Vietnam in India’s Act East Policy

 By Anashwara Ashok

Historical ties between India and Vietnam date back to the second century and both the countries formalised their diplomatic relations on 7 January 1972. India and Vietnam celebrated in 2017 the completion of 45 years of establishment of diplomatic ties. Both the countries share robust trade and economic relations with bilateral trade of approximately $13.69 billion in 2019[1]. The strategic importance of Vietnam for India can be delineated from the elevation of the bilateral relations from the level of ‘Strategic Partnership’ in 2007 to the ‘Comprehensive Strategic Partnership’ in 2016. Mutual trust, threats emerging from a rising China and a convergence of strategic interests have contributed to the deepening of ties between the two nations[2].

With the reinvigoration of India’s ‘Look East Policy’ into the ‘Act East Policy’ in 2014, India reiterated its resolve to promote economic and cultural ties with the Asia-Pacific by developing strategic relationships at different diplomatic levels. Such greater cooperation would in turn improve the physical and economic connectivity of North East India with rest of the country. Considering the strategic location of Vietnam and the historical ties both countries have shared, it is a major stakeholder in India’s Act East Policy.

Vietnam and the Act East Policy

There exist multi-dimensional areas of cooperation between India and Vietnam. The shared interests range from politico-strategic, defence to economic areas as well as culture, education, training, entrepreneurship development etc[3].

  • Defence Cooperation- Defence cooperation has emerged as a significant pillar of India’s strategic partnership with Vietnam. There exists a significant convergence between the two nations in the defence sector after the signing of Defence Protocol in 2000. Common areas of defence cooperation include “regular exchange of intelligence, joint coastguard training to combat piracy, jungle warfare and counterinsurgency training for the Indian Army, repair of Vietnamese aircrafts and helicopters, training of Vietnamese pilots, and Indian assistance on small and medium arms production.”[4] India has provided a $100 million and $500 million concessional line of credit to Vietnam to procure defence equipments. Vietnam has also purchased four offshore patrol vessels from India in its bid to strengthen the strategic partnership. Moreover, the Armed Forces of the two nations have been participating in joint military exercises along with cooperation in fields of Information Technology (IT) and language training. The first-ever bilateral land warfare and naval exercises between the two sides were conducted in 2018.
  • Regional Cooperation- Being apprehensive of Chinese rise in the South China Sea, both India and Vietnam have been assertive in their actions in the Indian Ocean Region. Despite China’s complaints against Indian cooperation in oil exploration in the ‘disputed’ Vietnamese waters, in 2018 India decided not to exit the Vietnamese oil block in the South China Sea region under Chinese pressure and continues to recognise the disputed island as part of Vietnamese territory[5]. Both the countries cooperate at various regional platforms such as Association of South East Asian Nations (ASEAN), East Asia Summit, ASEAN Defence Ministers Meeting (ADMM)- Plus, Mekong Ganga Cooperation and Asia Europe Meeting (ASEM) besides UN and WTO.
  • Cultural Cooperation- Indian Cultural Centre was opened in Hanoi in April 2017 with primary objective of strengthening India’s cultural experience in Vietnam. To fructify the Act East Policy, it is important for the ASEAN countries to familiarise with North East India. This was the objective of Rangoli, a three-day festival organised in January 2019 to showcase the cultural, artisanal, tourism and business potential of Assam and the North East[6]. The first ever Indian Film Festival (IFF) was organised in three cities of Vietnam (Danang, Hanoi and Ho Chi Minh City) in December 2015. During the festival, eight Hindi films with Vietnamese subtitles were screened. A seminar on ‘Vietnam -India Cinema Cooperation and its role in Promotion of Tourism’ was organised in Hanoi. This improves the people-to-people ties and business prospects, hence furthering objectives of the Act East Policy.
  • Economic Cooperation- Both the countries have resolved to strengthen their economic and commercial relations. Vietnam is India’s fourth largest trading partner in the ASEAN[7]. India is one of the top ten trading partners of Vietnam and a growth of almost 80 per cent in the bilateral trade has been witnessed over the last five years. Furthering the relationship is the civil nuclear agreement signed in 2016 and the resolve to achieve a trade target of $15 billion by 2020. The Indian Business Chamber (INCHAM), an organisation of Indians in Vietnam primarily aims to promote trade and business interactions. Moreover, India is among the 30 biggest foreign investors in Vietnam with 223 projects with the total accumulated registered capital of $913.33 million as of April 2019, focusing on energy, industry park infrastructure development, IT, pharmaceuticals, and agriculture[8].

