Both countries wanted to increase bilateral trade to $15 billion by 2020, but trade disruptions caused by COVID-19 led to a 9.9 percent drop in trade to $12.3 billion last year. Vietnam has become India`s 18th largest trading partner, while India ranks 23rd out of 141 countries investing in Vietnam. India has about 351 projects in Vietnam with a registered capital of $991.76 million, according to the Ministry of Planning and Investment (MPI). In addition, the two countries have signed important agreements, including 12 memoranda of understanding in various fields such as aviation technology, Internet of Things (IoT) blockchain, infrastructure, as well as petrochemical refinery and oil and gas processing projects. As the Standard Chartered report shows, there is considerable scope to increase trade between India and Vietnam if both governments take a proactive approach to trade and investment and exploit this potential. Vietnam and India have historically shared strong bilateral relations, and over the past two decades, trade between the two countries has increased significantly. These economic relations have manifested themselves in several Indian investments in Vietnam in various sectors. Vietnam`s efforts to accelerate integration into the global market offer many opportunities for economic cooperation between India and Vietnam. In 2019, Vietnam signed a historic Free Trade Agreement (FTA) and an investment protection agreement with the European Union. Vietnam is also a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which Hanoi has actively supported the signing and negotiation of. During Vietnam`s CHAIRMANSHIP of ASEAN in 2020, the 10 ASEAN member states signed the Regional Comprehensive Economic Partnership (RCEP) – the world`s largest free trade pact.

Vietnam offers several lucrative reasons for investment such as better market access, favorable investment policies, free trade agreements, economic growth, political stability, low labor costs, and a young workforce. According to a Standard Chartered report on business opportunities, Vietnam`s exports to India have the potential to grow by 10 percent per year, or about $633 million. Projected growth is mainly driven by exports of goods (53%) and services (46%). The Speaker of the Vietnamese National Assembly (NA) Vuong Dinh Hue visited India from December 15 to 19 to deepen strategic relations between the two countries. The visit was part of the NA President`s visit to South Korea and India to promote cooperation in the fields of economic trade, investment and cultural relations, involving several government ministers, including Deputy Prime Minister Le Minh Khai. Given Vietnam`s strong economic growth in recent years, a revision of the India-ASEAN Free Trade Agreement is needed to further promote trade in promising emerging sectors between the two countries. But Vietnam`s bilateral trade figures with India were only $11.1 billion in the 2020-21 fiscal year, 12 times less than with China. India`s imports from Vietnam increased from $2.5 billion in 2015-2016 to $6.1 billion in 2020-2021, but the growth rate is marginal compared to Hanoi`s trade relations with major ASEAN countries. Conversely, Indian exports to Vietnam have not grown steadily over the past five years, reaching only $5 billion in 2020-2021. Vietnam is an attractive destination for production and export, thanks to its selection of free trade agreements with several countries that allow exporting products with attractive and low tariffs to these countries. There is a need to develop a local support industry to support large manufacturers, and Indian companies have the potential to fill the gaps in this sector. Currently, India shares privileged market access and economic cooperation through trade agreements with more than 50 countries.

The following table lists the main bilateral and regional agreements that India has signed and implemented: ASEAN and India signed the ASEAN-India Agreement on Trade in Goods (TIG) on 13 August 2009 in Bangkok after six years of negotiations. The signing of the ASEAN-India Agreement on Trade in Goods paves the way for the creation of one of the largest free trade agreements in the world – a market of nearly 1.8 billion people with a total GDP of $2.8 trillion. The ASEAN-India FREE TRADE AGREEMENT provides for tariff liberalization of more than 90 percent of the products traded between the two dynamic regions, including “specialty products” such as palm oil (crude and refined), coffee, black tea and pepper. Tariffs on more than 4,000 product lines will not be abolished until 2016 at the earliest. The ASEAN-India-TIG Agreement entered into force on 1 January 2010. India and Vietnam are both members of the Mekong-Ganges Cooperation, which was established to develop and improve the close relations between India and Southeast Asian countries. Vietnam supported India`s candidacy for a permanent member of the United Nations. Security Council and join the Asia-Pacific Economic Cooperation (APEC). [17] In the 2003 Joint Declaration, India and Vietnam intended to create an “arc of advantage and prosperity” in Southeast Asia; [9] To this end, Vietnam supported the growing importance of India`s relations with the Association of Southeast Asian Nations (ASEAN) and the negotiation of an Indo-ASEAN free trade agreement. [5] [9] India and Vietnam have also established strategic partnerships, including comprehensive cooperation in the development of nuclear energy, the improvement of regional security and the fight against terrorism, cross-border crime and drug trafficking.

[9] [10] [18] Describes the trade agreements in which this country is involved. Provides resources for U.S. companies to obtain information on the use of these agreements. Part of the reason Vietnam is trying to diversify its trade and investment profile is to reduce its economic dependence on China. China is Vietnam`s largest trading partner with an import-export turnover of US$133 billion in 2020. Beijing is also Hanoi`s largest foreign investor with a total investment capital of $2.4 billion as of November 2020. At the same time, the two countries have long been involved in territorial and maritime disputes in the South China Sea. Over the past two decades, bilateral trade between Vietnam and India has grown steadily, from $200 million in 2000 to $12.3 billion in the 2019-2020 fiscal year. Given Vietnam`s strong economic growth in recent years, a revision of the India-ASEAN Free Trade Agreement is needed to further promote trade in promising emerging sectors between the two countries. .