New Delhi: Bilateral trade is expected to be a major area of focus when Prime Minister Narendra Modi will host his visiting Vietnamese counterpart Pham Minh Chinh for a bilateral summit here on Thursday.
This became evident when Chinh addressed the Vietnam-India Business Forum organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Embassy of Vietnam here on Wednesday ahead of the summit. Speaking on the occasion, Chinh called for stronger economic cooperation between Vietnam and India, setting an ambitious target of $20 billion in bilateral trade. He invited Indian businesses to invest in strategic sectors such as infrastructure, digital technology, and pharmaceuticals.
India-Vietnam bilateral trade and investments
In the fiscal year 2023-2024, India-Vietnam trade stood at $14.82 billion where India's exports to Vietnam amounted to $5.47 billion and Vietnam's exports to India were $9.35 billion. Main Indian exports to Vietnam include engineering goods, agricultural products (including meat and fishery products), chemicals and pharmaceuticals, electronic goods, minerals, cotton and textiles and plastics.
India's imports from Vietnam mainly comprise computer and electronic goods, mobile phones and accessories, machinery and equipment, steel and other metals, chemicals, footwear, garments, rubber, and wooden products. The Association of Southeast Asian Nations (ASEAN)-India Trade in Goods Agreement concluded in 2009 provides a preferential trade regime between India and Vietnam and that Agreement is currently under review.
India's investments in Vietnam are estimated at around $2 billion including investments routed through third countries. According to Vietnam’s Foreign Investment Agency, India has 378 projects with a total invested capital of over $1.1 billion in Vietnam. Major sectors of Indian investments are energy, mineral processing, agro-processing (coffee, tea, sugar), information technology, auto components, pharmaceuticals, hospitality and infrastructure. According to the Department for Promotion of Industry and Internal Trade of India, as of 2022, Vietnam has invested about $28.55 million in India in sectors like consumer goods, electronics, constructions, IT and pharmaceuticals.
There are regular exchanges of visits by business delegations and participation in trade fairs and exhibitions apart from business meets that support trade and business ties between the two countries. In April 2024, Indian businesses participated in the 33rd Vietnam International Trade Fair, Vietnam Expo, hosted by the Ministry of Industry and Trade of Vietnam where India was the 'Guest of Honour' country with participation coordinated by the Indian Trade Promotion Organisation. The Indian Business Chambers (INCHAM) in Vietnam provides a platform for cooperation among Indian businesses through its presence in Hanoi and Ho Chi Minh City.
During his address at the Vietnam-India Business Forum, Prime Minister Chinh invited Indian businesses to invest more in Vietnam, particularly in semiconductors, science and technology, innovation, digital transformation, green hydrogen, pharmaceuticals, renewables, and biotechnology sectors. He noted that Vietnam currently sources 33 per cent of its pharmaceuticals from India and expressed interest in establishing "a proper pharmaceutical ecosystem in Vietnam to help protect the health and life of our people".
"The Prime Minister also called for Indian businesses to facilitate Vietnamese companies’ integration into their supply chains and urged Indian businesses to consider Vietnam to be a strategic destination," a statement issued by FICCI reads. "Chinh revealed that he had met with several Indian companies that have pledged to invest in Vietnam. He welcomed these commitments and expressed hope for continued investment and cooperation."
India-Vietnam defence cooperation
Apart from trade, defence cooperation is expected to be another area of focus during the bilateral summit on Thursday. Defence is a major pillar of cooperation between India and Vietnam. India and Vietnam signed a formal agreement for defence cooperation in 1994. Relations between the two countries were elevated to the level of 'Strategic Partnership' during the visit of then Vietnamese Prime Minister Nguyen Tan Dung to India in July 2007. In 2016, during Prime Minister Modi's visit to Vietnam, bilateral relations were further elevated to a 'Comprehensive Strategic Partnership'.
Then again, during Defence Minister Rajnath Singh's visit to Vietnam in June 2022, the two sides signed the 'Joint Vision Statement on India-Vietnam Defence Partnership towards 2030', which will significantly enhance the scope and scale of existing defence cooperation. A Memorandum of Understanding on Mutual Logistics Support was also inked in the presence of the Defence Ministers of the two countries.