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Indo - Vietnam Strategic Cooperation in the 21st Century (Part 1)

07/10/2016


Indo - Vietnam Strategic Cooperation in the 21st Century (Part 1)

India has had a trusted friend in Vietnam for long time now. Hanoi is gradually becoming the linchpin of this eastward move by New Delhi. There have been several high-level visits from both sides in recent years. Vietnam and India has gained that India will also lead to a more stable balance of power in the region.


Indo - Vietnam Strategic Cooperation in the 21st Century

Pramoda Patel*

India has had a trusted friend in Vietnam for long time now. Hanoi is gradually becoming the linchpin of this eastward move by New Delhi. There have been several high-level visits from both sides in recent years. Vietnam and India has gained that India will also lead to a more stable balance of power in the region. Vietnam and India has gained.

India has had a trusted friend in Vietnam for long time now. In fact, the two nations share a historical connect tracing back to the 2nd century, when Indian traders sailed across to the regions of Indo-China. The Hindu kingdom of Champa first appeared around the modern-day Da Nang,a port city in Vietnam, in the late 2nd century. They adopted Hinduism, employed Sanskrit as a sacred language and borrowed heavily from Indian art. Till date, the souls of our nations continue to be connected and guided by the teachings of the Buddha, which not only influence our way of life, our beliefs and values, but also our dealings with each other. There was a time when Vietnam was a household name in India, especially in West Bengal where people had once identified themselves with Vietnam through the slogan, “Aamar naam, tomar naam, Vietnam Vietnam (my name, your name, Vietnam, Vietnam). India prides in the fact that she supported Vietnam in its struggle for independence and national construction. In fact, Jawaharlal Nehru was the first foreign leader to visit Vietnam after their victory against the French.

In recent times, political contacts have strengthened as several high-level leaders from both sides visited each other’s country. Trade and economic linkages continue to grow. India's thrust under the 'Look East' policy and ‘Act East’ Policy combined with Vietnam's growing engagement within the region and with India has paid rich dividends. Vietnam is an important regional partner in South East Asia. India and Vietnam closely cooperate in various regional forums such as ASEAN, East Asia Summit, Mekong Ganga Cooperation, Asia Europe Meeting (ASEM) besides UN and WTO.

The induction of Vietnam into the ASEAN Regional Forum (ARF) was also meant to enhance collective security through greater engagement with Indo-Chinese countries. India's induction into ARF, which was initially supported by China, showed that Beijing considered India an independent power capable of balancing the United States within the forum(1). However, during the East Asian Summit (EAS) its position changed as it opposed the entry of India. China thought this would undermine its leverage within the organization. China was also worried about erosion into its regional hegemony by India's induction and by the growing proximity between India and the United States. This shows that China‘s priorities with regard to India underwent a shift necessitating that she engage herself with friendly countries like Vietnam, which have supported her cause during the EAS, so as to have a greater say in the affairs of Southeast Asia. In addition, the two countries' threat perception with regard to China is more pronounced in comparison with others in Southeast Asia. India should also engage countries in the strategic periphery of China, similar to the strategy adopted by China with regard to enhancing relations with India's neighbours. India did take initiatives to engage Mekong riparian states through sub-regional initiatives like the MGC and BIMSTEC. However, as an organization the MGC is on the verge of redundancy. The major reason for its failure is the lack of government funding and initiatives and China's proactive pursuit of the GMS initiative. But in the Mekong River Commission China is represented by Yunnan, which emphasizes the fact that southern China and Indo-China have developmental convergence, and that it should not become an instrument of Chinese hegemony in the region(2).

Economic and Commercial Relation

Under the "Most Favoured Nation" status granted to Vietnam in 1975 (4), both nations signed a bilateral trade agreement in 1978 and a  Bilateral Investment Promotion and Protection Agreement (BIPPA) on March 8, 1997. The Indo-Vietnam Joint Business Council has worked to promote trade and investment since 1993. In 2003, both nations promulgated a Joint Declaration on Comprehensive Cooperation when the General Secretary of the Communist Party of Vietnam visited India and both nations were negotiating a free trade agreement( 5). In 2007, a fresh joint declaration was issued during the state visit of the Prime Minister of Vietnam(6).

Bilateral trade has increased rapidly since the liberalisation of the economies of both Vietnam and India. India is the 13th-largest exporter to Vietnam, with exports that have grown steadily from $11.5 million in 1985-86 to $395.68 million by 2003.Vietnam's exports to India rose to $180 million, including agricultural products, handicrafts, textiles, electronics and other goods. Between 2001 and 2006, the volume of bilateral trade expanded at 20-30% per annum to reach US$1 billion by 2006(7). Continuing the rapid pace of growth, bilateral trade is expected to rise to $2 billion by 2008, 2 years ahead of the official target. India and Vietnam have also expanded cooperation in information technology, education and collaboration of the respective national space programmes. Direct air links and lax visa regulations have been established to bolster tourism(8). In 2010, as the ASEAN-India free trade agreement came into effect, bilateral trade exploded to US$3.917 billion by the end of 2012, with Vietnam exporting $1.7 billion to India in 2012, an increase of 56.5% from 2011. Bilateral trade between India and Vietnam has seen continuous growth over the past few years. India is now among the top ten trading partners of Vietnam. According to Vietnam's official data, total trade volume touched US$ 3.94 billion in 2012. According to India’s official data, bilateral trade touched US$ 6.1 billion in 2012. This discrepancy is due to the fact that Vietnamese data does not include Indian exports/imports routed through third countries, such as Singapore or exports to third countries through Vietnam. During the first nine months of 2013, trade registered an increase of 39% vis-à-vis the corresponding period of last year. Exports from India reached US$2.1 billion, up 31% while exports from Vietnam were US$ 1.84 billion, up 49%. During the visit of General Secretary Nguyen Phu Trong to India in November 2013, both sides revised the trade target (of US$ 7 billion by 2015) to US$ 15 billion by 2020.

Vietnam continues to be an attractive investment destination for Indian companies. As of June 2013, according to the figures from Vietnam's Foreign Investment Agency, India has 73 investment projects with total registered capital of US$ 252.21 million. If investments by Indian companies from third countries are included as well, India has 68 valid projects with an estimated total investment capital of US$ 936.23 million. Indian companies are investing in oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, IT, and agricultural processing. Vietnam has three investment projects in India with total investment of US$ 23.6 million(8).  As of 2015 bilateral trade stands at US$ 7 billion & both nations have agreed on a target of US$ 20 billion by 2020. Vietnam continues to be an attractive investment destination for Indian companies. India is ranked as the 27th largest investor in Vietnam with 141 projects and with the registered capital of $ 630.49 million. However, if investments by Indian companies from third countries are included as well, India’s estimated total investment capital cross the figure of US $ 1 billion. Indian companies are investing in oil and gas exploration, mineral exploration and processing, sugar manufacturing, agrochemicals, IT, and agricultural processing. Additionally TATA group has been allotted a project of $2.1 billion in thermal power plant in Soc Trang province. Vietnam also has three investment projects in India with total investment of US$ 23.6 million. ONGC Videsh Ltd. (OVL), NIVL Ltd, KCP Industries Limited, Ngon Coffee Manufacturing, Tech Mahindra,CCL are some of the major Indian investors. (Part 2)


Editor-in-chief of Nam Today.

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