India pledges $300m loan to boost Vietnam’s maritime security

India has offered to provide Vietnam with US$300 million to strengthen its maritime security amid rising tensions in the Asia-Pacific region and increasing wariness in both countries about China’s growing military might and assertiveness.

India’s pledge was made during a visit to India this week by Vietnamese Prime Minister Pham Minh Chinh, during which he and his host, Prime Minister Narendra Modi, virtually inaugurated a military software hub in the city of Nha Trang in central Vietnam.

The Army Software Park is being developed with India’s assistance and is expected to produce software solutions as well as provide information technology services.

Modi said at a welcome ceremony for Chinh at Hyderabad House on Thursday that Vietnam was an important partner in India’s Act East Policy and Indo-Pacific vision. 

The Act East Policy is a diplomatic initiative to promote economic, strategic and cultural relations with the vast Asia-Pacific region at different levels. 

Both countries would “continue cooperation for a free, open, rules-based and prosperous Indo-Pacific,” Modi said.

This visit from July 30 to Aug. 1 was Chinh’s first trip to India as head of government.

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The leaders said in a joint communique at the end of the visit that Vietnam and India “agreed to strengthen further their defense cooperation based on common priorities and interests, and to contribute to the stability in the Indo-Pacific region.”

A package of preferential loans worth US$300 million would be offered for two projects to improve Vietnam’s maritime security, they said.

They  did not specify details but Indian media said the money would  be spent on procuring two types of patrol boats for the Vietnamese navy.

In June 2023, India donated to Vietnam a missile corvette, the INS Kirpan, and also sold it 12 high-speed guard boats.

Rule-based South China Sea

Maritime security is seen as one of the most important elements of Vietnam-India bilateral relations and they have held regular maritime security dialogues since 2019.

The joint communique emphasized the importance of “maintaining peace, stability, security and freedom of navigation and overflight in the South China Sea.”

Both countries are committed to finding peaceful solutions to maritime disputes in accordance with international law, in particular the 1982 U.N. Convention on the Law of the Sea, or UNCLOS, they said.

They stressed that UNCLOS is the legal framework for all maritime activities in the region and the basis for all claims over jurisdiction.

Vietnam, together with other ASEAN countries, and China are negotiating  a code of conduct for parties in the South China Sea. 

India and the United States are not involved in those talks but the two leaders called in their communique for a rule-based and effective code of conduct that “does not affect rights and jurisdictions of other countries, including those not taking part in the negotiation process.”

China has warned against what it sees as the “intervention” of outside countries in South China Sea disputes.

Edited by Taejun Kang.