By Sanjeev Miglani
NEW DELHI (Reuters) - Talks are gathering pace on the sale of Indian naval patrol vessels to Vietnam, an Indian official said, the first significant military transfer to Hanoi as it improves its defenses in the South China Sea where it is embroiled in a territorial dispute with China.
The four patrol ships will be provided to Vietnam under a $100 million defense credit line and represent a push by the nationalist government in New Delhi to counter Beijing's influence in South Asia by deepening ties with old ally Vietnam.
Vietnamese Prime Minister Nguyen Tan Dung held talks with counterpart Narendra Modi on Tuesday, the first meeting since the Indian leader took office in May, promising to turn the country into an economic and military power.
An Indian government official said negotiations for the patrol craft had gathered pace since the credit line was announced last month during the visit of India's president to Vietnam.
"We expect to see progress on this fairly early as negotiations are continuing between the Vietnamese and our defense suppliers," the government official involved in discussions said.
Vietnam wants the craft for surveillance off its coast and around its military bases in the Spratly island chain in the South China Sea where it is building a credible naval deterrent to China with Kilo-class submarines from Russia.
Claims by an increasingly assertive China over most of the energy-rich sea have set it directly against U.S. allies Vietnam and the Philippines. Brunei, Taiwan and Malaysia also claim parts of the waters.
Beijing's placement of an oil rig in disputed waters earlier this year infuriated Vietnam but the coastguard vessels it dispatched to the platform were each time chased off by larger Chinese boats.
Since then, the two sides have sought to repair ties and on Monday, top officials agreed to use an existing border dispute mechanism to find a solution to the territorial dispute.
Dung said Vietnamese defense cooperation with India was the pillar of their strategic partnership.
"During the visit, I am going to discuss with Indian leaders the major directions and concrete measures to promote bilateral cooperation," he told the Economic Times in response to a question on how he planned to expand security cooperation.
India and Vietnam have a long-standing defense relationship but it has been restricted to military exchanges, training, spares and maintenance of military hardware since both have predominantly Soviet-origin equipment.
Training has moved to a higher gear since Vietnam acquired the diesel-electric Kilo submarines which India has operated since the 1980s. It has been giving underwater combat training to Vietnamese sailors at the submarine school, INS Satavahana, in the southern city of Vishakapatnam since October.
China has previously criticized India's cooperation with Vietnam in the oil and gas sector, saying state firm ONGC's exploration activities off the Vietnam coast were illegal. Greater defense cooperation may draw similar concern.
But Indian military officials said Beijing itself had been providing arms to every neighbor of India, from Pakistan to Sri Lanka and lately even the Indian Ocean island of Maldives. Besides, patrol craft were far less lethal than the missile transfers that China had made to Pakistan, they said.
"These OPVs (offshore patrol vessels) are actually dual purpose," said retired army major general P.K. Chakravorty, who served as India's defense attache in Hanoi. "You can use them for anti-piracy operations as well as for military purposes."
(Reporting by Sanjeev Miglani; Editing by Nick Macfie)