietnamese waters and India’s defying the same, have created an environment which is not congenial for free and frank discussions on collaboration between India and China.

India is seriously interested in collaboration with China in oil exploration in third countries and being dependent on oil imports for about 80 per cent of its domestic requirements, India is looking for new blocks for oil and gas exploration so that the production in these fields can be kept captive for use in India. As a part of this, Indian agency ONGC Videsh Ltd is expanding its operations in a large number of Asian, African and Latin American countries. ONGC’s presence in Vietnam is a part of this programme.

ONGC Videsh Ltd has been in Vietnam for quite some time in offshore oil and natural gas exploration and they are in the process of further expanding cooperation with Essar Oil Ltd also being awarded a gas block in Vietnam. India is having discussions in Vietnam as per international laws and India supports freedom of navigation in the South China Sea and hopes that all parties to the dispute including China would abide by the 2002 declaration of conduct in the South China Sea. The Chinese stance was discussed by the Indian external affairs minister S. M. Krishna during his discussions with the Vietnamese officials in Hanoi on September 16 and both the countries found no logic in the belligerence being shown by Chinese authorities on this issue.

In fact, Vietnam fully endorsed Indian stand and the Vietnamese Prime Minister gave the impression that the oil exploration and development work should be taken up by India on a priority basis. Vietnam gave all support to ONGC Videsh Ltd for speeding up the work as per schedule. Mr. Krishna’s talks on Friday have paved the way for expansion of OVL’s oil and gas exploration work. Both the countries sought to raise the level of business cooperation between the two countries and it was agreed that oil and gas exploration would remain a major area of collaboration, despite objections being made by China.

Indian officials noted during the discussions that Vietnam, though a Communist Party led country, has differences with China on a large number of issues and territorial waters boundary is one of them. China is also objecting to some of the maritime activities of Vietnam and that way, the bilateral relations are not at all cordial between China and Vietnam. Indian delegation during this meeting expressed satisfaction that the strategic partnership between India and Vietnam is developing well and the areas would cover defence and security, trade, investment as also education and culture.

Though the issue will be taken up by India with the Chinese Government at the highest level, it will have its echo at the trilateral summit as all the three countries are interested in expanding the areas of oil and gas exploration including participation in the construction of gas pipelines crisscrossing through different countries. Both Russia and China are interested in participating in the construction of the Turkmenistan- Afghanistan-Pakistan-India (TAPI) gas pipeline. China is equally taking interest in Iran-Pakistan-India (IPI) gas pipeline in which India is not taking much interest due to US opposition.

Oil and gas is a major area of interest as also conflicts for the three countries, but there are other areas which can be pursued by the companies of the three countries to further the areas of collaboration. The economic cooperation between India and China can be enhanced in the fields of power, steel, telecommunications, banking, information technology and pharmaceuticals. Indian companies are setting up power plants in the country in a big way with the help of the Chinese companies and there is a big rush for the Chinese power equipment. Indian Government has also granted credit facilities in the global market for the Indian companies in yuan upto a total of US$ one billion. This move by the Indian Government will allow the Indian companies to cut their borrowing costs as the dollar is turning dearer.

The decision to add yuan dominated overseas debts is significant amidst the growing importance of the Chinese currency and the development of a burgeoning offshore yuan market in Hong Kong. Borrowing costs in China are much lower than in India and many other markets. The Indian companies in the power and telecom sectors will be benefited with the low cost funds from the Chinese banks and this will help in the growth of trade and investment between the two countries. That way, there is scope for high growth in India-China trade in 2011 and 2012. Indian industry sources feel that the differences over the Vietnam waters issue should not derail discussions for collaboration in other areas. (IPA Service)