The past few months have seen growing engagements between India and Vietnam. While China’s aggression remains a common concern, for India this is also an opportunity to reset its engagements with ASEAN after opting out of the RCEP in November.
Indian and Vietnamese navies recently concluded a two-day passage exercise in the South China Sea as part of a series of accelerated engagements between the two countries in recent months.
This exercise aside, other engagements include two bilateral virtual summits—one between the defense ministers and another between the prime ministers of both countries—as well as agreements to jointly train pilots and collaborate in shipbuilding and submarines. India handed over a high-speed boat to Vietnam under a US$100 million credit line and Vietnam has shown an interest in buying the Brahmos missile.
Why is India urgently reaching out to Vietnam?
The strategic ties between India and Vietnam have grown since they formulated their Comprehensive Strategic Partnership in 2016. While China’s assertive actions have driven the two countries closer together, there are other aspects to India’s outreach to Vietnam.
When the Regional Comprehensive Economic Partnership (RCEP) came into effect in November, India chose not to be a part of this trade bloc. India’s disputes with China and concerns about Chinese goods finding their way into the Indian market directly or indirectly led to this decision.
“New Delhi had announced its decision on RCEP last year when it had misgivings about the trade pact and about the role China would have in it,” said Dr. Harsh V. Pant, director of Indian think tank Observer Research Foundation. “Those misgivings have become sharper post COVID-19 and border tensions. The use of trade policy for geopolitical ends has been trademark Chinese behaviour and India is trying hard to reduce its vulnerabilities vis-à-vis China.”
With RCEP in place, Southeast Asian countries are more likely to prioritize their engagements with Beijing than New Delhi. This situation presents a challenge for India since it had been attempting to strengthen its ties with the ASEAN countries through its Act East Policy. Close ties with Vietnam offer an opportunity for India to work on its relations with the Southeast Asian region.
India and Vietnam have a maritime cooperation agreement but through oil exploration, India also maintains a physical presence in the South China Sea. Indian public sector company ONGC Videsh Limited is engaged in oil exploration at Block 128 in the Phu Khanh Basin off the coast of Vietnam. While India is looking to increase its outreach in Southeast Asia, Vietnam also supports India’s presence as a counterbalance to China.
Is there a Quad angle to India-Vietnam relations?
India’s back-to-back engagements with Vietnam swiftly followed the Malabar Naval Exercise. In November 2020, Australia, India, Japan and the United States participated in this exercise which is considered to be one more step towards formalization of the Quad following a meeting of the four respective foreign ministers in October 2020.
Like India, the other Quad countries have also been engaging closely with Vietnam of late. Owing to tensions with China, Australian exporters are looking to diversify their business by concentrating more on trade ties with Vietnam. In particular, Australia is favourably inclined towards Vietnam as a market for its beef and grain.
Similarly, Japan has been incentivising its firms to move their businesses out of China. Japan offered subsidies to its firms in China in two rounds. The first round of subsidies was meant for firms to shift their operations from China to Southeast Asian countries. Thirty-seven out of 81 such firms opted to shift their operations to Vietnam. In the second round, Japan offered incentives to its firms to relocate to India and Bangladesh.
Meanwhile, the US considers coordination with Vietnam as vital to reigning China in. The highlights of US-Vietnam relations in recent times were the visit of US aircraft career USS Roosevelt to Vietnam in 2020 and the US looking to engage more with ASEAN through Vietnam as ASEAN Chair. Vietnam is also one of the Quad-plus countries.
India-Vietnam could engage outside of ASEAN
On January 1, India started its two-year term as a Non-Permanent Member of the United Nations Security Council (UNSC). Vietnam is already involved with the UNSC as a Non-Permanent Member for 2020-2021.
Indian Prime Minister Narendra Modi has expressed confidence that both countries will be able to cooperate at a global level through the UNSC. “Vietnam is a significant mainstay of India’s Act East arrangement and a crucial accomplice of its Indo-Pacific Vision,” Modi said. “Additionally, the essentialness of India-Vietnam participation will increment one year from now when both the nations will be individuals from the United Nations Security Council.”
During the recent bilateral virtual summit between Modi and his Vietnamese counterpart Nguyen Xuan Phuc, the two countries signed a “Plan of Action for period 2021-2023 for further implementation of Comprehensive Strategic Partnership”.
Under this plan, the countries have agreed to step up high-level and institutional engagement and work towards achieving a peaceful, free, stable and rules-based region. Furthermore, India and Vietnam have committed to stepping up military-to-military exchanges, training and capacity-building programs.
India has its work cut out in ASEAN after walking out on the RCEP, but its relations with Vietnam maintains its close ties to the region. Being outside of RCEP does not mean it is completely isolated from ASEAN; stepping up its engagement with Vietnam highlights how important it still sees its relations with the bloc.