Vietnam is Important to India’s Development, Trade & Investment Priorities

Under India’s Act East policy, Vietnam will remain the important vantage point to project India’s development, trade and investment priorities.

[Dr. Pankaj Jha | Oped Column Syndication]


The Look-East Policy has been an important element of Indian regional approach in Southeast Asia since 1992. The success of this policy enthused the Mandarins of South-Block to develop the policy into more action oriented, project and outcome based policy. After a couple of decades, India’s Act-East Policy announced in 2014 became a successor to the Look-East Policy.

In Southeast Asia, the scholars have expressed concerns that the Look-East Policy was a policy without tangible outcome or project oriented approach with time bound review. Therefore, the Act-East Policy nomenclature was adopted. It was manifestation of India’s outlook towards the region, and a congenial approach towards its neighbours in Southern Asia. In this context, Vietnam’s salience in India’s Act-East policy can be deciphered from five different perspectives.

Firstly, Vietnam has been one of the important countries which has seen an unwavering support both at the political and social level, and now it has permeated into the larger regional issues, such as South China Sea and the increasing assertive posture of China.

For India, Vietnam remains as a critical component of its Act-East policy, as it was the first country in Southeast Asia to weather the Cold-War and the relationship remains unchanged. In the post-Cold-War phase, Vietnam’s membership of the ASEAN (Association of Southeast Asian Nations) and its importance in the Indochina region[1] has been well accepted.

Further, India acknowledged Vietnam’s political stability and security in different forums. Vietnam’s entry into World Trade Organization (WTO) and also active participation in the regional institutions such as ASEAN, ARF (ASEAN Regional Forum), ADMM-Plus (ASEAN Defence Ministers’ Meeting Plus)[2] and also East Asia summit point to the fact that Vietnam has a role to play.

Secondly, India in its India-ASEAN Action Plan (2016-2020) has enlisted developing trade and economic relations with the countries in CLMV (Cambodia, Laos, Myanmar and Vietnam sub-grouping) — something that includes developing maritime connectivity and also engaging these countries through various developmental projects.

Integrating Vietnam into the Myanmar-Thailand-India trilateral highway was the vision of Atal Bihari Vajpayee, the former Indian prime minister, who said that there should be seamless connectivity between Delhi and Hanoi. The scholars have also proposed to expand BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) membership to include Vietnam — something that was one of the visionary ideas proposed by Vajpayee. He had stated that Vietnam had been the important component of India’s eastward approach.

Further, the perspective about the trans-regional construct such as Indo-Pacific has reflected the need for order and security at sea. In fact, developing relations with the US has brought the two countries together to address common security threats germinating in the larger Indo-Pacific region.

Thirdly, Vietnam has also gained salience in terms of defence cooperation with India. These two countries have become important strategic partners when the strategic partnership between these two was signed in 2007, and the relationship was elevated to Comprehensive Strategic Partnership during Indian PM Narendra Modi’s visit to Vietnam in September 2016.

The Comprehensive Strategic Partnership document remains the important blueprint for the future cooperation between the two countries. The bilateral exercises in South China Sea as well as regular port calls by Indian ships have happened in the past. Also, the cooperation in internal security matters such as counter-insurgency training and the training in the Jungle Warfare school has been important aspects of deepening defence relationship.

India’s extension of lines of credit US$100 million and the supply of two fast craft patrol boats by L&T company to Vietnam is the harbinger of new patterns of defence relationship. During Narendra Modi’s visit to Vietnam for procurement of defence equipment, new line of credit US$500 million was announced. India also looks forward to the supply of Brahmos to Vietnam after certain regulatory and technical safety and secrecy aspects are duly covered.

Further, India has shown that EAMF (Expanded ASEAN Maritime Forum) need to address the maritime issues and common maritime challenges. Since both India and Vietnam do converge on maritime security and related aspects, strengthening relations with all the stakeholders would help in achieving this goal.

Fourthly, Vietnam is one the fastest growing economies in Southeast Asia. It had been drawing foregin-direct-investment (FDI) to the tune of US$19.1 billion for 2018 — something which suggests that Taiwan, Japan and other ASEAN countries look it as a promising destination.

In 2018, according to trading economics portal, Vietnam had received FDI in the manufacturing and processing sector (nearly 47 per cent), real estate industry (18.6 percent) and wholesale & retail trade sector (10.3 percent). Japan, South Korea, Singapore have invested about 24.2 percent, 20.3 percent, 14.2 percent respectively of the total FDI in Vietnam.

