Sandeep Arya, Indian Ambassador to Vietnam, told VIR that in 2023, the Indian and Vietnamese governments will boost the review of the ASEAN-India Trade in Goods Agreement (AITIGA) which came into force in 2010. Vietnam will be among 10 nations that India will work with about a new version of the agreement.

Vietnamese products showcased at the 41st India International Trade Fair (IITF) in New Delhi on November 2022. (Photo: VNA)

Under the existing agreement, ASEAN member states and India have agreed to open their respective markets by progressively reducing and eliminating duties on 76.4 per cent of goods and liberalising tariffs on over 90 per cent. Currently, import tariffs for many types of agricultural materials have been removed, from an average of 10-15 per cent.

The new deal version will be aimed to provide more convenience for enterprises of the participating economies, therefrom helping amplify trade and investment ties between India and Vietnam in particular and between India with the other ASEAN member states in general.

“Vietnam is a significant trade partner of India within ASEAN, and the economies of Vietnam and India have numerous complementaries. Vietnam is now considered as a key partner in India’s Act East policy. Especially, they currently have a comprehensive strategic partnership. Vietnam is also an important investment destination of Indian investors,” Ambassador Arya said. “We highly appreciate the great potential for cooperation between the two countries, especially in the sectors of oil and gas, IT, digital economy, pharmacy, electronics, and defence goods.”

The ambassador also underlined that in 2023, India and Vietnam will also boost trade by identifying specific items such as agro-commodities, and engineering goods. In addition, the embassy will also activities for connecting businesses of both countries, especially in areas of investment opportunities in infrastructure, oil and gas, defence technology, direct shipping links, and tourism.

The bilateral trade turnover soared from $5.6 billion in 2016 to $15 billion last year – up 13.6 per cent on-year. India’s main exports to Vietnam include metals, machinery, electronics and electronic equipment, agricultural products, chemicals and pharmaceuticals. Vietnam exported to India many types of products such as electronic equipment, chemicals, machinery and industrial goods.

The Vietnamese government promulgated Decree No.159/2017/ND-CP on Vietnam’s special import tariff plan to implement the ASEAN-India Free Trade Agreement (FTA) for the 2018-2022 period. Under the plan, over 5,600 lines of tariffs, covering nearly 60 per cent, were either erased or reduced. Product groups with the most tax cuts include meat-based products, vegetables, and other types of agricultural products.

As of January 20, Vietnam had 351 valid Indian projects, registered at more than $1 billion. These projects operate in many sectors including energy, mineral exploration, agro-processing and chemicals, sugar, tea, coffee manufacturing, IT, and car components. Vietnam, meanwhile, currently has six ventures in India with total registered capital of $28.55 million, operating in the sectors of pharmaceuticals, IT, chemicals, and building materials.

Both countries have also agreed to actively collaborate in oil and gas exploration projects in third countries. The Vietnamese side also welcomed Indian oil and gas companies to take advantage of opportunities in the midstream and downstream sectors in Vietnam.

Vietnam has also become an attractive market for renewable energy for Indian companies. For example, Adani Group has funded Adani Phuoc Minh Wind Power Plant and Adani Phuoc Minh Solar Power Plant. The wind power project was adopted in 2018, with construction begun in 2020 and commercial operation seen in October 2021. Located in the south-central province of Ninh Thuan, this 27.3MW plant is a joint venture between Adani (80 per cent of chartered capital) and Vietnam’s TSV JSC.

Meanwhile, the solar power plant, also in Ninh Thuan, was commissioned in 2020 and is currently operational. It has a capacity of 50MW.

Vietnam currently has 15 FTAs entering into force and is now negotiating another two – one with Israel, and another with a group consisting of Switzerland, Norway, Iceland, and Liechtenstein.

Meanwhile, India is engaged in trade talks for an FTA with a number of key economies, including the UK, Canada, and the EU. Moreover, it has launched negotiations for a comprehensive trade talk with Australia after a mini trade deal came into effect last year.