Trade between India and Vietnam is growing by leaps and bounds and has increased by almost 80 % in the past five years. The Indo-Vietnamese trading partnership is expected to grow rapidly as the two sides agree to set the target of bilateral trade at USD 15 billion by 2020. And there is an interesting comparison between India-Vietnam partnership and Pakistan-China alliance?
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The data released by the Indian Department of commerce highlights that trade between India and Vietnam grew 11.5 per cent to USD 14.2 billion in 2018 compared to a year ago. India is among Vietnam’s top ten trading partners.
Presently, both Vietnam and India enjoy strong diplomatic and trade relations. India’s strong relations with Vietnam was visible at the time of Vietnam’s independence from France, and also when India was one of the first countries to recognize a united Vietnam in 1975 after the war with the United States.
At present, India looks at Vietnam as a key partner in its “Act East” policy, quite similar to how China treats Pakistan. Vietnam and India share the same anxiety when it comes to China’s growing power and dominance in the region.
Due to this anxiety, India is asking Vietnam and other ASEAN states to protect its interest in the economic resources hidden in the South China Sea which China has considered the South China Sea its own. This is clearly visible in its certain development activities like the artificial islands Beijing has been building in disputed water.
The common security interests have promoted the bilateral trade between India and Vietnam. Since 1992, Vietnam has established extensive economic ties with India through cooperation in oil exploration and agriculture. Vietnam’s main exports to India include electronics and electrical products, textiles, handicrafts, cashew nuts, coffee, tea, precious metals etc.
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On the other side, India top exports to Vietnam are agriculture, farm products, meats, seafood, cotton, and pharma products etc. In terms of investments, India is the 26th ranked investor in Vietnam with almost 210 projects involving telecommunication, energy, mining, and electrical appliances.
Last week’s ASEAN-India expo co-organised by the Indian Ministry of Commerce and Industry, the Federation of Indian Chambers of Commerce and Industry, and the ASEAN-India Business Council held in New Delhi saw Vietnam’s strong presence with nearly 20 Vietnamese firms representing industries as diverse as farm produce, transportation services, and tourism was present.
In Future, Vietnam can also increase investments in India by taking advantage of the Indian government’s 100 per cent allowance of Foreign Direct Investment in the e-commerce and food manufacturing industries.
There are two major challenges in the context of trade between India and Vietnam, firstly there is a significant gap with respect to culture and language between people from both countries. Secondly, the two countries are geographically far apart. This not only harms tourism but also trade and business exchanges.
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