With eye on China, India offers Vietnam $300 mn line of credit

India and Vietnam announced a new plan of action to boost their comprehensive strategic partnership, while concluding an agreement for Indian credit lines worth $300 million to strengthen the southeast Asian nation’s maritime security, as PM Narendra Modi hosted his counterpart Pham Minh Chinh amid renewed tensions in South China Sea (SCS).
While announcing the initiatives, and in a dig at Beijing, Modi said India stands for evolution, not expansionism. He said new steps were being taken to boost defence and security ties, including inauguration of an army software park in the coastal city of Nha Trang.
A powerful pillar of India’s Act East policy, Vietnam has seen ties with its Communist neighbour improve lately, and President Xi Jinping visited Hanoi last year, but it remains, like some of its other Asean neighbours, at the receiving end of China’s expansive and contested nine-dash line claim over SCS waters.
“We share unison in our views regarding the Indo-Pacific region. We will continue our cooperation for a free, open, rules-based and prosperous Indo-Pacific,” said Modi, adding they also emphasised cooperation on the issues of terrorism and cyber security.
Apart from the credit lines that will be used by Vietnam for defence procurement, and the plan of action for the implementation of the comprehensive strategic partnership during 2024-2028, the two sides signed seven other agreements. Pham said both sides agreed to share information and work together to ensure peace and stability in SCS.
Defence and security remains the most important of the five pillars that the strategic partnership is based on. Despite China’s objection against exploration in the contested SCS waters, India and Vietnam have continued with their partnership in the oil and gas sector, including exploration and production in Vietnam’s continental shelf. The leaders underlined the significance of this “mutually beneficial” cooperation.