Which industries have the opportunity to break through in exporting to India?

Trade - the pillar of cooperation in Vietnam - India relations

Vietnam and India established diplomatic relations in 1973 and upgraded them to a Comprehensive Strategic Partnership in 2016. Over the past years, the Vietnam-India Comprehensive Strategic Partnership has made important progress in many fields, in which the business communities of the two countries have played an important role in promoting bilateral economic cooperation.

Assessing the bilateral cooperation between Vietnam and India, Indian Ambassador to Vietnam Sandeep Arya affirmed that the Vietnam-India comprehensive strategic partnership has recorded strong progress with many remarkable achievements in 2023, laying the foundation for cooperation activities in 2024 and the following years.

According to the Ambassador, Vietnam and India have great potential to expand cooperation and promote growth in the fields of agriculture - fisheries; electricity, electronics, chemicals and pharmaceuticals production; mineral processing; energy; infrastructure development; transport services and tourism . The two sides have been discussing towards establishing a framework and coordination mechanism to promote trade cooperation in these areas. Not only that, the two countries also have much room to expand cooperation in other areas such as banking, digital payments and direct transport services.

Trade is an important pillar in Vietnam-India bilateral relations. Illustrative photo

Sharing the same view, the Vietnam Trade Office in India also believes that trade is an important pillar in the Vietnam-India bilateral relationship, which has continuously achieved steady growth over the past 20 years. Bilateral relations have increased from about 200 million USD in 2000 to 15 billion USD in 2022, making India one of the top 8 trade partners of Vietnam, while Vietnam is in the top 4 ASEAN countries with trade relations with India.

Notably, in recent years, the import-export structure of the two countries has been balanced and complementary. While India is an important source of raw materials and finished products for Vietnam in the fields of steel, chemicals, pharmaceuticals, textiles, animal feed, and seafood, Vietnam's leading export products to India are personal computers; mobile phones and components, steel, chemicals, wood and wood products, footwear, spices, coffee, pepper, etc.

In 2023, according to statistics from the General Department of Customs, Vietnam's export turnover to India in December reached 702.5 million USD, down 3.6% compared to the previous month. In total, Vietnam's export turnover to India in 2023 reached more than 8.49 billion USD, up 6.7% over the same period last year. With this figure, India is one of the few markets with positive growth.

Leading the group is the group of computers, electronic products and components reaching 1.94 billion USD, up 88.2% over the same period last year, accounting for 22.9% of the proportion. Next is the group of phones of all kinds and components reaching 1.03 billion, accounting for 12.2% of the proportion. In 2023, the export turnover of some groups of products will have growth compared to the same period last year: Iron and steel of all kinds increased by 319.3%; wood and wood products increased by 287.3%; rubber products increased by 65.7%.

Exporting goods to the Indian market in 2024 still opens up opportunities for Vietnamese businesses, as consumer demand in the market of 1.4 billion people gradually recovers and regains growth momentum after the pandemic.

Opportunity for export breakthrough to India?

At the 5th meeting of the Vietnam - India Joint Trade Subcommittee held in August 2023, Deputy Minister of Industry and Trade Phan Thi Thang said that the two sides need to exploit complementary factors in the commodity structure, ensuring no disruption in the supply chain and production for each side's strong commodity groups such as textiles, footwear, processed agricultural and aquatic products, industrial goods, animal feed, chemicals and plastics, pharmaceuticals, electronic components, etc.

In addition, according to the Deputy Minister, the two countries need to remove trade barriers for each other's import and export goods; promote market opening for each side's strong goods, especially agricultural products and fresh fruits; along with promoting cooperation in the field of e-commerce; enhancing business connections, trade and tourism through promoting the exploitation of more direct flights, increasing the frequency of flights between major cities of the two countries.

Cinnamon is Vietnam's main export item to the Indian market. Illustrative photo

Looking at the structure of export goods and export growth in recent times, it can be seen that on the Vietnamese side, the manufacturing industries of phones, agricultural products, iron and steel... have many opportunities to boost exports to India.

First of all, for the agricultural sector. Coffee is currently an important export item of Vietnam to India. Indians are very fond of Vietnamese instant coffee. Besides L'amant, Trung Nguyen and G7 brands have also developed very well in India. The governments of the two countries are still negotiating to reduce import taxes, at which time Vietnamese coffee will have a strong presence in India.

In addition, cinnamon is also a key export item of Vietnam to this market. Currently, Vietnam's cinnamon exports to India account for about 80% of the market's cinnamon import demand. According to Indian data, in the 2022-2023 fiscal year, India imported 38,000 tons, of which 35,000 tons came from Vietnam. " Cinnamon or spices are almost exclusive products of Vietnam in India. Therefore, businesses should promote trade promotion solutions, learn carefully about the market to increase export value" - Mr. Bui Trung Thuong recommended.

Second, export of all kinds of phones and components. As reported above, in 2024, the export turnover of all kinds of phones and components to India reached 1.03 billion, accounting for 12.2% of the total. Although it has only been exported to India since 2009, all kinds of phones and components have become the item with the largest export turnover to this market.

Third, Vietnam's steel and steel product manufacturing industry has the opportunity to boost exports to India as in 2023, iron and steel exports to India increased by 319.3% over the same period in 2022.

Although it is considered a potential market, Mr. Bui Trung Thuong - Trade Counselor, Vietnam Trade Office in India, said that exporting to the Indian market is not easy because in the context of India's export difficulties, this market will also find ways to protect the domestic market, creating jobs for businesses and workers. Therefore, to penetrate deeper into this market, Mr. Bui Trung Thuong said that trade promotion work will have to be improved, combining diverse forms.

The deal to encourage Vietnamese businesses to export to India needs to create an ecosystem in the Indian market. In addition, India's e-commerce is currently about 10 years behind Vietnam. However, this gap will be closed very quickly, so it is very appropriate for businesses to approach the market at this time.

Today, January 26, 2024, marks the 75th anniversary of India's Republic Day (January 26, 1950 - January 26, 2024). Vietnam and India established diplomatic relations in 1973 and upgraded them to a Comprehensive Strategic Partnership in 2016.

At the Vietnam - India Business Forum held on January 10, 2024 in India, Deputy Prime Minister Tran Luu Quang said that Vietnam and India still have a lot of potential and room to develop economic cooperation between the two countries in the coming time, especially in new trends and development areas such as green economy, circular economy, digital transformation, software industry, semiconductors, and artificial intelligence.

The Deputy Prime Minister affirmed that Vietnam always gives high priority to promoting comprehensive cooperation with India, especially in economics, trade and investment, in an increasingly practical and effective manner; and is ready to create conditions for Indian businesses to operate long-term and successfully in Vietnam.

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