The global health crisis has disrupted established supply chains for manufacturers based in both India and Vietnam, opening up opportunities for the two countries’ businesses to explore alternative options.
|Indian Ambassador to Vietnam Pranay Verma. Photo: VNS|
As a large economy, India is willing to step forward and plug some of the supply chain gaps for its partner countries, including Vietnam, according to Indian Ambassador to Vietnam Pranay Verma.
For example, in areas like agro-products, textile and garments, machineries etc., suppliers and manufactures in India and Vietnam can establish new partnerships to diversify their supply chains, the ambassador said.
Speaking at the India Ideas Summit on July 22, Prime Minister Narendra Modi underlined that there are extensive opportunities to invest in a variety of sectors in India thanks to historic reforms and India’s rise in Ease of Doing Business rankings of the World Bank.
In 2019, trade between Vietnam and India reached US$11.3 billion. At present, India is Vietnam’s largest trade partner in South Central Asia.
The two countries target to increase the value by 32% to US$15 billion in 2020.
With the aim of boosting the two-way trade, Vietnamese Minister of Planning and Investment Nguyen Chi Dung visited India in February 2020 to discuss with Som Parkash, Union Minister of State for Commerce and Industry. During the visit, the Vietnamese delegation worked with Oil and Natural Gas Corporation (ONGC), Essar, NTPC, HCL, GMR, among others, for opportunities and expansion of investment.
According to ASEAN Today, meat and fish are India’s principal exports to Vietnam. Meat accounts for 27% of total Indian exports to Vietnam while fish exports stand at 17%. India’s principal import from Vietnam is electrical equipment, which forms 49% of Vietnam’s total exports to India.
|India-Vietnam trade over the past decade. Source: the Embassy of India in Hanoi|
Vietnam is making efforts to simplify investment procedures to facilitate the operations of India’s companies and draw influx of Indian capital in extractive industry, textile and footwear, energy, health care – pharma, supporting industries, machines, automobile spare parts, agriculture, IT, and food processing.
Meanwhile, e-commerce and food production are promising sectors for Vietnamese investors thanks to India’s relaxation in these fields as the Indian government allows 100% foreign direct investment in food, beverage, and e-commerce.
The scope for increasing economic engagement with Vietnam also offers India an opportunity to increase its engagement with ASEAN since Vietnam is the current ASEAN chair. India’s revised engagements with ASEAN could result in a doubling of bilateral trade to US$300 billion by 2025, ASEAN Today reported.
Concerted efforts towards strengthening Indian-Vietnamese economic relations offer benefits to both countries and could provide India with a platform to deepen economic engagement with ASEAN as a whole.
Cooperation in health care
Ambassador Pranay Verma highlighted the potential cooperation of pharmaceuticals, saying that Indian medicines are available in appropriate 150 countries while 62% of vaccines and 20% of global generic drugs are sourced from India.
Vaccine production and plasma therapy are also regarded as promising sectors for cooperation.
PM Modi also said healthcare sector with the production of medical-technology, tele-medicine and diagnostics is one of India’s strengths posting an annual growth of roughly 22%.
Currently, Vietnam’s pharmaceutical industry meets only 53% of the domestic demand.
The Indian PM noted that India’s rise means a rise in trade opportunities with a nation that can be trusted, a rise in global integration with increasing openness, a rise in competitiveness with access to a market which offers scale, and a rise in returns on investment with the availability of skilled human resources.