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Modi’s Vietnam Policy: Snatching South China Sea from China

Ashutosh Muglikar
by Ashutosh Muglikar
6 September 2016
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India extends $500 million to Vietnam to bolster defence ties

As a part of Prime Minister Narendra Modi’s “Look East Policy”, India on Saturday extended a USD 500 million line of credit to Vietnam to deepen defence cooperation and signed 12 agreements which includes a deal to construct offshore patrol boats (by L&T).

This is significant as China is perceived to flex its muscles in the South China Sea region which forced US President Barack Obama to request China to exercise “caution”. This move and increased cooperation is surely going to be keenly watched by China.

This concrete elevation of strategic ties to a comprehensive strategic partnership is preceded by long term efforts by the Modi Government since 2014.

Early in August 2014 External Affairs Minister Sushma Swaraj visited Vietnam and In September 2014 President Pranab Mukherjee.

These visits were followed by Prime Minister of the Socialist Republic of Vietnam, H.E. Mr. Nguyen Tan Dung visiting India from October 27-28 2014.

Since 2014 India and Vietnam have signed multiple agreements/arrangements/dialogues ranging from annual Security Dialogue, service to service cooperation, ship visits, training, capacity building and cooperation at the regional fora including on Humanitarian Mine Action under ADMM-Plus and maritime agreement. ONGC and Petro Vietnam had signed an agreement for oil exploration.

The agreements range from defence, IT, space, cyber security to sharing of shipping information showcasing the depth of this fresh warmth between these two nations. This move has surely rattled China as India is now the third Country with whom Vietnam has defence ties, the other two being China and Russia.

It is pertinent to note that the recent International Arbitral award on South China Sea dispute has put Vietnam, Philippines, Taiwan, Malaysia, Brunei and China at loggerheads over the “ownership” of the South China Sea.

It will be in India’s interest that Vietnam exercises control over South China Sea as it is considered rich in oil and natural gas deposits. India is playing a long term strategy to ensure its energy demands are met and are secured.

This extension of credit line is the result and very important step towards the above-mentioned stated goals.

A “line of credit” is a loan extended to a government. It is like a source of fund which can be tapped by them to purchase goods and service. So if Indian government is extending credit to Vietnam then this money will be used by latter to buy defence or other equipment from Indian Companies.

This line of credit being a sovereign commitment there government of Vietnam is backing it. This will give business to Indian Companies and effectively strengthening #MakeInIndia, spurring manufacturing and providing jobs. At the same time it is helping in furthering ties with a nation. Win-Win for all.

ASEAN is important to India in terms of historical links, geographical proximity cultural ties and the strategic space that we share. It is central to India’s ‘Act East’ policy. Such positive and well strategized steps will help in long term to counter China’s influence in the region.

Tags: ChinaIndiaNarendra ModiSouth China SeaVietnam
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Ashutosh Muglikar

Ashutosh Muglikar

I am a Company Secretary by profession. Director at Propelis Consulting | IndiaFirst | In pursuit of happiness | Maverick

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