Export to India Boosted

To expand exports to India, on July 6, 2011, the Ministry of Industry and Trade hosted an online dialogue on the Indian market via the foreign market information portal (www.ttnn.com.vn). Mr Tran Quang Huy, Deputy Director of the Africa, West Asia and South Asia Department under the Ministry of Industry and Trade, talked with reporter Huong Ly concerning the topic.

 

With an annual growth of 9 - 10 percent, the world’s second highest growth, India is arguably transforming into an information technology powerhouse and a powerful emerging economy. The country is also a member of the BRIC Group (a group of four emerging economies: Federative Republic of Brazil, Russian Federation, Republic of India, and People's Republic of China) which served as an engine for the ongoing global economic recovery.

 

India, with a population of over 1.2 billion, saw exports of US$245.9 billion and imports of US$350.3 billion in the fiscal year 2010 - 2011. It spent nearly US$1 billion on imports from Vietnam in 2010 and US$484 million in the first five months of 2011, up 53.2 percent year on year.

 

Its major imports from Vietnam include animal feeds and raw materials; pharmaceuticals and pharmaceutical materials; machinery, appliances and accessories; chemicals and chemical products, etc.

 

Vietnam and India have established very solid legal frameworks. The two countries formed the strategic partnership in 2007. India recognised Vietnam as a country with a full market economy. A series of agreements, particularly the Agreement on ASEAN-India Trade in Goods (AITIG), facilitate Vietnamese competitive goods to deepen the roots in India. The results prove that India is a very potential market for Vietnam in all fields of cooperation, especially trade and investment.

 

In applying its tariff commitments for ASEAN countries, including Vietnam, joining the ASEAN - India Free Trade Agreement (AIFTA), the Indian Ministry of Finance issued the Notice No. 153/2009- Customs dated December 31, 2009 on import tariffs on goods from ASEAN countries, including Vietnam. According to this tariff, many of Vietnam's exports to the Indian market will be subject to lower tax rates provided that exports have certificates of origin (AI sample) issued by certification management agencies authorised by the Ministry of Industry and Trade. For instance, cinnamon and anise are levied 25 percent of import tax instead of 30 percent; plywood and footwear are imposed 22 percent instead of 27 percent.

 

Vietnam’s exports imposed [anti-dumping] taxes by India included rolled steel, sliced cassava and cassava starch, fibres, compact lamps, CDs, leather shoes, chemicals, metals and metal products; machinery, mechanical equipment, electrical equipment; plastic, rubber; pulp, paper; foods; stones, plastic products, etc.

Charged exports occurred when India had not recognised Vietnam as a full market economy and it could apply a lot of antidumping measures and trade remedies to goods imported from other countries, including Vietnam.

 

In addition, India is the largest economy in South Asia with a similar structure of goods production to Vietnam. As a country has to protect domestic production, it will exert all technical barriers and trade remedies possible for this purpose (particularly when the global economy has not completely ridden out the economic crisis.)

In principle, an export item may be subject to anti-dumping measures in a foreign market by cumulative effect. Domestic producers are entitled to sue the market share a group of countries (with more than 7 percent of market share of such import). Vietnamese exports are mainly imposed with cumulative form.

 

You may face risks when you do business in any market and India is no exception. Therefore, you must carefully know your partners and follow international trade regulations when you do business with them. Although you have done business with a partner for a long time, you still have to strictly comply with payment and other regulations in international trade.

 

According to Indian customs laws, in some cases when imports arrive at a port of entry, only importers are entitled to take such imports while others cannot. As a result, it is very risky to use DB payment method if Indian companies violate contracts and deposits. Then, Vietnamese businesses will hardly take back their exports.

 

Firstly, the Indian commodity structure is relatively similar to that of Vietnam but it is more competitive in both quality and value. Prices of our apparels, footwear, handicrafts and fine-art items exported to the Indian market are not as high as in some other markets. Therefore, Vietnamese businesses tend to export these commodities to such markets as the European Union, the United States and Japan rather than India.

 

India has a huge demand for importing raw materials, unprocessed agricultural products as well as consumer goods and it is still imposing high tariffs to restrain imports to protect domestic production. Hence, our goods will face numerous difficulties when they enter this market, especially Vietnamese advantageous exports like coffee, rubber, pepper, apparel and footwear.

 

Furthermore, Vietnam is importing high-valued but competitive goods from India like animal feeds, pharmaceuticals, medical equipment, computers, and electronics components.

 

Another reason is the reduction of import tariffs according to commitments to the World Trade Organisation (WTO) and the region, and growing consumer demand and purchasing power for imported goods that Vietnam needs.