Business & Economy

OPINION: Vietnam Understands India’s ‘Significance’ Amid US-China Trade Tensions

© Photo : MEA IndiaTalks between PM Narendra Modi and PM Pham Minh Chinh of Vietnam
Talks between PM Narendra Modi and PM Pham Minh Chinh of Vietnam  - Sputnik India, 1920, 25.05.2023
Bilateral trade between India and Vietnam reached $15.1 billion in 2022-23, up from just $3 billion a decade ago.
Dr. Ranjeet Mehta, the deputy secretary-general of Indian industry group PHD Chamber of Commerce and Industry (PHDCCI), is leading a high-profile business delegation to Vietnam in a bid to boost economic cooperation by identifying areas of collaboration.
The Indian business delegation’s visit comes amid ongoing efforts by the Vietnamese government to reduce reliance on China and the US, two of its biggest trading partners.
While the US is the biggest export market of Vietnam, China is its biggest source of raw materials.
Vietnam emerged as a major beneficiary in the wake of US-China ‘Trade War’, as it has been looked at as an alternative by many Western companies moving their manufacturing out from China.
On the other hand, Chinese companies have increased their investments in Vietnam in a bid to avoid Western sanctions.
Sputnik: How do you view cooperation between India and Vietnam amid ongoing geopolitical and trade tensions between US and China?
Dr. Ranjeet Mehta: From the conversations we have had with Vietnamese businesses, we have got a sense that they are following the geopolitical developments very closely. And they understand the growing significance of India.

They understand that it is hard to ignore India as it is also the most populous country and the world’s biggest market.

They are keen to develop close business ties and partnerships with India, be it in the sourcing of raw materials, inviting Indian investments and expertise in various sectors of their economy or in exporting finished goods such as textiles to the Indian market.
Sputnik: In recent months, Vietnam has also been looking at India as an alternative to China when it comes to supply of raw materials. What are these key raw inputs?
Mehta: Yes, that’s right. There is an increasing interest among Vietnamese companies to diversify their supply chains and source raw materials from India. And they are looking at India as a major sourcing hub for raw materials.
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Vietnamese companies seem especially interested in sourcing tiles, inputs for cement and textiles, all of which are available in ample quantities in India.

I think this would benefit companies from both countries. So far, there have been some logistical issues such as a lack of direct flights between the two countries. But that has been changing in recent years with direct flights between different Vietnamese and Indian cities.
In July, we will have yet another direct flight between Ho Chi Minh City and Kochi.
There has also been a tremendous jump in the number of visa approvals. In the last four months, the number of visas issued to Vietnamese nationals increased to 4,000, which include 200 business visas.
Sputnik: How can India help Vietnam in diversifying its trade basket? What are the key areas?
Mehta: There are at least six areas that we have identified for increased bilateral cooperation—infrastructure, renewable energy, electric vehicles, textiles, food processing, healthcare and education.
India is also a big market and Vietnam could benefit from exporting its textiles among other products. In fact, many Indian companies are also looking to source finished textile products from Vietnam.

India provides a huge market for Vietnamese products and it is time that Vietnam invites Indian businesses to invest in the country, by getting in newer technology and digital transformation models.

I believe that this would be a situation in which both Indian and Vietnamese companies would benefit to a great extent.
Sputnik: How can India benefit from expanding the scope of commercial ties with Vietnam?
Mehta: India has one of the best start-up ecosystems in the world, adding 80 recognized start-ups on a daily basis. We have world-class infrastructure facilities, the best railway network in India which is projected to grow by seven times by 2047. India also has the second-biggest road network in the world.
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Given the business climate and the logistics, there is a huge potential for investment in India.
There is a growing interest among Vietnamese companies to invest in India. For instance, Lien Minh Group would like to invest over $60 million in India in the next year in the hospitality sector.
There is also a strong possibility of inviting more Vietnamese students to pursue education at Indian universities.
Right now, many Vietnamese students are opting for countries like Australia and US to pursue their higher education. I think India would be an attractive and a more affordable educational destination.