The epidemic of new coronavirus (Covid-19) poses both challenges and opportunities to businesses in India and Vietnam, according to the Indian Ambassador to Vietnam Pranay Verma.

Indian Ambassador to Vietnam Pranay Verma. Photo: Embassy of India in Hanoi

Nobody had expected this epidemic to happen and it has challenged many economies in the world and caused some certain impacts on businesses in both India and Vietnam, Ambassador Pranay Verma said at the discussion titled “India-Vietnam Economic Partnership for Shared Prosperity” in Hanoi on February 26.

In reality, some of Indian companies have faced insufficient supply and a slight increase in prices of input materials due to the spread of Covid-19. But many others at the same time have also made more contracts to meet the need, the ambassador said.

Companies specializing in pharmaceuticals, textile, and footwear are among them, he added.

Meanwhile, Vietnamese firms would also boost trade with Indian partners in these sectors as Vietnam is good at textile products while demand for pharmaceuticals remains high, Mr. Verma emphasized.

Opportunities for bilateral investment and trade

Vietnam-India's trade in 2015-2020. Source: Vietnam customs. Chart: Linh Pham

The ambassador hoped that both India and Vietnam will find new ways to cooperate to tap potential which is “significant.”

India is seeking for a US$5-trillion economy and Vietnam is targeting at a US$500-billion economy. To some extent, the two countries have similar goals and they could boost the cooperation for further investment and trade, the ambassador commented.

He said Vietnam’s investment in India remains modest compared to the potential and he expected Vietnamese companies would see more opportunities to invest in the South Asian country.

Whereas, India’s investment in Vietnam is promising. The government of India has also increased official development assistance (ODA) to Vietnam with an estimated US$1 billion for a number of projects, including smart city, pharmaceuticals, infrastructure, renewable energy, textile, footwear, and cultural preservation, the ambassador said at the event.

Rajesh Uike, deputy chief of mission, the Embassy of India in Hanoi. Photo: Embassy of India in Hanoi

Talking about India’s policies on attracting investment, Deputy Chief of Mission of the Embassy of India in Hanoi Rajesh Uike said India’s investment environment has changed a lot over the past few years, offering opportunities for foreign investors, including those from Vietnam.

He said India moved 79 positions in the World Bank’s Doing Business Ranking to the 63rd in 2019 from 142nd in 2014. The improvement together with a better tax system, increasing investment in infrastructure, and the government’s reduced intervention are among factors forming a better investment environment for foreign investors, Mr. Uike noted.

In terms of trade, the two-way turnover reached US$10.68 billion in 2018, doubling that in 2016. The two countries expect the amount to hit US$15 billion in 2020.

Vietnam’s main staples to India include machines and spare parts, mobile phones and electronic devices, computers and laptops while the country’s imported products comprise of steel, pharma, seafood, cotton, animal feed, among others.