Vietnam - India: Strengthening Business Cooperation

 

According to Ms Preeti Saran, the traditional relations of friendship, comprehensive cooperation and strategic partnerships between Vietnam and India have been constantly boosted; however, the current bilateral economic development, trade and investment between the two countries are under potential.

 

Ms Preeti Saran said Indian companies wish to cooperate with Vietnam in the establishment of joint ventures, expanding cooperation in the fields of tourism, textiles, agriculture, considering those fields of key importance for economic cooperation between the two sides, and helping Vietnam diversify export markets and import sources.

 

According to Ms Preeti Saran, Vietnam is one of the world's leading countries in textile export but is weakened by the heavy dependence on the need of inputs import. On the other side, India is the second largest country in the world for raw cotton, fabric, yarn, and textile raw materials in general. According to the TPP agreement, trade between the participating countries will not be subject to textile export tax. Therefore, Indian enterprises producing raw materials wish to cooperate with and invest in Vietnamese textile businesses to benefit from this agreement together when Vietnam joins the TPP. In addition, Indian businesses desire to further strengthen cooperation in the areas of pharmaceuticals, seafood, chemicals, real estate, information technology, etc.

 

Ms Preeti Saran also hoped that India and Vietnam would strive to raise two-way trade from the current US$8 billion to US$15 billion by 2020 as proposed by Vietnam Prime Minister Nguyen Tan Dung. She affirmed that India is always willing to share experiences and cooperate with Vietnam in various fields, and welcome Vietnamese enterprises to invest in India.

 

Dr Vu Tien Loc expressed his pleasure at the increasingly close cooperation between the two countries and said that for the upcoming time, VCCI would increase the frequency of seminars as well as sending more business delegations to participate in trade and investment promotion activities with Indian businesses.

 

Vietnam and India officially established diplomatic relations on 7th January 1972. Since then, the two countries have built long-standing traditional friendship. So far, the two countries have signed Free Trade Agreements, Avoiding Double Taxation, Promotion and Protection of Investments, Consul, Cultural Cooperation, Aviation, Travel, Legal Assistance on Criminal, etc; agreements on Cooperation in Mines and Geology, Environment, Traditional Medicine and the Protocol on defence cooperation, the two Ministries of Foreign Affairs have signed agreements on political references. The ASEAN-India Free Trade Agreement came into effect on 1st January 2010, with Vietnam on 1st June 2010.

 

In 1982, the two countries established the Joint Commission on economic, culture, science and technology cooperation. This is an important mechanism to help the two sides to promote exchanges and cooperation in various fields, including the development of Action Plan every three years. So far, the Joint Commission has had 13 sessions.

 

Bilateral trade has increased rapidly, from US$72 million in 1995 to more than US$1 billion in 2006, nearly US$2.5 billion in 2009; US$2.5 billion in 2010 and is now staying at US$8 billion.

 

Key exports of Vietnam to India include: Cattle feed, mobile phones, machinery, pharmaceuticals, material plastic, iron and steel and other metal, pharmaceutical materials, textile materials and leather, fabrics, pesticides, etc. On the other hand, main export items of Vietnam to India are: coal, pepper, electronic components, rubber, cinnamon, machinery and equipment, steel, fibre, footwear and so on.

 

Two-way trade between Vietnam and India in the textile sector over recent years has significantly increased, especially after the ASEAN-India Free Trade Agreement was signed in early 2010. Many textile products are given tax reduction or tax-free preference following the FTA’s roadmap. Specifically, exports of cotton textile products including yarn, fabric and garments, etc from India to Vietnam has increased in recent years, from US$8.9 million in 2007 to US$26.1 million in 2009, the average annual growth being 71.24 percent.

 

Regarding investment cooperation, India has a developed industry with key sectors such as: machine building, petrochemical, iron and steel, engineering, pharmaceutical and especially the rapid growing information technology industry. As of December 2013, India had a total of 77 projects, ranking 30/101 countries and territories investing in Vietnam with registered capital of US$254.13 million. Of which, the cash flow focuses mainly on processing and manufacturing (33 projects with a total investment of US$134.9 million) and mining (3 projects with a total investment of US$86 million). Regarding form of investment, most were 100 percent foreign capital investment (49 projects with a total investment of US$142 million). The remaining was under the form of business cooperation and joint ventures contracts.

 

Currently, India has about 70 companies and representative offices in Vietnam. Those offices mainly operate in the fields of pharmaceuticals, machinery, equipment, parts and components, chemicals, agricultural supplies.

 

Indian investment in Vietnam mainly went into the fields of telecommunications, information technology, motorbikes, fertilizers, pharmaceuticals, electrical equipment. Some notable projects includes: the joint project of Nam Con Son gas plant, the FPT and APTECH joint project of establish a training centre in India to develop Vietnamese IT professionals.

 

Currently, investment of Vietnamese enterprises to India is still modest. So far, Vietnam has had only one investment project in India which is the project of India Technology Development and Investment Company invested by FPT with a total capital of US$150,000 dedicated to software development and information service implementation.

 

VCCI, so far, has signed a cooperation agreement with the Federation of Chambers of Commerce and Industry of India; and a cooperation agreement with the Association of Indian Exporters on supporting enterprises of the two countries in finding export partners. In addition, VCCI has joined the Vietnam-India Business Council in the conference of Vietnam-India Joint Commission; the VCCI branch in Ho Chi Minh City has signed a cooperation agreement with the Indian Chamber of Commerce to help further promote bilateral trade and investment; a cooperation agreement with the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

 

Especially, in 2009, VCCI and the Indian Chamber of Commerce signed a MoU of the establishment of Vietnam-India Business Forum. The forum would help boost cooperation between Vietnam and India; opening up new channels of information exchange between the two countries.