Trade gathering pace with India

At last week’s conference on the issue in Hanoi, organised by the Vietnam Association of Foreign Invested Enterprises, the Indian Embassy to Vietnam said that economic ties are set to further flourish, thanks to the upgrade of the ASEAN-India Trade in Goods Agreement (AITIGA) in 2025.

Trade gathering pace with India, (Photo: theaseanmagazine.asean.org)

After the sixth meeting regarding the upgrade in November in Delhi, the seventh meeting will be held in Jakarta in February.

The new AITIGA will offer simple trade mechanisms that will be user-friendly, making it more favourable for India-Vietnam trade. It is expected to enhance and diversify trade while bringing symmetry in the bilateral trade between ASEAN countries and India.

Under the existing deal, ASEAN member states and India have agreed to open their respective markets by progressively reducing and removing duties on 76.4 per cent of goods and liberalising tariffs on over 90 per cent of goods.

According to the ASEAN Secretariat, the new version of the agreement will be aimed to make it more convenient for enterprises of the participating economies, therefrom helping increase trade and investment cooperation between India and Vietnam in particular and between India with the other ASEAN member states.

The Indian Embassy last week cited fresh figures from the General Department of Vietnam Customs as reporting that both nations’ trade turnover has seen an annual growth rate of 11 per cent over the past 10 years, reaching $14.3 billion last year, and an estimated sum of more than $15 billion in 2024.

Over the past decade, India’s exports to Vietnam has increased by 7.2 per cent annually to $5.9 billion, while Vietnam’s to India has also risen by 14.8 per cent annually to $8.4 billion.

According to the embassy, Vietnam’s export value to India has soared by 17.5 per cent over the past three years. The two countries have also been conducting positive discussions on boosting cooperation in the new sectors such as infrastructure, electricity, and pharmacy.

“According to statistics from the Vietnamese Ministry of Planning and Investment’s Foreign Investment Agency, Indian funding in Vietnam now stand at $1.12 billion [for 430 valid ventures], but the Indian side reports that the figure hits $2.2 billion,” the embassy stated. “Indian investment into Vietnam has increased by 15.8 per cent over the past 10 years.”

The embassy stated that there will be numerous opportunities for India and Vietnam to further cement trade cooperation, especially in the promising sectors of agriculture, chemical, electricity, electronics, gemstones, jewellery, renewable energy, infrastructure, IT, and emerging technology.

In July 2024, during a state visit to India by Vietnamese Prime Minister Pham Minh Chinh, Vietnam and India also pledged to amplify bilateral ties in high-profile areas including science and technology, especially in core technology, semiconductors, AI, innovation, and exploitation and processing of rare earths. They also committed to strengthen cooperation in IT development and training, with a direction towards establishing a digital partnership.

To this end, Vietnam also suggested that India remove non-tax measures against Vietnam, and soon work with Vietnam to sign a bilateral free trade agreement, which, together with the AITIGA upgrade, will help boost trade and investment flows through removing tax and technical barriers.

A document delivered at the conference last week showed that India, in recent years, has implemented many trade defence instruments against goods from ASEAN in general and Vietnam in particular. For example, India has been applying BIS standards to imported products such as iron and steel, and leather and footwear. This has forced many Vietnamese exporting enterprises to apply for BIS certificates from India.

“The procedure for applying for BIS certificates is very complicated, and many Vietnamese enterprises cannot apply for certificates and cannot export,” the document read.

BIS refers to Bureau of Indian Standards, which is the National Standards Body of India under the Department of Consumer Affairs of India’s Ministry of Consumer Affairs, Food and Public Distribution.

In addition, India has also been applying anti-dumping investigation on goods from Vietnam such as calcium carbonate filler, stainless steel pipes, copper wires and tubes, and nylon, among others.

It also uses measures to restrict the import of incense sticks and incense powder from Vietnam, while also applying minimum prices on Vietnamese pepper products.

