Indian Prime Minister Narendra Modi offered Vietnam a $500 million line of credit for defense cooperation, much of which Vietnam will likely use to purchase weapons and equipment from India to fend off Chinese aggression in the South China Sea.

Modi visited Vietnam from Sept. 2 to 3 as part of New Delhi's "Act East Policy" aimed at strengthening security and economic ties with India's East Asian neighbors. Vietnam has become the world's eighth largest buyer of weapons as it strives to build a modern military deterrent that will give China pause.

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"I am also happy to announce a new defense credit for Vietnam of $500 million for facilitating deeper defense cooperation," said Modi after signing the deal.

Modi also said the relationship between the two countries would "contribute to stability, securities and prosperity in this region."

India last offered Vietnam a similar line of credit in 2014 in the amount of $100 million. It isn't clear if the latest loan includes this amount India previously made available to Vietnam for the latter to buy Indian-made naval patrol vessels.

Lines of credit normally obligate the receiver, in this case Vietnam, to purchase weapons from the creditor, in this case India.

Vietnamese Prime Minister Nguyen Xuan Phuc praised his country's close friendship with India. Phuc said he and Modi also "discussed matters concerning the East Sea."

"All sides must peacefully solve East Sea disputes based on international laws," said Phuc.

Neither Phuc nor Modi, however, mentioned if a deal that will see Vietnam buy India's supersonic BrahMos cruise missile (the fastest in the world) had pushed through. They also didn't explain what Vietnam will buy with the $500 million credit line.

Vietnam and India signed 12 agreements on Sept. 3 covering naval information sharing, cyber security, ship building and U.N. peace-keeping operations, among others.

Modi left Vietnam for Hangzhou, China on the evening on Sept. 3 to attend the G-20 Summit on September 4 and 5.

Modi is the first Indian prime minister to visit Vietnam in over a decade. Analysts say his visit proves how important Hanoi is to India, and also sends a strong signal to China as to which side India supports in the South China Sea imbroglio.

"Vietnam is India's important strategic partner and the visit is aimed at further strengthening bilateral ties, including defense, security and trade," said Preeti Saran, Secretary (East), External Affairs Ministry, before Modi's arrival.

TagsPrime Minister Narendra Modi, Vietnam, $500 million line of credit, India, Act East Policy, Prime Minister Nguyen Xuan Phuc, East Sea