India and Vietnam have announced a new plan to strengthen their ‘Comprehensive Strategic Partnership’ over the next five years.The initiative was discussed during a bilateral meeting between the Indian Prime Minister and Vietnamese Prime Minister Pham Minh Chinh in New Delhi.The agreement focuses on enhancing cooperation in various areas including trade, digital payments and defence.
Highlights of the bilateral meeting
- New Action Plan (2024-2028): India and Vietnam agreed on a new plan to strengthen their Comprehensive Strategic Partnership established in 2016. The plan aims to enhance bilateral trade, economic cooperation, technology development and defence and security partnership over the next five years.
- Digital Payment Connectivity: The central banks of the two countries signed an agreement to establish digital payment connectivity. This will increase financial transactions between India and Vietnam. Both countries are adopting digital payments, Vietnam is developing cross-border payment connectivity with other ASEAN countries.
- Credit Line Extension: India will provide a US$300 million credit line to Vietnam to support its military security and development projects. This includes the inauguration of the Indian grant-funded Army Software Park in Nay Chaung and enhanced cooperation on counter-terrorism and cyber security.
- Memorandums of Understanding (MoUs) Signed: Six MoUs were signed covering various sectors such as agricultural research, customs capacity building, law and justice, radio and television and traditional medicines.
- Trade and Economic Goals: Vietnam proposed to increase annual bilateral trade from the current US$14.8 billion to US$20 billion. The two countries agreed to expedite the review of the ASEAN-India Trade in Goods Agreement to boost trade. Vietnam welcomed Indian investments in IT, manufacturing, textiles, semiconductors and renewable energy.
- Strategic Alignment: The two countries committed to strengthen cooperation in the Indo-Pacific region, with a focus on maintaining freedom of navigation and overflight in the South China Sea. They emphasised on the peaceful resolution of disputes based on international law, particularly the 1982 United Nations Convention on the Law of the Sea (UNCLOS).
- Economic Diplomacy Dialogue: A new Economic Diplomacy Dialogue will be established at the Deputy Foreign Minister level to address trade and investment issues.
India-Vietnam Relations
Historical Ties and Diplomatic Relations
- India and Vietnam share a Comprehensive Strategic Partnership. Mahatma Gandhi and President Ho Chi Minh exchanged messages during their independence struggle. India established diplomatic relations with Vietnam in 1972 and the relationship was elevated to a Comprehensive Strategic Partnership in 2016. The development of India-Vietnam relations is guided by the “Joint Vision for Peace, Prosperity and People” adopted in 2020. In 2022, the two countries will celebrate the 50th anniversary of the establishment of diplomatic relations.
Institutional Mechanisms
- The 18th Joint Commission Meeting (JCM) on Economic, Trade, Scientific and Technological Cooperation was held in Hanoi on 16 October 2023. Previous JCM meetings, Foreign Office Consultations and Strategic Dialogue at the Secretary level help review bilateral cooperation.
Trade, Economic and Development Cooperation
Trade Statistics: India-Vietnam trade from April 2023 to March 2024 was US$ 14.82 billion. India’s exports to Vietnam were US$ 5.47 billion and imports were US$ 9.35 billion.
Major Exports and Imports: India exports engineering goods, agricultural products, chemicals, pharmaceuticals, electronic goods, minerals, textiles and plastics to Vietnam. Imports from Vietnam include computers and electronic goods, mobile phones, machinery, steel, chemicals, footwear, textiles and wood products.
Investments: Indian investments in Vietnam are around US$ 2 billion, covering sectors such as energy, mineral processing, agro-processing, IT, auto components, pharmaceuticals, hospitality and infrastructure.Vietnam’s investments in India are around US$ 28.55 billion, mainly in consumer goods, electronics, construction, IT and pharmaceuticals.
Development Partnership: Under the Mekong-Ganga Cooperation framework, India has completed about 45 Quick Impact Projects in over 35 provinces of Vietnam, with another 10 projects under implementation.
The Mekong-Ganga Cooperation (MGC), established in 2000, comprises six member countries: Cambodia, Lao PDR, Myanmar, Thailand, Vietnam and India. The cooperation focuses on key sectors such as tourism, culture, education, information technology, telecommunications and transport. India has supported the conservation and restoration of the UNESCO World Heritage Site ‘My Son’ in Quang Nam Province, central Vietnam. The Archaeological Survey of India is scheduled to complete the conservation and restoration of the A, H and K Temple Group at the My Son complex site in 2022.
Defence Cooperation: Defence and security cooperation between India and Vietnam is strong, with the 2009 Memorandum of Understanding on Defence Cooperation and the 2015 Joint Vision on Defence Cooperation providing the framework In 2022, the two countries.