Published: 7th Dec, 2020
Context
Recently, the virtual meet between India's defence minister Rajnath Singh and Vietnamese defence minister General Ngo Xuan Lich took place.
About
India-Vietnam
- The year 2020 marks the 42nd anniversary of India-Vietnam bilateral trade.
- Vietnam and India have shared strong bilateral relations historically, and for the past two decades, trade between the two countries has risen considerably.
- Bilateral trade: Over the past two decades, bilateral trade between India and Vietnam has steadily grown from US$200 million in 2000 to US$12.3 billion in the financial year 2019-2020.
- Exports: Exports from Vietnam to India include mobile phones, electronic components, machinery, computer technology, natural rubber, chemicals, and coffee.
- Imports: Imports from India include meat and fishery products, corn, steel, pharmaceuticals, cotton, and machinery.
Key-takeaways of the meet
- As part of increased defence cooperation, India and Vietnam have agreed on joint training of pilots by the respective Air Forces and training of forces to be deployed in UN Peacekeeping missions.
- Both countries are also looking at collaborating in a number of domains of defense cooperation like shipbuilding, surface and subsurface capacities like submarines at sea.
- New Delhi has already extended defence Lines of Credit worth USD 600 million to strengthen Vietnam’s domestic defence manufacturing.
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ASEAN Defence Ministers’ Meeting-Plus (ADMM Plus)
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What about Free Trade Agreement?
- The ASEAN-India Free Trade Area (AIFTA), which Vietnam is a part of, was established in 2009 as a result of convergence in interests of all parties in advancing their economic ties across the Asia-Pacific.
- After India announced its decision to opt-out of the Regional Comprehensive Economic Partnership(RCEP), the India-ASEAN FTA is expected to be reviewed to compensate for the potential trade loss.
What are the major opportunities for Indian companies?
- Pharmaceutical: Vietnam’s domestic pharmaceutical industry is currently able to meet just 53 percent of the country’s demand, representing significant opportunities for Indian investors as India is among the leading global producers of generic medicines.
- Agriculture: Vietnam is seeking alternate buyers for its agricultural exports, after the reduction in demand from China due to the pandemic.
- Tourism: The tourism industry in Vietnam is a largely untapped market sector for Indian businesses, which is likely to gain strong traction after the pandemic.
- Supporting industries: Vietnam is an attractive destination to produce and export due to its assortment of free trade agreements with several countries.
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