India - Vietnam Economic and Commercial Relations

India’s exports to Vietnam have grown steadily from US$ 11.5 million in 1985-86 to US$ 324.6 million during 2002 and further to US$ 395.68 million during January-November 2003. The balance of trade has been heavily in favour of India since the Vietnamese exports to India have remained extremely modest (during 2002, Vietnamese exports to India were only US$ 53 million).

During his visit to Vietnam in January 2001, Hon’ble Prime Minister of India had suggested the target of US$ 500 million for the bilateral trade between our two countries to be achieved in a period of three years. India’s exports to Vietnam during January-November 2003 have grown to US$ 395. 68 million and the target of US$ 500 million for the bilateral trade is likely to be achieved during 2003.

The primary reason for trade in favour of India is the similarity in our exports both countries are exporting items such as garments, footwear, rice, cashew, tea, coffee, pepper, rubber, marine products etc.

In other words, most of the Vietnamese products are already available in India and indeed exported to other countries. Even so, the possibilities of exporting some items such as crude oil, phosphates, furniture, non-ferrous metals, natural rubber, ceramics, tea, handicrafts, semi-precious stones and gems etc. from Vietnam to India do exist.

India’s share in Vietnam’s imports has improved substantially from 0.79% in 1996 to 1.68% in 2002 even though the global imports in Vietnam increased from US$ 11 billion in 1996 to US$ 19.36 billion in 2002. India ranked 13^th during 2002 (as against 18^th during 1996) among the leading exporting countries to Vietnam. The trend during 2003 shows that India’s position is likely to climb northwards.

The main items of our exports to Vietnam are pharmaceuticals (we are leading exporters), plastics, machinery and equipment, steel, textile machinery and fabrics, chemicals, wheat and spices etc. [India’s basket of exports has been expanded during 2003 and the new items of our exports to Vietnam are lubricants and oils, fertilizers and CKD and IKD motorbikes.] On the other hand, India imports natural rubber, artificial resins, resins aniseed, tea essential oils and cosmetic preparations, non-ferrous metals, chemical material and products, raw silk, silk yarn, paper board and manufactures, wood and wood products etc.

Railways and Power Projects:

Government of Vietnam has approved a 20 year project to develop the country’s railways transport system at an estimated cost of US$ 10.6 billion (US$ 6.5 billion for the trackwork and US$ 4.1 billion for procurement of locomotives and coaches). Likewise, Electricity of Vietnam (EVN) have plans to construct 37 new power plants with a total generation capacity of 10,600 MW during 2003-10. For this, an annual investment capital of US$ 2.78 billion would be needed.

During 2002, the following Indian companies have bagged internationally funded projects.

M/s. Kalpataru was awarded US$ 5.5 million tender for supply of transmission towers to Vietnam. Likewise, M/s. Ajanta Pharmaceuticals was awarded US$ 0.9 million tender for supply of anti-TB drugs and M/s. Polar got US$ 1 million project for supply of condoms. All these projects are funded by the World Bank and were awarded against competitive bidding.

Joint Business Council

Trade related issues are also reviewed by the two countries under the aegis of the Indo-Vietnam Joint Business Council, a body of the private business sectors in the two countries coordinated by the FICCI on the Indian side and Vietnam Chamber of Commerce & Industry on the Vietnamese side. India-Vietnam JBC was set up pursuant to an agreement signed in New Delhi between FICCI & ASSOCHAM from India & VCCI from Vietnam. It’s first meeting took place in Hanoi on 6^th September 1993. It held its 4^th meeting during Prime Minister’s visit in January 2001 at which three business to business agreements were signed:

(a) MOU between ONGC and Petroleum Investment of Development Company (PIDC) of Vietnam;

(b) TATA and TRANSINCO of Vietnam; and

(c) FICCI and Indian Business Chamber in Vietnam.

Bilateral Trade and Investment

A Bilateral Trade Agreement was signed between the two countries originally in 1978, a revised version of which came into being on 8^th March, 1997 in New Delhi during the visit of the Vietnamese Prime Minister to India.

A Bilateral Investment Promotion and Protection Agreement (BIPPA) was signed between the two countries on 8^th March, 1997 in New Delhi and ratified during the visit of the Vietnamese President to India in December 1999. A Joint Declaration on the Comprehensive Cooperation in the 21^st Century between India and Vietnam was signed during the visit to India by General Secretary of the Communist Party of Vietnam H.E. Mr. Nong Duc Manh in April-May 2003.

Bilateral trade figures for recent years are given at Annexure-I.

(a) Name of the Commercial Officer & : Shri S.K. Makhijani,

e-mail address First Secretary & Head of Chancery

indiapol@netnam.vn

(b) Contact details of Chambers of : Mr. Vu Tien Loc,

Commerce President,

Vietnam Chambers of Commerce & Industry, 9, Dao Duy Anh Street, Hanoi

Mr. Pham Gia Tuc

Secretary General

Vietnam Chambers of Commerce & Industry, 9, Dao Duy Anh Street, Hanoi

E-mail: vcci@fmail.vnn.vn

Website: www.vcci.com

(c) List of Indian businessmen attached at Annexure-II.

Annexure-I

(in US$ Million)

(Source General Statistic Department, Government of Vietnam.)

The major commodities exported to Vietnam during 2002 (with their percentage share) were:

(a) Drugs, pharmaceuticals and material for pharmaceuticals (16.83%)
(b) Material for plastics (10.8%)
(c) Seafood (8.47%)
(d) Iron & steel (5.9%)
(e) Machinery & equipment (5.78%)
(f) Chemicals (4.9%)
(g) Pesticides (3.5%)

This trend continued during 2003. The new items of our exports during 2003 were lubricants and oils (US$13.05 million during January-November 2003), Fertilisers (US$ 2.47 million - Jan-Nov. 2003) and CKD & IKD motorbikes (US$ 0.70 million - Jan-Nov 2003).

In so far as imports from Vietnam are concerned, the main items during 2002 were crude oil (32.13%) pepper (19.07%) tea (14.48%), leather & made-ups (2.13%), rubber (2.04%), cinnamon (1.87%), electronic components (1.85%), & coal (1.3%).

Source : Indian High Commision, Vietnam