Vietnam’s growing importance in the global supply chain has created strong potential for the nation’s relationship with India to flourish, especially in terms of the small and medium-sized enterprises (SME) sector.

Vietnam and India see great potential for cooperation in the garment making industry

The view was shared by speakers during a teleconference held on February 25 to promote investment opportunities between local and Indian SMEs, hosted by the Vietnam Embassy in India, the Indian Industries Association (IIA), and the Hanoi Association of Small and Medium Enterprises (HANOISME).

During the event, Pankaj Gupta, chairman of the IIA, pointed out that some large Indian firms such as Adani Group, Mahindra, SRF Chemicals Ltd, and Suzlon Energy Ltd have shown a keen interest in investing in the Vietnamese market.

According to speakers, Indian businesses are greatly interesting in exploring investment opportunities in the fields of energy, mineral exploration, agrochemicals, production of sugar, tea, coffee, information technology, and automotive components.

Alongside the participation in several free trade agreements (FTAs), in addition to factors such as rapid economic growth, improved infrastructure, political stability, cheap labour costs, and a young workforce, Vietnam has plenty of investment incentives to offer to foreign firms looking to do business locally, participants noted.

Experts also pointed out that there are numerous challenges posed for foreign enterprises that operate in the field of oil and gas exploration, all of which are currently subject to a high corporate tax rate of between 32% and 50%.Other issues such as a language barrier, a shortage of ATMs, and a lack of other reliable transaction systems, can also hinder financiers. 

Vietnamese Ambassador to India Pham Sanh Chau underscored the importance of domestic political stability, the local business climate, and growing bilateral relations, as well as the opening of direct flights which has facilitated trade activities between the two countries in recent times.

He emphasised that both sides have great potential for development co-operation in such fields as support industries, and the manufacturing of auto parts, motorcycles, materials, textiles, footwear, and home appliances.

According to the Foreign Investment Agency of Vietnam, as of December, 2020, India has invested in approximately 300 valid projects in Vietnam with roughly US$900 million of capital, ranking 26th among foreign investors in the country.