India and Vietnam made serious efforts to upgrade their bilateral relations earlier this month during the visit to New Delhi by Vietnamese Communist Party Secretary General Nguyen Phu Trong. Eight pacts were inked, including ones on energy cooperation and protection of information, which are strategically significant areas that will influence the trajectory of this bilateral relationship. Vietnam has offered seven oil blocks to India in South China Sea, including three on an exclusive basis where Hanoi is hoping for production-sharing agreements with India's state-owned oil company ONGC Videsh Ltd. (OVL).
In a significant move, India has also decided to offer a $100 million credit line to Vietnam to purchase military equipment. Usually a privilege reserved for its immediate neighbors, this is the first time that New Delhi has made such an offer to a more distant nation. Delhi and Hanoi have been working toward building a robust partnership for the past few years.
It is instructive that India entered the fraught region of the South China Sea via Vietnam. New Delhi signed an agreement with Vietnam in October 2011 to expand and promote oil exploration in the South China Sea and then reconfirmed its decision to carry on despite the Chinese challenge to the legality of an Indian presence. Beijing told New Delhi that its permission was needed for India's state-owned oil and gas firm to explore for energy there. But Vietnam quickly cited the 1982 United Nations Convention on the Law of the Sea to claim its sovereign rights over the two blocks in question. Hanoi has been publicly sparring with Beijing over the South China Sea for the last few years, so such a response was expected.