India's Prime Minister Narendra Modi (R) reviews the guard of honour with his Vietnamese counterpart Nguyen Xuan Phuc during a welcoming ceremony at the Presidential Palace in Hanoi, Vietnam September 3, 2016. REUTERS/Kham - RTX2NY1Y

HANOI (Reuters) – Indian Prime Minister Narendra Modi said on Saturday his country would provide a credit line of half a billion dollars to Vietnam for defense cooperation, the latest sign of closer ties between two countries with separate territorial disputes with China.

India’s Prime Minister Narendra Modi (R) reviews the guard of honor with his Vietnamese counterpart Nguyen Xuan Phuc during a welcoming ceremony at the Presidential Palace in Hanoi, Vietnam September 3, 2016. REUTERS/Kham – RTX2NY1Y

The credit offered by Modi, the first Indian prime minister to visit Vietnam in 15 years, was among a dozen cooperation agreements he signed in Hanoi alongside Vietnamese counterpart Nguyen Xuan Phuc.

Vietnam is in the midst of a major military buildup that analysts say is a deterrent as neighboring China grows more assertive in staking its rival claims in the South China Sea.

(Reporting by ho Binh Minh; Writing by Martin Petty; Editing by Kim Coghill)

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