Vietnam-India defence ties not aimed at anyone: Envoy

New Delhi: Despite being Comprehensive Strategic Partners since 2016, old allies India and Vietnam are yet to exploit full potential in their economic partnership.

While the corpus of Rs 500 crores announced by India to create a Project Development Fund (PDF) for catalysing Indian economic presence in Cambodia, Laos, Myanmar and Vietnam, is yet to find relevant projects in Vietnam, the $500 million Indian Line of Credit (LoC) for defence also remains unutilised.

In an exclusive interview to this newspaper, Vietnamese ambassador to India Pham Sanh Chau conceded that not much has happened on the defence LoC and PDF. “We want to identify a civilian project like construction of a bridge etc to use the PDF which can be symbol of friendship between two countries,” Mr Pham said.

“The LoC is to be used for relevant purchase of defence equipments etc which is work in progress and a lengthy process,” the envoy added. He denied that the defence purchases, including purchase of Aakash and Brahmos missiles, are held up due to fear of antagonising China.

While the ambassador refused to talk about the speculated purchase of Aakash and Brahmos, terming them to be “highly confidential issues,” he asserted that India-Vietnam defence relationship is independent and not targeted at any third country.

“We have no fear of antagonising China when we deal with India on defence matters. We have different cooperation with China and it is certainly not the target of India-Vietnam defence partnership. But even though China is a big neighbour and we are partners in some ways, we have to abide by principles that bind us. China violates these principles,” Mr Phan said, while talking about the Chinese ships entering Vietnamese waters for the third time in last two months and trying to assert their claim on entire South China Sea, including Vietnam’s Exclusive Economic Zone.

On the trade and investment, both sides need to ramp up engagement. Vietnam is upset over India’s recent move of putting restrictions on import of agarbatti. The restriction was imposed on August 31 to save Indian small and medium industries after high import on agarbatti was reported from Vietnam and China.

“Last year, the trade between two countries was 28% which was $12.8b. The target is $15b by 2020. But with this restriction it will not be easy and now we see some sign of protectionism from India. India’s move on agarbatti has resulted in major crisis in Vietnam. This is a worrying tendency,” said Mr Pham.

He added with India being its only market for agarbattis, Vietnamese companies have invested heavily in the producing the product. Vietnam is also upset with the fact that the move by India was sudden and without giving enough time to Vietnamese farmers to prepare for alternatives. “Now is the festival season in India for which Vietnamese farmers were preparing stock. The move by Indian government is sudden. We have requested Indian government to reconsider its decision,” the ambassador said.

Meanwhile, Vietnam is in talks with companies like Hinduja and Mahindra for investments.

“At present not many companies see conducive atmosphere for investment and joint ventures in Vietnam. We, in Vietnam, have to create and rework our existing laws to enable more investments from foreign countries, including India. For instance, our cap on foreign equity is 30% but Hinduja is asking for 51%. So, we need to find exception to current rules to enable investment,” the envoy said.

He added that Vietnam may soon be a good market for Indian generic drugs. Similarly, Vietnam is looking at buying cotton and yarn from India which at present is procured from China.