Many Indian companies are interested in putting money into Vietnam in sectors including infrastructure and renewables.

Adani Group is planning to strengthen cooperation with Vietnamese partners in aviation and logistics via construction of Long Thanh and Chu Lai airports.

Adani has funded Lien Chieu Port in the central city of Danang, at a cost of about $2 billion. It has also put money into its Phuoc Minh wind power plant and Phuoc Minh solar plant. It is reported that Adani also wants to engage in other energy projects in the south-central province of Binh Thuan, specifically Vinh Tan 3 thermal power plant, with a total backing of around $2.8 billion.

In July 2024 in India, PM Chinh met with leaders of SMS Pharmaceuticals Ltd. and Sri Avantika Contractors. The groups said they had forged a partnership with a Vietnamese company to develop a pharmaceutical park in the north-central province of Thanh Hoa. The initiative is reported to have an initial investment of about $1 billion for the first phase, before an additional $4-5 billion coming in future phases over the next decade.

Elsewhere, BDR Pharmaceuticals International is producing pharmaceuticals, cancer drugs, and more in many nations. The company has been operating a representative office in Vietnam since 2022, and is currently supplying pharmaceutical input materials for churning out cancer drugs for a number of factories in Vietnam.

Sandeep Arya, Indian Ambassador to Vietnam We view rising opportunities for greater investment between India and Vietnam, and we are witnessing a more active interest among Indian companies towards Vietnam and vice versa. Indian investors in Vietnam are expanding their existing backing in the area of vehicle components, food-processing, consumer goods, energy, miscellaneous manufacturing, and IT services. It was useful that Prime Minister Pham Minh Chinh reached out directly to Indian businesses at a forum in Delhi in 2024 and also individually met the heads of numerous Indian corporations and specialised companies in areas of promise. Vietnam has particularly welcomed investments from India in infrastructure, high technology, IT, manufacturing and supporting industries, textiles, vehicles, agriculture, innovation, semiconductors, renewable energy, biogas and polyester fabrics, and much more. In early 2024, VinFast announced funding for e-vehicle production in India, while FPT is also deepening its presence in India. We also encourage further investments from Vietnam in agriculture, agro-processing, aquaculture, wood processing, urban development, production of bamboo and forestry products, hospitality and tourism, digital technology, e-vehicles, and healthcare and related services in India. We recognise that investment flow is a process ranging from informing businesses about opportunities, understanding the legal environment, building partnerships, and implementation. Efforts at all levels are in progress involving numerous businesses in both India and Vietnam, and I hope to see the value of $2 billion between the two economies grow in the coming years. Phan Thi Thang, deputy Minister of Industry and Trade There is a lot of room for Vietnam and India to further deepen the economic and trading relationship, based on a good political and diplomatic relationship. Since upgrading to a comprehensive strategic partnership in 2016, the number of visits and discussions between the two countries’ leaders is soaring. In 2024, Prime Minister Pham Minh Chinh paid a visit to India that gained fruitful outcomes in terms of economics, and trade, as well as opened up some opportunities for businesses of the two countries. Both Vietnam and India are stable-growth economies. The International Monetary Fund reported that these two countries are in Asia’s top 15 biggest economies. In 2025, Vietnam’s economy may reach $506 billion, and the government sets the goal of GDP growth at over 8 per cent. These are the most important factors to call for investment and facilitate production and business. Moreover, the industry structure of the two countries is complementary. Both Vietnam and India have a huge demand for goods from each other. So Vietnam can provide diversified goods to India, such as agricultural and aquatic products, spices, machinery and equipment, spare parts, electronic equipment, chemical products, fertilisers, consumer goods, and handicrafts. On the contrary, India supplies raw materials for Vietnam’s domestic production industries such as textiles, footwear, pharmaceuticals, components, spare parts, and animal feed. Based on the traditional friendship, the economic and trade cooperation between Vietnam and India will certainly develop more strongly, contributing to the common prosperity of the business community and people of the two countries.

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