Vietnam – India: Strengthening Business Links
Recently, at the head office of the Vietnam Chamber of Commerce and Industry (VCCI), Dr Doan Duy Khuong, VCCI Vice President, had a meeting with Mr Neelakantan Ravi, former Indian Ambassador to Vietnam, on the occasion of his working visit to Vietnam. The purpose of the meeting with Mr Neelakantan Ravi is to study the economic situation in Vietnam, thus propose solutions to strengthen business links between the two countries’ business communities.
Vietnam and India established diplomatic relations on 7 January 1972. The two countries have long had friendly relations. India actively supported Vietnam during the war as well as in the innovation progress and economic development afterwards.
So far, the two countries have signed several trade agreements on avoiding double taxation, encouraging and protecting investment, consular, cultural cooperation, aviation, tourism, mutual legal assistance on criminal matters. Additionally, the two countries have also signed agreements on political consultation between the two foreign ministries, cooperation on mining and geology, environment, traditional medicine and the Protocol on defence cooperation. At the 15th ASEAN Summit in October 2009 in Hua Hin, Thailand, the two countries signed a memorandum of understanding recognizing Vietnam as a full market economy (MES).
In 1982, the two countries established the Joint Commission on economy, culture, science and technology cooperation. This is an important mechanism to help the two sides to promote and exchange the cooperation of different sectors, including the construction of the Action Plan once every three years. To date, there have been 13 meetings of the Commission.
According to statistics, trade between the two countries has increased rapidly, from US$72 million (1995) to more than US$1 billion in 2006, and US$2.5 billion in 2010. In 2012, two-way trade turnover reached nearly US$4 billion.
The major exports from India to Vietnam include fodder, mobile phones, machinery, pharmaceuticals, plastic materials, iron, steel and other metal types, pharmaceutical materials, textile and leather materials, fabric, pesticides, etc. Meanwhile, the major exports from Vietnam to India include coal, pepper, electronic components, rubber, cinnamon, machinery and equipment, steel, fibre, footwear, etc.
In particular, two-way trade between Vietnam and India in the textile sector has increased significantly over the years. Especially after the Free Trade Agreement between ASEAN and India was signed in early 2010, many textile products have enjoyed tax reduction and exemption under the commitments. Specifically, cotton textile exports including yarn, fabric and ready-made clothes from India to Vietnam have increased in recent years, from US$8.9 million in 2007 to US$26.1 million in 2009 with the average annual growth rate of 71.24 percent.
On investment, as of December 2012, India has 69 projects, ranking 30th among 98 countries and territories investing in Vietnam, with registered capital of US$252 million. The projects of India concentrate mostly in the field of processing industry and manufacturing with 22 projects with total investment capital of US$94.4 million, accounting for 45 percent of investment capital. Following it is the mining sector with three projects with the total investment capital of US$86 million, accounting for 41.7 percent of the total degree.
Excluding three projects on exploring and exploiting oil and gas, India is currently investing in 16 localities, but investment capital lies mainly in Alliance mining project in Tuyen Quang province with total investment capital of US$15 million and in Dhampur Vietnam sugar production project in Ninh Thuan with total investment of US$22 million.
The majority of Indian investment is under the form of 100 percent foreign capital, with 32 projects and total capital of US$103.6 million. The remaining capital is in the form of joint ventures and business cooperation contracts.
Currently, India has about 70 companies with representative offices in Vietnam. The offices are operating in the fields of pharmaceuticals, machinery, equipment, spare parts, chemicals, and agricultural supplies.
Regarding investment to India, so far, Vietnam has a new project in India, which is India Technology Development invested by FPT, a multinational information technology company of Vietnam, with a total investment of US$150,000 to produce software and offer IT services.
In particular, in recent years, VCCI has signed a cooperation agreement with the Federation of Chambers of Commerce and Industry of India (FICCI), the Association of Indian Exporters on promotion activities to support enterprises of the two countries to find export partners. In particular, the VCCI and FICCI signed an MoU establishing Vietnam – India Business Forum helping boost bilateral cooperation between Vietnam and India and also opening up new channels of information exchange between the two countries.
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