Prime Minister Narendra Modi paid a landmark visit to Vietnam on September 2 and 3, en route to Hangzhou, China for the G20 Summit.

This was the third substantive visit by PM Modi to South-East Asia. It can however be stated with little risk of contradiction that this visit was by far the most momentous of all his forays to South-East Asia. It was the first visit by an Indian Prime Minister to Vietnam after 15 years. Both countries mark the 10th anniversary of strategic partnership and the 45th anniversary of establishment of diplomatic relations next year.

The 2,000 year-long heritage of civilisational, religious and economic links between India and Vietnam makes the relationship special. India-Vietnam relations have been exceptionally friendly and cordial since their foundations were laid by Prime Minister Nehru and President Ho Chi Minh more than 50 years ago. The traditionally close ties have their historical roots in the common struggle for liberation from foreign rule and the national struggle for independence. Pandit Nehru was one of the first foreign visitors to Vietnam after its victory against the French in 1954. President Ho Chi Minh visited India in February 1958 on a state visit. President Rajendra Prasad visited Vietnam in 1959.India strongly condemned American action during the Vietnam War and was also one of the few non-communist countries to assist Vietnam during the Cambodian–Vietnamese War.

What makes this visit by Modi particularly significant is the verdict on South China Sea (SCS) by Permanent Court of Arbitration (PCA) at The Hague on July 12, 2016, on a complaint filed by Philippines against recent assertions and actions by China. The verdict was a comprehensive rebuke to China, declaring that the latter had no historical claim on SCS and that it was causing great ecological harm by constructing artificial islands to buttress its claims in the waters.

Although Vietnam was not a party to the dispute, it has substantial interests relating to harvesting energy and fishery resources from its Exclusive Economic Zone. It has been experiencing difficulty for last many years to exploit resources due to harassment by China, which led to violent clashes resulting in death and damage to property in the past. Two recent attacks in June 2015 led to injuries to Vietnamese fishermen and damage to their boats near Paracel Islands which are a subject of dispute.

India issued a measured statement after PCA Award was announced, emphasising the importance of freedom of navigation, maritime security and the imperative need to abide by the provisions of the United Nations Convention on Law of the Sea (UNCLOS). China has adopted a belligerent attitude, declaring the PCA had no authority to adjudicate on the issue.

We have a significant interest in ensuring the openness of sea-lanes of communication in SCS as more than 50 per cent of India’s foreign trade flows through these waters. India has also contracted with Vietnam to prospect for oil and gas in areas which fall within its Exclusive Economic Zone.

Modi’s visit also saw 12 agreements being signed, which promise to further cement the alliance between Vietnam and India. It was decided to upgrade bilateral ties from ”strategic partnership” to ”comprehensive strategic partnership”. This change in nomenclature goes beyond mere symbolism. PM Modi said this decision ”captures the intent and path of our future cooperation. It will provide a new direction, momentum and substance to our bilateral cooperation.”

The most consequential area identified for enhanced engagement between Vietnam and India is defence. During President Pranab Mukherjee’s visit to Hanoi in September 2014, India had offered assistance of US$100 million for procurement of four patrol boats. During the current visit, Modi extended an additional line of credit of US$500 million to further bolster defence ties. Discussions on export of sophisticated Brahmos supersonic cruise missiles (jointly produced by India and Russia) and Varunastra, the new, indigenously built, anti-submarine torpedoes to Vietnam are at an advanced stage. Defence partnership between the two countries assumes greater significance in view of increasing militarisation and belligerence by China in recent times.

Economic and commercial cooperation is a significant element of bilateral ties. Currently bilateral trade stands at around US$ 7 billion. Both sides are committed to enhance this to US$ 15 billion by 2020. This is a challenging target, but eminently achievable. India’s private sector is getting increasingly engaged in promoting bilateral trade and investment. Tata Power is constructing a 1,320 MW power plant, with an investment of US$1.8 billion. ONGC Videsh Ltd. (OVL), NIVL Ltd, KCP Industries Limited, Ngon Coffee Manufacturing, Tech Mahindra, CCL are some major Indian companies that have invested in Vietnam’s oil and gas exploration, mineral exploration and processing, sugar manufacturing, agro-chemicals, IT, and agricultural processing. Conclusion of negotiations under Regional Comprehensive Economic Partnership and operationalisation of India-ASEAN Free Trade Agreement on Investment and Services will provide a further fillip to bilateral economic engagement. Vietnam’s membership of Trans Pacific Partnership could open up fresh opportunities for increasing exports by Indian companies which invest in Vietnam.

Capacity building, training and human resource development is also important. Vietnam is one of the largest beneficiaries, barring India’s neighbours, of scholarships under the India Technical and Economic Cooperation (ITEC) and Indian Council for Cultural Relations (ICCR) programmes. Cultural cooperation and people-to-people contacts – Buddhism, yoga, Bollywood, Indian tele-serials and classical music and dance – have strengthened the already-strong bond between the two countries. An Indian Cultural Centre is expected to be established soon to provide further impetus in this arena.

The disintegration of  Soviet Union in 1991 provided an opportunity to India to strengthen ties with the Association of South East Asian Nations (ASEAN), in which Vietnam has become an important player since its membership in 1995. Prime Minister Narasimha Rao launched the ‘’Look East Policy’’ in 1992, which played an important role in upgrading multi-faceted relations between India and the ten-member ASEAN. Since 2014, Modi’s administration has worked to expand the scope of its ties with ASEAN member states under its ”Act East Policy”. The recent visit to Vietnam is the latest example of this policy in action.

India’s engagement with Vietnam has become a benchmark in New Delhi’s rapidly-evolving policy towards the region. As India’s ties with China become more contentious, Hanoi is likely to play an ever more critical role in New Delhi’s strategic calculus.