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.

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.

Source: Vietnam Investment Review