Positive Outlook on Vietnamese-Indian Trade

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Aug. 17 – Continuing growth in bilateral trade between India and Vietnam is reinforcing the importance of these two emerging economies to each other.

In 2010, bilateral trade grew 34 percent year-on-year to US$2.06 billion, with a similar pattern emerging in 2011. For the first half of 2011, bilateral trade came to US$1.8 billion, a 39.2 percent increase over the same period in 2010.

India’s involvement in trade with Vietnam has grown exponentially in the last decade as evidenced, most recently, by a more than 136 percent increase in exports from Vietnam to India in 2010 over 2009. Key Vietnamese exports include steel, coffee, rubber and electronic items.

Growth in trade volume can be attributed to a number of internal and external factors, which are working in the favor of both countries. Externally, ASEAN’s expanding influence in the region has proved beneficial through introducing agreements such as the ASEAN-India Trade in Goods (AITIG) and for bringing together leaders and companies at events like the India-ASEAN Business Fair.

Internally, improvements to Vietnam’s export structure, such as the opening of a new direct air route between the two countries, have helped trade.

On the whole, both countries are eager to continue to increase two-way trade. Vietnam’s budget deficit with India decreased by 37 percent in 2010 to US$769 million and Vietnam’s Deputy Minister of the Ministry of Industry and Trade encouraged Vietnamese businesses to undertake the initiative to craft solutions to further reduce the deficit and increase exports to India.

It is likely that trade relations between the two countries will continue to brighten as India’s recognition of Vietnam’s full market economy suggests sustainable growth is within reach.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email vietnam@dezshira.com, visit www.dezshira.com, or download the firm’s brochure here.