India's Prime Minister Narendra Modi (R) and his Vietnamese counterpart Nguyen Xuan Phuc (C) review an honour guard during a welcoming ceremony held at the presidential palace in Hanoi on September 3, 2016. Photograph: (Reuters)
Deal comes amidst China's muscle flexing in the disputed South China Sea and 'emerging regional challenges'
India today extended a USD 500 million line of credit to Vietnam to deepen their defence cooperation and signed 12 agreements including a deal to construct offshore patrol boats, amid China's muscle flexing in the disputed South China Sea and "emerging regional challenges".
Prime Minister Narendra Modi, who held wide-ranging talks with his Vietnamese counterpart Nguyen Xuan Phuc here, said the two countries have decided to elevate their strategic ties to a Comprehensive Strategic Partnership to provide it a new momentum.
"Our decision to upgrade our Strategic Partnership to a Comprehensive Strategic Partnership captures the intent and path of our future cooperation. It will provide a new direction, momentum and substance to our bilateral cooperation," said Modi, who arrived here yesterday on his maiden visit to this key south east Asian nation.
Vietnam had earlier Comprehensive Strategic Partnership only with Russia and China.
"I am also happy to announce a new Defence Line of Credit for Vietnam of USD 500 million for facilitating deeper defence cooperation," Modi said after the signing of the agreements.
The 12 agreements were signed in a wide range of areas covering defence, IT, space, cyber security and sharing white shipping information in presence of Modi and Phuc.
"The range of agreements signed just a while ago point to the diversity and depth of our cooperation," he said, adding the agreement on construction of offshore patrol boats is one of the steps to give concrete shape to the bilateral defence engagement.
Modi described his talks with Vietnamese counterpart as "extensive and very productive" and said they covered the full range of bilateral and multilateral cooperation.
"We have agreed to scale up and strengthen our bilateral engagement. As two important countries in this region, we also feel it necessary to further our ties on regional and international issues of common concern," said Modi, who is here on a day-long visit.
"We also recognised the need to cooperate in responding to emerging regional challenges," the Prime Minister said, without naming any country.
China is involved in a raging dispute with the Philippines, Vietnam, Taiwan, Malaysia and Brunei over ownership of territory in the South China Sea (SCS), a busy waterway through which India's 50 per cent trade passes.
China has also objected in the past to India's Oil and Natural Gas Commission (ONGC) undertaking exploration at the invitation of Vietnam in the SCS, which is believed to be rich in undersea deposits of oil and gas.
India and the US have been calling for freedom of passage in the international waters, much to the discomfort to Beijing, whose claim over SCS was recently struck down by an international tribunal in favour of the Philippines.
"Our common efforts will also contribute to stability, security and prosperity in this region," Modi said.