India will soon activate a $100 million line of credit (LOC) to Vietnam, paving the way for its first major military sale to Hanoi.
In a move that Beijing is expected to watch closely, Vietnam will buy four offshore patrol vessels from India to guard its interests in the South China Sea where it is locked in territorial disputes with China.
After holding talks with his Vietnamese counterpart Nguyen Tan Dung on Tuesday, Prime Minister Narendra Modi said, "Our defence cooperation with Vietnam is among our most important ones."
"India remains committed to the modernisation of Vietnam's defence and security forces," he said, adding that the two countries would deepen military cooperation.
Vietnam is also said to be interested in buying the Brahmos supersonic cruise missile - a joint venture between India and Russia - to shore up its defences at a time when Beijing's aggressive posturing in the South China Sea has triggered international concern.
The missile flies at more than 2.8 times the speed of sound and takes under six minutes to destroy a target 290 km away. The Brahmos, which can carry a 300-kg warhead, has so far not been exported.
Vietnamese sailors are already polishing their underwater warfare skills at a Visakhapatnam naval base. Training of Vietnamese fighter pilots in India is also on the cards.
Indian warships are regularly deployed to the South China Sea which Beijing seeks to control. Tensions are simmering between China and Vietnam over the disputed energy-rich waters. The two countries went to war in 1979 over Vietnamese actions in Cambodia.