However, Vietnam still lags in terms of investment. Although the financial structures to support foreign direct investment is being developed, it’s not fully developed as of yet. In this regard, India can help in training personnel and corporate experts to fasten Vietnam’s economic development.

India has proposed to develop and establish a Tracking, Data-Reception/Data-Processing Station in Ho Chi Minh City, Vietnam. Vietnam is also one of the priority countries for instituting centres/institutions of excellence in software development. This will be complemented with training-centres in CLMV countries as well as e-network to develop integrated network for tele-education and tele-medicine.

India has laid out special plan for the CLMV countries. India has proposed to carry-out English language training for law-enforcement officers and also proposed to carry-out training for stock market professionals.

Lastly, Vietnam has always been seen as the unique repository on Indian migration for centuries to Indochina. The religious influence along with the Cham Hindus[3] showcase the depth of Indic influence, and Vietnam has preserved those umbilical cords. Culture has been an unexplored territory and for Indian people it is a history worth narration. Indian tourists look forward to visiting the Vietnamese cities given the friendly nature of the people as well as cost-effective tours.

There has been demand for direct flights between Delhi and Hanoi as well as between Mumbai and Ho Chi Minh City. There was proposal for low-cost Vietnam airlines starting its operations. However, while most of the formalities have been done, the problem is that of gaining slots in the evening for the maximum profits and sustaining the flight operations. This has been a bone of contention between the IGIA (Indira Gandhi International Airports) authority and the Vietnamese airlines. It is hoped that this would be resorted soon and Indian people can fly to Hanoi and Ho Chi Minh city with about 2/3 the costs and nearly 4-hour flight.

The P2P contacts would further contribute to the burgeoning relationship between the two countries. The two countries have also given the electronic visa facility to each other’s tourists on a reciprocal basis as well as visa on arrival. The connectivity has been an important element of the relationship and with the completion of the Asia highway as well as the trilateral highway project, it would be just a matter of time when India and Vietnam would be connected by highway network, as there is the proposal to extend the trilateral highway up to Vietnam.

India has signed Motor Vehicles Agreement (MVA) with Bangladesh, Bhutan and Nepal under the framework of the BBIN (Bangladesh, Bhutan, India and Nepal), a sub-regional bloc in southern Asia. Further, there are proposals to work on the protocol related to India-Myanmar-Thailand Motor Vehicle Agreement (IMT-MVA). With the possible functioning of the highway up to Vietnam, the MVAs might also be signed with other Indochina countries.

Under India’s Act East policy, Vietnam will remain the important vantage point to project India’s development, trade and investment priorities. Already Indian projects in Vietnam have been doing quite well, though there has been a stagnation.

The two countries can help each other in developing agriculture, animal husbandry, floriculture and sericulture. India’s Northeast will gain the most from the integration with mainland Southeast Asia.

The development with regard to signing of formal code-of -conduct in South China Sea is of interest to India, though it should not be on the terms dictated by Beijing. In fact, the ASEAN nations and China can take cue from India-Bangladesh maritime-border demarcation — where India respect the International Court Justice (ICJ) intervention and accepted the ICJ ruling, which is believed to be more favourable to Bangladesh.

Vietnam, as the prime stakeholder, would have to play an important role so that South China Sea becomes a sea of convergence and so that freedom of navigation, exploitation of marine resources in EEZ (Exclusive Economic Zone) and over flight in the sea is maintained.


[1] Indochina is a geographical term and refers to Southeast Asia. The name refers to the lands historically within the cultural influence of Southern-Asia and China, and physically bound by the Southern-Asia in the west and China in the north.

[2] The ADMM-Plus is a platform for ASEAN and its eight Dialogue Partners to strengthen security and defence cooperation for peace, stability, and development in the region.

[3] Cham people are an ethnic group of Austronesian origin in Southeast Asia. Their contemporary population is mostly concentrated in Cambodia and Vietnam. The majority of Cham in Cambodia are Sunni Muslim, while their Vietnamese counterparts are largely Hindus.


Dr. Pankaj Jha is senior faculty with Jindal School of International Affairs (JSIA), O P Jindal Global University and teaches international security. His authored books include India and China in Southeast Asia: Competition or Cooperation (2013) and India and the Oceania: Exploring Vistas of Cooperation (2016).


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.