Why does Vietnam have a trade deficit in fruits and vegetables from India?

According to the Vietnam Fruit and Vegetable Association, fruit and vegetable exports in April 2023 reached nearly 400.6 million USD, an increase of 22.3% over the same period in 2022; in the first 4 months of 2023, fruit and vegetable exports reached 1.381 billion USD, an increase of 17.7% over the same period in 2022.

Round Indian onions from 3 cm and up cost only 250 USD/ton, while those from Vietnam cost 25,000 - 30,000 VND/kg, and are still in whole bunches, not cut apart.

On the other hand, fruit and vegetable imports in April reached 151.6 million USD, up 1.3% over the same period in 2022. In the first 4 months of the year, fruit and vegetable imports reached 570 USD, up 3.6% over the same period last year.

As of the first 3 months of 2023, Vietnam's fruit and vegetable imports reached 418.7 million USD, an increase of 4.1% over the same period in 2022. Regarding the supply of fruits and vegetables to the Vietnamese market in the first 3 months of 2023, China led with 40.8% market share (equivalent to 170.9 million USD); followed by the US with 13.8% market share (equivalent to 57.9 million USD).

Notably, fruit and vegetable imports from the Indian market in the first 3 months of 2023 reached 17.372 million USD, an increase of nearly 4 times over the same period last year, accounting for 4.15% of the market share from 1% last year.

Mr. Dang Phuc Nguyen - General Secretary of the Vietnam Fruit and Vegetable Association - assessed that the Vietnamese fruit and vegetable industry has a trade surplus, but with the Indian market, Vietnam has a trade deficit.

For example, in 2022, Vietnam exported 49.618 million USD worth of fruits and vegetables to India, mainly dragon fruit, but imported 53.452 million USD worth of other products: apples, pears, spices (onions, garlic, etc.). India is a powerhouse of fruits and vegetables, many products have low prices and cheap labor, so it has a very competitive advantage; especially onions and garlic are extremely cheap, so they are imported in large quantities.

Currently, Vietnam and India do not have a free trade agreement in the field of fruits and vegetables. Import and export goods are subject to tax, so trade is not commensurate with its potential.

The Indian partner really wants to export grapes and pomegranates to Vietnam, while Vietnam wants to export more dragon fruit to India. To do so, there needs to be a policy of reducing import taxes from both sides.

The Vietnam Trade Office in India also said that Vietnam-India bilateral trade in the first 3 months of 2023 reached 3.69 billion USD, down 9% over the same period last year, of which Vietnam exported 2.06 billion USD, up 1.2%; imports reached 1.63 million USD, down 21.3% over the first 3 months of 2022.

Some export items with strong growth rates in the past 3 months include: iron and steel of all kinds increased by 670.3% to 117 million USD compared to 15.2 million USD in the same period; wood and wood products exports increased by 191.4% to 15 million USD; exports of computers, electronic products and components had the highest value reaching 281.18 million USD, up 75% over the same period in 2022.

On the contrary, in the first quarter of 2023, Vietnam's import of animal feed and raw materials increased by 220% over the same period last year, reaching 195.28 million USD; import of aquatic products increased by 93.9%, reaching 108.49 million USD; import of vegetables and fruits increased by 284.1%, reaching 17.37 million USD.

Source: https://congthuong.vn/vi-sao-viet-nam-nhap-sieu-rau-qua-tu-an-do-252630.html