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Changing Balance of Power and India-Vietnam Relations (Part 3)

29/12/2016


Changing Balance of Power and India-Vietnam Relations (Part 3)


(Part 2)

Changing Balance of Power and India-Vietnam Relations

Sanjay Pulipaka*

 

In 2013, India offered $ 100 million line credit line for the purchase of patrol boats from India. During President Mukherjee’s visit to Vietnam in 2014 noting “that defence and security cooperation was an important pillar of the strategic partnership between the two countries” both countries signed an MOU for line of credit of $100 million for facilitating defence procurement by Vietnam.[1]  In 2016, during the visit of Defence Minister Manohar Parrikar the bid documents for building patrol vehicles between Vietnam Border guards and Larsen & Toubro (L&T) were exchanged.[2] It has been reported that Varunastra – heavyweight anti-submarine torpedo that was inducted into the Indian Navy recently – may also on the offered to Vietnam. Further, India has indicated a willingness to sell BrahMos missile to Vietnam.[3] Referring to the proposed sale of BrahMos missile to Vietnam, Defence Minister Manohar Parrikar stated that “in-principle decision has been taken to allow exports to certain countries who are in friendly relationship with us.”[4] India is reportedly planning on upgrading two of the Vietnam’s frigates and “the package to upgrade the ships would include a new sonar system, torpedo launchers, a fire control system and a new antisubmarine rocket launcher system.” In a significant development, in January 2016, it has been reported that Indian Space Research Organisation (ISRO) will set up satellite tracking and reception centre in Southern Vietnam and this will give Vietnam to access ISRO imagery directly without any delays.[5] There is perception that this centre may be used for civilian as well as military use.

Economic Cooperation – An Area for Improvement

The major trade partners of Vietnam are China, Japan, USA, and South Korea with some variations in terms of ranking year on year. It is interesting that for Vietnam, strategic collaborators are not the biggest trade partners and like many countries in the region it is making efforts to ensure that there is congruence between the two. Joining TPP seems to be an attempt at ensuring that there is some congruence between largest trade partners and strategic partnership.

It is here that countries such as India should step forward to enhance the trade relationship with Vietnam. According to the statistics of Director General of Foreign Trade, India, the bilateral trade between India and Vietnam amounted to more than $ 9 billion during 2014-2015. The data in the adjacent Figure (4) indicates that the trade relationship is witnessing steady improvement except for a dip in 2015-2016. It is being estimated that the bilateral trade may touch $20 billion by 2020 and Vietnam is looking for investment from India in the realms of infrastructure, power generation, information technology, education and pharmaceuticals.[6] According to Indian government sources, the major items exported to India include “mobile phones and components, machinery, computers & electronic hardware, natural rubber, chemicals and coffee.”[7] While India is considered to be among the top ten trading partners of Vietnam there is still significant scope for improvement. [8]

The future areas of economic interactions could involve Vietnam textile industry importing fabric and yarn from India and exporting low priced garments to India.[9] Interestingly, it is being anticipated that with Vietnam joining the TPP, Indian companies may be interested to invest in Vietnam to take advantage of the new trade pact. Indian diplomats have noted that “a growing number of Indian firms are seeing Vietnam as an appealing investment destination with the arrival of the Trans-Pacific Partnership (TPP), signed early this year and expected to take effect in 2018.”[10]  The economic relations, therefore, have a substantive potential to evolve into backbone of the bilateral relationship. 

Conclusion

All this indicates that for India’s Act East Policy, Vietnam has emerged as an important pillar. There is congruence between the two counties in their regional policies. The defence cooperation between the two countries will witness steady improvement. It is time for both countries to explore new avenues of collaborating with other countries on new platforms. India and Vietnam should strive to scale-up the economic component of their engagement. This will require closer examination of the opportunities and proactive policies specifically benefitting each other. India and Vietnam constitute important pillars of multipolar Asia and will determine the trajectory of Asian geopolitics in the years to come.

 


[1] ​Joint Communiqué between the Socialist Republic of Vietnam and the Republic of India (Hanoi, 15 September 2014), Ministry of External Affairs, September 15, 2014, available at http://www.mea.gov.in/bilateral-documents.htm?dtl/23997/Joint+Communiqu+between+the+Socialist+Republic+of+Vietnam+and+the+Republic+of+India+Hanoi+15+September+2014

[2] "L&T Likely to Build Patrol Vessels for Vietnam," The Hindu, June 6, 2016, available at http://www.thehindu.com/business/Industry/lt-likely-to-build-patrol-vessels-for-vietnam/article8697433.ece 

[3] Pradip Sagar, "India Plans to Export Brahmos to Vietnam," Indian Express, June 10, 2016, available at http://www.newindianexpress.com/nation/India-plans-to-export-Brahmos-to-Vietnam/2016/06/10/article3475122.ece 

[4] “Export of Missile Systems to Friendly Nations gets Centre Nod,” Indian Express, June 17, 2016, http://indianexpress.com/article/india/india-news-india/missile-systems-export-india-manohar-parrikar-2859454/   

[5] Sanjeev Miglani and Greg Torode, "India to build satellite tracking station in Vietnam that offers eye on China," Reuters, January 25, 2016, available at http://in.reuters.com/article/india-vietnam-satellite-china-idINKCN0V309W

[6] "India-Vietnam trade may rise to $20 billion by 2020: Thanh," The Economic Times, January 13, 2015, available at http://articles.economictimes.indiatimes.com/2015-01-13/news/58024495_1_pharmaceutical-research-and-production-india-and-vietnam-india-vietnam

[7] "India-Vietnam Relations," Ministry of External Affairs, December 2014, available at http://www.mea.gov.in/Portal/ForeignRelation/Vietnam_Dec2014.pdf

[8] "India-Vietnam Relations," Ministry of External Affairs, December 2014, available at http://www.mea.gov.in/Portal/ForeignRelation/Vietnam_Dec2014.pdf

[9] Rajiv Kumar, "Why India-Vietnam Ties are Important," DailyO, October 10, 2014, available at http://www.dailyo.in/politics/why-india-vietnam-ties-are-important/story/1/498.html

[10] "TPP spurs Indian Trade,"  VBN.com, August 01, 2016, available at https://www.vietnambreakingnews.com/2016/08/tpp-spurs-indian-trade/

 


* Senior Consultant at the ICRIER, New Delhi. The views expressed here are personal

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