Vietnam and India will celebrate the 45th anniversary of the establishment of diplomatic relations (January 7, 1972 - 2017) and the 10th anniversary of strategic partnership next year. Based on sound political relationship, the two countries have discussed and agreed on many measures to bring the strategic partnership to new heights to meet the expectations of the leaders and peoples of both countries.
India is a country with a very long development history, globally known for the Indus and Ganges civilisation and the place of origin of many major religions in the world. As the largest country in South Asia, after gaining independence in 1947, India built a self-reliant planned economy. To date, India has become a major economy in the world and has the world’s second largest population. The nation is playing an increasingly important role in international arena in political, security, economic and commercial aspects.
Vietnam and India signed the agreement on economic and commercial cooperation on February 26, 1978 and re-signed it on March 8, 1997. The two sides agreed to grant each other most-favoured-nation (MFN) treatment in import and export permits, customs duties and all other costs and taxes applied to imports, exports or transited goods. At the same time, they give each other treatments not less favoured than those granted to any other country in import and export licensing. This means that Vietnamese and Indian goods are accorded treatments not less favourable than those accorded by the two countries to other countries.
In 1982, the two countries set up the Joint Committee on Economic, Cultural, Scientific and Technological Cooperation. This was an important mechanism for the two sides to exchange and promote various areas of cooperation, including the introduction of action programmes which were created every three years. To date, the Joint Committee have gathered 13 meetings.
Currently, India is among the Top 10 trade partners of Vietnam. The two-way trade value topped US$9 billion in the 2014-2015 fiscal year. In 2015, the bilateral trade value increased by over five times in 10 years, reaching US$5.5 billion. Both sides agreed to achieve US$15 billion of trade turnover in 2020.
Vietnam’s major exports to India include mobile phones; machinery and spare parts; computers, electronic devices and components; coffee; natural rubber; pepper; vehicles and parts; chemicals, plastic materials; mineral ores; cashew nuts; timber and wood products; textile products; yarns; fabrics; and cinnamon.
Meanwhile, it imports seafood; cotton; machinery and spare parts; pharmaceuticals; iron and steel and other commodities from India.
India has a relatively developed industry powered by important industries such as machine manufacturing, petrochemical, steel, mechanical engineering, pharmacy and information technology. As of December 2015, India had 118 investment projects with a combined registered capital of US$439 million, ranked 28th out of 110 countries and territories investing in Vietnam.
On investment locations, excluding three offshore oil and gas exploration and production projects, Indian investors are present in 16 provinces and cities in Vietnam, but their investment capital mainly concentrated on mining projects in Tuyen Quang province (US$15 million by Alliance) and in sugar production projects in Ninh Thuan province (US$22 million by Dhampur Vietnam).
Currently, India has about 70 companies and representative offices active in Vietnam. These offices are primarily engaged in pharmaceutical, machinery, equipment, spare parts, chemical and agricultural supplies.
India invests in telecommunications, information technology, motorbike, fertiliser, pharmaceutical and electrical equipment in Vietnam. Its typical projects include Nam Con Son Gas Plant construction joint venture by ONGC Company; Long Phu 2 thermal power plant investment project; a US$525-million steel mill with an annual output of 2 million tonnes invested by Vietnam Steel Corporation and Vietnam Rubber Corporation with India’s Essar Group; and a US$20-million cephalosporin antibiotic production plant with a yearly output of 300 tonnes, expected to be carried out soon.
Vietnam has only one project in India. FPT Corporation invested US$150,000 to establish India Industry Investment Development Company to produce software and provide IT services.
According to economic experts, India’s investments in Vietnam are expected to increase sharply in the coming years since its large corporations such as Larsen & Turbro, Birla, Adani, Shapoorjee, Escorts and Eicher are seeking investment opportunities in the Southeast Asian nation. India asserted that its companies, both big and small, are very interested in Vietnam's market and promoting many investment projects in garment and textile, tea processing, coffee, energy, infrastructure and information technology there.
India also welcomed Vietnam to consider investment in India within the framework of such initiatives as “Make in India”, “Digital India”, and “100 smart cities”.
Quynh Chi
Vietnamese
