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Ambassador’s Remarks on India-Vietnam Business Opportunities at the Virtual India e-Biz Expo 2021 Organised by Indian Chamber of Commerce

Posted on: February 26, 2021 | Back | Print

Good Morning/Good Afternoon, depending on where you are.

Thank you, Mr. Sandeep Mukherjee for that introduction. 

I recognize Dr. Rajeev Singh, Director General of Indian Chamber of Commerce (ICC); Mr. Pradeep Surekha, Senior Vice President of ICC; Mr. Dato Ramesh Kodammal of ASEAN-India Business Council; my colleagues, High Commissioner Ajaneesh Kumar from Brunei, Joint Secretary Vishvas Sapkal and Director Indu Nair from New Delhi.

Thanks again to ICC for giving me this opportunity.  It has been one year of COVID disruptions, and it is an apt time for us to talk about where we stand as we hope to move out of the shadows of the pandemic and look to reverting to life as it used to be. 

But I think we have also learnt new ways to adapt to the new normal. And here I would commend ICC’s efforts in organizing these videoconferences. I remember you had organized one in October last year too, focusing on Vietnam-India relations where I had an opportunity to speak.  So clearly, ICC has a focus on ASEAN and Vietnam, and we really appreciate your initiatives in this regard.

The COVID-19 pandemic, as I often say, has indeed created disruptions, but at the same time, has also opened new opportunities.  And I say this because COVID has really forced us into re-thinking the way we did business as usual. And I think therein lies the opportunities.  Disruptions of supply chains have forced us to explore new linkages and new partnerships as we look at diversifying our trade – both import sources as well as export destinations – as well as at diversifying our trade basket itself.

And in all this exploration, ASEAN figures quite prominently, which is good to see for us who are located in the region and working to promote India’s engagement with this region. 

Talking about Vietnam…, well in 2020 we still managed to cross, even though marginally, the $10 billion mark in our bilateral trade, as per the Indian statistics, which I think is good news. According to Vietnamese statistics, the annual bilateral trade figure is slightly below $10 billion. Now if you compare this with the $12 billion trade in 2019, it would seem that the disruptions have not created as big an impact as we thought they would at one point of time. For Vietnam, India has slipped from being 7th to the 10th largest trading partner in 2020, but for India, Vietnam remains 17th globally and 4th in ASEAN. So I think, overall we are in a situation where we can express some satisfaction at the current state despite the disruptions of COVID-19.

Some of the major Indian exports also registered positive growth in 2020. Steel, pharmaceuticals, plastics, oilseed, cotton – these are some of our mainstay trading commodities and did register positive momentum in 2020.  So I think we are well placed to look at where and how we should go about our plans for the future as we get out of the shadows of COVID-19 and move to pursue more proactively our business and trading engagements with Vietnam.

The bilateral trade volume, of course, is still quite small compared to the potential that exists. Our bilateral trade is still below 2% of our respective global trade; so that really doesn’t correspond well with the fact that we are the two of the fastest growing economies in the region.  Vietnam itself is growing rapidly.  Last year, it was one of the rare countries to have registered a positive GDP growth of 2.9%. Indeed, Vietnam actually surpassed its 2019 trade volume to register a record high global trade. So, opportunities are galore in Vietnam and we really need to devise a way to exploit those opportunities. COVID situation in Vietnam also is a positive, given the fact that the country has remained largely unaffected by the pandemic, in some ways like an island.

So what do we need to do going forward?

As we are looking to the future, I would structure the steps that we should take to emerge stronger in our business ties with Vietnam and the region, across four broad strands.

First strand, of course, is commodities – which commodities should we focus on. We of course should focus on the traditional mainstays of our trade, but we also need to expand the trade basket. I think we are trading in fewer commodities with Vietnam than we can, and we can certainly expand trade in some areas, such as agriculture commodities. Vietnam is both a big exporter and an importer of agricultural commodities and I think this is something that we need to factor in. We are helping our agricultural traders by responding to their queries and trying to figure out how they can promote their exports to Vietnam.  There are some market access issues which we are working with the Vietnamese side to resolve, but broadly speaking, this is an area where there is lot of potential.

Pharmaceuticals is a traditional area in our trade with Vietnam, but here too, we have seen that while the overall volume of the trade has remained by and large constant, the proportion of Indian exports in the larger import of pharmaceuticals by Vietnam has gradually declined over the years. There are some regulatory issues that we are trying to resolve with the Vietnamese side, but even within those constraints, we see a lot of scope to enhance our pharma trade with Vietnam. 

Another promising area is energy.  We are present in this sector in Vietnam for over 30 years. Our OVL has a very good track record of energy partnership with Vietnam. There are other energy companies too, from India who are looking at opportunities in Vietnam’s offshore resources. In addition, Vietnam has a very ambitious renewable energy plan, and we can actually look at not just the investment opportunities that exist in Vietnam’s renewable sector, but also opportunities in supplying components for the renewable energy industry here which is looking at big imports in this area.

Auto-components is another area that we have been strong at, but can do even better with greater focus and attention.

I would identify digital sector as a new focus that we must have. As you may be aware, Vietnam like India has a great ambition for turning itself digital. Indeed, Vietnam has a vision of becoming a “Digital Society” and is looking at a target of 30% of the GDP coming from digital economy by 2025 and 30% by 2030. In some of the cutting-edge areas like 5G, Vietnam is one of the few countries in the region that is actually going to roll out 5G networks commercially. There again, possibly, we can look at Vietnam’s experience and try and see what opportunities lie for our businesses.

