Vietnam-India trade: exploring new market

The People's Committee of Ho Chi Minh City, on March 17, coordinated with the Consulate General of India in HCMC to organize the "Second Edition of India - Vietnam Business Forum". The forum, which attracted the participation of more than 300 enterprises from the two countries, is an opportunity for domestic enterprises to seek investment opportunities, as well as expand their export market share in a market with a population of more than 1.3 billion people.
Vietnam-India trade: exploring new market ảnh 1 Garment production for export at an enterprise in HCMC. (Photo: SGGP)

Huge market

Analyzing the investment opportunities for Vietnamese enterprises in expanding market share in India, Mr. Vo Van Hoan, Vice Chairman of HCMC People's Committee, said that India has a market size of more than 1.3 billion people. It will be an extremely large consumption market, especially in the context that Vietnam is a country with strongly-developed agriculture, fishery, textiles, leather, and footwear industries.
However, the development of market share, as well as investment, in the Indian market remains limited. At present, Vietnam has nine investment projects in India, with a total capital of more than US$6 million, mainly in the wholesale and retail sector, ranking 42 out of 78 countries where Vietnam has invested abroad. The bilateral trade turnover between India and Vietnam reached $13 billion in 2021, up 36.5 percent over the same period in 2020, and is expected to hit the target of $15 billion in 2022.

In particular, for HCMC alone, two-way trade turnover reached $1.45 billion, an increase of 30 percent compared to 2020. “Now India has risen to the top agricultural product exporting country. Therefore, Indian enterprises need to increase the import of agricultural products, especially rice products, vegetables, and fruits. However, along with the increase in the import of agricultural products, including Vietnamese agricultural products, technical barriers will also be tightened because this is a requirement to maintain the export market share of Indian enterprises”, said Mr. Harsh Vardhan, an expert in the field of agricultural products and food.

Mr. Nguyen Thanh Hung, Sales Director of Sao Khue SG Co., Ltd., said that technical barriers to quality standards in the Indian market were not a concern of enterprises because domestic enterprises had been familiar with being imposed many strict technical barriers in export markets. For instance, the company has experience in exporting agricultural products to Japan, South Korea, and China. In these markets, food safety and quality standards are always tightened. Since the beginning of the year, Japan has issued 25 new notices on adjusting food safety and quality standards related to the use of plant protection chemicals on agricultural products but cannot cause difficulties to his company. Currently, on average, the company exports from three to seven 20-foot or 40-foot containers each week. The company has also standardized the quality of input products thanks to the close connection with the cooperatives in the raw material growing area. The company's concern with the Indian market is finding a reliable partner to avoid risks when exporting.

Combining the strengths of each country to catch the investment wave

Vice-Chairman of HCMC People's Committee Vo Van Hoan said that in the past two years, the world had experienced the heavy impact of the Covid-19 pandemic. However, with efforts to prevent the pandemic, Vietnam and India have gradually controlled, reopened, and are gradually recovering their economies. Currently, HCMC has developed a socio-economic recovery plan for the 2022-2025 period, in which the recovery phase starts from now until the end of 2022, and the development phase is from 2023 to 2025. Therefore, 2022 is considered a crucial year, laying the premise for the next development phase. To achieve the goal of economic recovery, the city government needs the support of the business community at home and abroad, including the Indian business community.

With their competitive advantages, Vietnam and India are at the center of the shift of global supply chains. It is reflected in the fact that both countries are receiving large foreign investment, opening up opportunities for the two countries to forestall the post-Covid-19 economic recovery period, creating advantages for both countries in the global supply chain. With the close cooperation between the two countries, businesses will seize opportunities to accelerate development, take advantage of investment opportunities, as well as participate more deeply in the global supply chains that are heading to the two countries.

However, some enterprises specializing in exporting goods to the Indian market shared that India is a large market, but it also contains risks. Exporters often have to ask Indian enterprises to pay 100 percent of their orders before shipping to avoid the risk of losing goods and not being paid. However, it is often difficult for this request to be accepted. Domestic enterprises have only connected with a few large-scale enterprises or large distribution systems of India. It has caused certain limitations when domestic enterprises want to expand their export market share.Promoting two-way cooperation In the opposite direction, Vietnam is an attractive destination for Indian businesses. Mr. Pranay Verma, Indian Ambassador to Vietnam, said that Indian enterprises highly appreciate the investment potential in Vietnam, focusing on six industry groups, including engineering, supporting industries, digitalization, e-commerce, retail, and agricultural products. According to Mr. Pranay Verma, besides the investment capacity, the bilateral relationship has been strong throughout the 50-year history of the two countries and especially the event of elevating the strategic and comprehensive cooperation of the two countries since has created momentum for Indian businesses to promote strong investment and development in Vietnam.
Vietnam-India trade: exploring new market ảnh 2 Vice-Chairman of HCMC People's Committee Vo Van Hoan (L) and Mr. Pranay Verma, Indian Ambassador to Vietnam, at the forum. (Photo: SGGP)
By February 2022, India ranked 25th out of 140 countries and territories investing in Vietnam with 315 valid projects with a total capital of more than $918 million. The fields that attract strong investment from Indian enterprises are processing, manufacturing, electricity distribution, and mining. As for HCMC, India ranks 25th place out of 116 countries and territories that have invested in the city, with 179 valid projects with a total capital of nearly $82 million. Talking about the concerns of enterprises of the two countries, Mr. Pranay Verma said that in the coming time, India would regularly exchange and organize B2B activities to enhance trust and expand trade between businesses of the two countries, avoiding trade risks. At the same time, India would further promote the connection of Vietnamese enterprises to localities, based on the strengths, as well as cooperation potentials between the localities of India. Trade events would mainly focus on industries, such as IT, agriculture, pharmaceuticals, e-commerce, especially tourism. In the opposite direction, India would also suggest Vietnamese authorities remove difficulties in administrative procedures, creating opportunities for Indian enterprises to approach investment projects in Vietnam. At this time, both India and Vietnam are focusing on solutions for economic recovery and gradually overcoming the heavy impacts of the Covid-19 pandemic. The forum has become a space for businesses, as well as leaders at all levels of the two countries, to connect and share to learn more about mutual opportunities in efforts to recover the economy, contributing to creating new values in trade exchanges between the two countries.

HCMC calls for investment in Smart City Project

According to Mr. Le Quoc Cuong, Deputy Director of the Department of Information and Communications of HCMC, HCMC set the theme for 2022 as safe adaptation, flexibility, and effective control of the Covid-19 pandemic, continuing to improve the quality of building the urban administration, improving the investment environment, and accompanying businesses. With this theme, the city has determined that one of the important tasks for economic recovery and development is to carry out comprehensive digital transformation, develop the digital economy, build a digital society, promote the application of information technology, build a digital government, synchronously design, build, and rely on the operation of integrated systems, interconnection of large-scale databases, and application of artificial intelligence (Al) into the deployment of smart and creative cities. Therefore, the city has been calling on Indian businesses and investors - who have strength in digital technology to step up research and promote investment in the above matters.