NEW DELHI: Prime Minister Narendra Modi will hold an important summit meeting with his Vietnam counterpart Nguyen Xuan Phuc Monday, as India and Vietnam continue to bear the brunt of Chinese expansionism. Defence ties between the two countries, like in the recent past, will again be one of the main focus areas with Vietnam set to acquire a high-speed patrol boat from India and both the sides looking to finally operationalise a $500 million Line of Credit (LOC) offered by India to Hanoi for defence procurement.

In a significant statement last week, Vietnam ambassador to India Pham Sanh Chau had said Vietnam was looking forward to more investments by Indian companies in its oil and gas sector, in particular to Essar Exploration group ramping up its investment to $11 billion.

India is also helping Vietnam, which remains locked in maritime territorial disputes with Beijing in South China Sea (SCS), procure high-speed boats through a $ 100 million LOC. The first of these boats has been built by L&T and is likely to be launched this week.

With the security situation in SCS likely to be discussed in the summit, official sources here said the two countries have shared interest in a free, open, peaceful, prosperous and a rules-based regional order. India is again likely to reiterate its commitment to freedom of navigation and overflight and adherence to international laws, particularly UNCLOS.

Official sources said that during the summit, the two leaders will exchange views on wide-ranging bilateral, regional and global issues and provide guidance for the future development of India-Vietnam Comprehensive Strategic Partnership. They are also likely to issue a Joint Vision for this.

"In addition, a number of agreements/announcements are likely, covering areas such as defence, energy, development partnership and healthcare. Implementation of India’s Defence Line of Credit for high speed guard boats for Vietnam will be further progressed. New opportunities in renewable energy cooperation will also be explored," said a source.

Sources said both India and Vietnam were important countries in the Indo-Pacific region with significant maritime interests. This will enable the two sides to explore potential cooperation based on India’s IPOI (Indo-Pacific Oceans Initiative) and ASEAN’s AOIP (ASEAN Outlook on the Indo-Pacific) that Vietnam subscribes to, official said.

The challenge though would be to finalise a framework agreement for implementing India's $500 million defence LOC for Vietnam. Hanoi was said to have expressed interest in using it for infrastructure development, instead of defence, when President Ram Nath Kovind visited Vietnam two years ago. If the two countries do manage to reach an agreement, it's certain to raise more than a few eyebrows in Beijing.

According to authorities here, since India and Vietnam are also going to concurrently serve on the UN Security Council in 2021 as non-permanent members, new opportunities have opened up for closer cooperation on regional and international issues, as well as their shared agenda for "respect of international law and reformed multilateralism".

"The timing of the Virtual Summit in the context of the Covid-19 pandemic will also allow the two leaders to take stock of the regional and global landscape and exchange views on their respective strategies to deal with the pandemic as well as the post-pandemic economic revival. In this context, the existing economic and trade linkages between the two countries provide a useful platform to explore new and resilient supply chains," said a source.