Healthcare, as Mr. Kodammal very rightly mentioned a while ago, is a great partnership avenue in the present context. Amidst the pandemic, cooperation in healthcare acquires a new meaning – not just in terms of trading in pharmaceuticals and medical devices, but even investments in healthcare facilities and capacity building. India, given its reputation and capabilities in healthcare systems, stands well to meet some of those expectations and seize some of those opportunities.

In other areas that we can prioritize, tourism is right now a disrupted sector, but one which has huge growth potential.  Whenever we are back to normal, I think this is an area we need to scale up, and I am talking about inbound tourism into India from these countries.  There is a huge interest in India among the people of Vietnam which we can tap with direct flight connectivity and better travel infrastructure.

Second strand of our future approach may be characterized as strategy and the big picture – how do we strategize about positioning ourselves in this country, in this region.  And I would say here, the foremost need is to strategize on ways to leverage Vietnam’s vast network of free trade arrangements for the advantage of our traders. How we can position our products in supply chains for the new markets that Vietnam has got privileged access to – this is something that our trading and investment communities should consider looking at, particularly given that we have such excellent relations with Vietnam.

Another part of the strategy should be to compete on price and quality. Vietnam is increasingly a quality conscious market in a way it did not use to be 10 years ago. Our businesses must be mindful of that.

The third strand I would describe as processes and mindsets.  Here I would lay stress on greater use of technology to connect businesses, especially in the context of COVID-19. Indeed, this is what we are doing with today’s event, and this is what we should be continuing to do. 

I will particularly focus on B2B engagements. It is often that business chambers organize these online discussions with policymakers and regulators which is a good thing. It does help business community to hear from them and clarify their stand in terms of business environment. But the real opportunities for business are to be found through B2B engagements. And therefore, we need more B2B interactions than what we have.

And in these B2B discussions, we need to get our MSMEs involved in a bigger way.  MSMEs are major pillars of most of the emerging economies – including Vietnam and India. So, connecting our MSMEs, and our Startups, has to get more attention.

Another mindset issue is about targets. You know that we are all very good at setting targets. But I think we need to go beyond that and have sectoral targets, otherwise one doesn’t know how the overall target is made. We also need to have a strategy behind that target, a blueprint, a plan of action. I am very happy that in our Joint Vision Statement that our Prime Ministers adopted during the Virtual Summit in December 2020, this point has been highlighted – that whatever targets we set should be backed by a concrete plan of action and for that, the onus has been largely given to our chambers and business community to figure out a strategy that should help achieve those targets. I think sectoral targets are very important in helping focus attention, resources and energies leading to achievement of overall targets.  In this endeavour again, as we have noted, the role of chambers is very important. 

And the fourth strand of our forward movement may be called structural. This involves steps and issues that may require partnership between businesses and governments on both sides.

One of the foremost areas here that we need to look at is the regional trading architecture – how do we upgrade that, because clearly ASEAN-India FTA as it exists today is a reflection of the realities of 2009, not of 2021. Our capacities have changed, our expectations have changed, our outlook towards the region has changed since that FTA was negotiated. To reflect those changes, there is need to have an upgradation of the ASEAN-India Trade in Goods Agreement, or AITIGA, which we have been talking with the ASEAN countries as well as the ASEAN community.  Our business community also has a role to play in highlighting the urgent need for AITIGA’s review to revitalize our economic ties with ASEAN.

Connectivity is another structural issue that we need to improve.  Despite our close relations with Vietnam, we did not have direct air connectivity with this country until October 2019. This is something that really does not help when we talk about scaling up our business engagement.  Once we launched direct air connectivity in late 2019, it started showing results in a few months that preceded the COVID outbreak. Regular direct air connectivity will play a very important role as a force multiplier in our efforts to promote trade and business ties.

Direct shipping connection is another area that we have been trying to establish for some time and one that needs greater attention.  Indu from our Department of Commerce is here, and I will urge her to look at this issue and consult our Ministry of Shipping. We have some institutional arrangement with the Vietnamese side through agreement between our two Shipping Ministries. Perhaps, our commercial players now need to take the lead, even as they may require some guidance as to how to go about it. But lack of direct shipping connection is a problem we have seen costing us our traditional market share in this country in some key sectors, and that is something that needs to be set right.

Another part of the structural pillar, and that’s more for businesses to consider, is the need to explore warehousing facilities in Vietnam. Lack of direct shipping has led to longer turnaround time for delivery of goods in critical supply chains located in Vietnam, much to the detriment of our traders vis-à-vis other competing suppliers.  So warehousing is something that can be looked at by our traders in commodities like cotton, where we have seen our traditional market in Vietnam’s textile sector shifting to suppliers from other countries due to their ability to deliver faster.

And lastly, I would suggest the implementation of mutual recognition of standards and certification. That’s again an area where we have a framework agreement which needs to be earnestly implemented. It will have a salutatory impact on our trade, particularly in areas such as equipment, machineries, electrical equipment etc. which are major commodities in our trading engagement. 

So, broadly that’s what I can talk about in 15 minutes. I don’t think anything that I have just said is not already known. I think it’s all about how we go about doing it. And there I see the need for our business community to play a bigger role; the need for a more intense B2B engagement; and the need for a more sectorally-oriented, target-oriented approach of doing business.

ASEAN and Vietnam are new growth realities of 21st century, just as is India. And therefore, it is very natural that we should forge deeper connections with each other.

I thank ICC for this event today. I assure that from the Embassy and our Consulate General in Vietnam, we will always be there to help out in whatever way possible for our businesses to connect with opportunities in Vietnam.

Thank you very much for your attention.