Indian businesses prepare for digital transformation

Vaibhav Saxena, vice chairman of the Hanoi Office of the Indian Business Chamber in Vietnam

In recent years, relations between Vietnam and India have become substantially closer. A large number of Indian investors have established and expanded their business in various sectors in Vietnam.

According to K. Srikar Reddy, Consul General of India in Vietnam, as of June 20, 2019 there were 254 projects of Indian businesses in Vietnam with the total investment of about $928 million. If we include Indian investment projects through third markets such as Hong Kong and Singapore, the figure reaches $1.7 billion. The accumulated figure reached $921.5 million in 251 projects as of November.

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Under India’s Act East Policy, Vietnam plays an essential role in its presence in Southeast Asia. Some of the main sectors in Vietnam which arouse Indian firms’ interest include textiles and garments, energy, IT, and pharmaceuticals and healthcare.

We have witnessed direct investment from India through the presence and success of companies such as Tata Coffee, which has decided to invest in building a modern instant coffee processing factory in the southern province of Binh Duong, total capital of $63 million.

Tracing its roots back to 1922, Tata Coffee is one of the largest integrated coffee cultivation and processing companies in the world and the largest corporate producer of Indian-origin pepper. With the utmost emphasis on sustainability and traceability, the company produces some of the finest green coffee beans, instant coffee, pepper, and tea.

Elsewhere, energy is another sector attracting the attention of Indian financiers. During a Vietnamese state visit to India in March 2018, leaders from the two countries affirmed that Vietnam and India had made significant progress in co-operation in oil and gas exploration, renewable energy, power generation, and energy conservation. In order to further co-operation, Vietnam and India aim to sign the Framework Agreement on establishment of the International Solar Alliance.

Adani Group, one of India’s multinational renewable energy conglomerates, has invested in a wind power project with a capacity of 100MW in the central province of Ninh Thuan and a couple of other projects. ONGC Videsh Ltd., India’s largest oil and gas exploration and production company, has also poured around $114 million into Vietnam.

Meanwhile, in medical and pharmaceuticals, statistics show that about 78 per cent of the materials for pharmaceutical production are imported from India and China. Apart from being an important trading partner, Indian investors also allocate more capital into Vietnam’s healthcare sector. Hospitals and clinics are among the most promising areas of investment. Indian enterprises are likely to maintain their focus on the aforementioned areas, perhaps with slightly more emphasis on renewable energy since this is a rather new industry with plenty of potential for development.

Digital transformation

In recent years, we saw that Vietnam has been implementing more technological advancements in manufacturing. It is advisable for Indian companies to prepare themselves in order to penetrate or expand themselves in the local market. One suggestion is that they should do research on the kind of technology that is being applied in Vietnam so that they are able to make adequate adjustments to their business strategy.

Among the many sectors that Indian business are targeting, IT is essential for the two countries’ governments, with a number of bilateral co-operation agreements. Vietnam encourages Indian investors to further their presence in the country by providing them with preferential policies, aiming at transforming Vietnam into Southeast Asia’s new IT hub, especially focusing on software development and hardware manufacturing.

In May, Hindustan Computers Ltd., an Indian multinational IT service and consulting firm, unveiled its plan to establish an IT centre worth $650 million in Ho Chi Minh City.

As the representative of Indian firms in Vietnam, we are industriously connecting businesses and helping them gain more access to the Vietnamese market. A number of business workshops and meetings have been held throughout the year and this has long become a tradition for the Indian Business Chamber in Vietnam. The aim is to create a place for businesspeople from different nations, especially India and Vietnam, to meet and expand their networks.

We plan on continuing these activities due to the many positive outcomes already achieved. We will gather feedback from members to improve our events. Finally, we will actively make inquiries about their needs or any difficulties encountered during their operation in Vietnam.