Prospects of Enhanced Cooperation

With the above-mentioned areas of mutual interest, India and Vietnam have forged a strong foundation for their bilateral relationship. This expanse of cooperation can be further increased by shifting the realm of India-Vietnam relations to the North Eastern States of India. Due to the geographical proximity between North East India and Vietnam, better people-to-people ties can be generated by furthering development and connectivity. To this end, it has been proposed that the ambitious Trilateral Highway project connecting India, Myanmar and Thailand be extended to Cambodia, Lao PDR and Vietnam. If executed, this connectivity will facilitate trade and promote production networks between India and Vietnam.

Another area of mutual interest is tourism industry where more progress is essential. Despite the existence of a mutual visa-on-arrival scheme and electronic visa facility on reciprocal basis for tourists, tourism sector has remained dull. Many tourism road shows have been organised regularly by Vietnam at cities like Calcutta, Bhubaneshwar and New Delhi but must be extended to cities of North East like Guwahati, Imphal and Kohima. The number of flights are increasing as seen in the new air route inaugurated through direct flight connection between Kolkata and Hanoi.  It makes travelling to Vietnam easier especially for people in the North East who earlier were dependent on flights from New Delhi. Additionally, direct flight routes between major airports of North East like Guwahati (Assam) to cities in Vietnam should be considered, if feasible. It will increase connectivity, investment and development and also improve the scope of tourism in North East India. On the diplomatic front, it is suggested that Indian embassy in Hanoi or the consulate in Ho Chi Minh City creates a separate division dealing exclusively with the interests of North East India. This will encourage setting up of consulates by Vietnam in states of North East India, hence increasing relations of the region with ASEAN.

Cooperation in the pharmaceutical industry would also improve ties between the two nations. In fact, medical facilities in India especially North Eastern states remains an unexplored sector. Delving deeper into such fields will improve industrial growth in both countries. India is also trying to develop an attractive and conducive environment to attract Vietnamese entrepreneurs to invest in North East India. To this end, India proposed in 2015 a $1 billion line of credit to promote projects that support physical and digital connectivity between India and ASEAN countries[9]. However, there has not been much progress on the use of this line of credit due to bureaucratic impediments.

Linking the businesses and workforce of North Eastern states to those in Vietnam will further enhance economic potential and development of both the countries. Vietnam’s rapid economic growth can be attributed to its successful integration with global value chains and improved manufacturing sector. Moreover, Vietnam has been favoured as the destination for trade flows and supply chains amidst growing US-China trade wars. By building stronger ties with Vietnam, North Eastern states can seek benefits on two fronts. They can become suppliers of raw materials and other inputs to the Vietnamese manufacturers as well as this will act as an opportunity for them to promote their own states as a destination to set up industries and businesses for Vietnamese investors.

Hence, the ‘Comprehensive Strategic Partnership’ between India and Vietnam is extremely promising and an opportunity for India to strengthen ties with one of its most important partners in Southeast Asia. India plays a pivotal role in the Indo-Pacific region and Vietnam is significant to India’s Act East Policy. To reach the mutually agreed target of $15 billion by 2020, new trade and business opportunities need to be explored. A greater focus on untapped areas of cooperation will further develop and deepen the bilateral relation. Moreover, considering the strategic location of India’s North Eastern states and their proximity to Vietnam, there is a lot of potential for Vietnamese investments in the region and at the same time people of these states can seek greater opportunities in Vietnam under the ambit of Act East Policy.


[1] Consulate General of India Vietnam, ‘Strong Foundation of Bilateral Relationship’, September 2019.

[2] Harsh V. Pant, ‘India and Vietnam: A truly strategic partnership’, Observer Research Foundation, 6 March 2018.

[3] Rajaram Panda, “India-Vietnam Relations: Prospects and Challenges”, Liberal Studies Journal, 2, 1 (2017).

[4] David Brewster, “The Strategic Relations between India and Vietnam: The Search for a Diamond on the South China Sea?” ANU Open Research Paper, (2008).

[5] ET Bureau, ‘Eye on China: India and Vietnam advance their strategic partnership’, Economic Times, 12 July 2018.

[6] Rudroneel Ghosh, ‘Advantage Assam: Vietnam can be a good development partner for the Northeast’, Times of India, 5 February 2018.

[7] ANI, ‘How India and Vietnam can increase bilateral trade’, Business Standard, 25 February 2019.

[8] Vietnam Investment Review, ‘Vietnam and India seek to boost trade and investment ties’, 23 May 2019.

[9] Jaishree Balasubramanian, ‘PM Modi proposes $1 billion line of credit for connectivity with Asean’, Livemint, 21 November 2015.