INDIA VIETNAM RELATIONS

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Context

• The 5^th meeting of the India-Vietnam Joint Trade Sub-Commission (JTSC) was held in New Delhi.

Background

• India-Vietnam relations have been exceptionally friendly and cordial since their foundations were laid by the founding fathers of the two countries - President Ho Chi Minh and President Rajendra Prasad and Prime Minister Nehru.
• The traditionally close and cordial relations have their historical roots in the common struggle for liberation from foreign rule and the national struggle for independence. Pandit Jawaharlal Nehru was one of the first visitors to Vietnam after its victory against the French at Dien Bien Phu in 1954. President Ho Chi Minh went to India in February 1958.
• President Rajendra Prasad visited Vietnam in 1959. In recent times, political contacts have strengthened as reflected in several high-level visits by leaders from both sides. Trade and economic linkages continue to grow.
• India's thrust under the 'Look East' policy combined with Vietnam's growing engagement within the region and with India has paid rich dividends.
• Vietnam is an important regional partner in South East Asia. India and Vietnam closely cooperate in various regional forums such as ASEAN, East Asia Summit, Mekong Ganga Cooperation, Asia Europe Meeting (ASEM) besides UN and WTO.

India-Vietnam Trade

• During FY 2021, bilateral trade between India and Vietnam reached around US$ 14 billion.
• Vietnam occupies the 101st position in FDI equity inflows into India with a cumulative FDI amount of US$ 5.35 million from April 2000 – September 2022.
• Vietnam occupies a central position in India’s Act East Policy as also in the Indo-Pacific strategy.
• According to Indian data for the financial year April 2021-March 2022, bilateral trade posted a growth of 27% and reached US$ 14.14 billion. Indian exports to Vietnam amounted to US$ 6.70 billion (an increase of 34%) while Indian imports from Vietnam amounted to US$ 7.44 billion (an increase of 21%).
• Vietnam is trying to diversify its trade and intends to make use of India’s growing market.
• The key Vietnamese exported products to India are mobile phones and components, computers, electronic products and components, chemicals, plastics, rubber, coffee, pepper, and cashew.
• The main Indian exported products to Vietnam are iron and steel products, textile materials, fishery, corn, pharmaceutical, pharmaceutical raw materials, and auto spare parts.

Economic Relations and Investments

• India’s investments in Vietnam are estimated at around US$ 1.9 billion including investments routed through third countries.
• According to Vietnam’s Foreign Investment Agency, as of April 2021, India has 299 valid projects with total invested capital of US$ 909.5 million, ranking 26th among countries and territories investing in Vietnam.
• Significant sectors of Indian investment are energy, agro-processing, mineral exploration, agriculture, manufacturing, agrochemicals, IT, and auto components.
• Currently, India is one of the top 8th trading partners of Vietnam while Vietnam is the 15th largest trading partner of India and the fourth in Southeast Asia. Vietnam occupies the 101st position in FDI equity inflows into India with a cumulative FDI amount of US$ 5.35 million from April 2000 – September 2022.
• Under the Mekong Ganga Cooperation (MGC) framework, India has been taking up Quick Impact Projects (QIPs), each valued at US$ 50,000, in different provinces of Vietnam for the development of community infrastructure.
• India has 317 valid projects worth over US$ 1 billion in Vietnam, ranking 23rd out of the 129 countries and territories investing in that country.

Science and Technology

• Science and Technology is an important area of bilateral cooperation.
• The MoUs/Agreements signed during Prime Minister Modi’s visit to Vietnam last year on Exploration and Uses of Outer Space for Peaceful Purposes, IT Cooperation, Cyber Security and the Framework Agreement signed in December on Uses of Atomic Energy for Peaceful Purposes show the importance our two countries attach to this area.
• Information Technology is an area with strong growth potential. Many Indian companies have established their presence in Vietnam for various IT solution and services in the area of banking, telecom, cyber security etc.

Educational and Training Exchanges

• Vietnam is an important partner under the Indian Technical and Economic Cooperation (ITEC) programme through short-term courses in Indian institutions to over 200 participants annually.
• Vietnam is also among our partner countries for e-ITEC programmes.
• Indian Council of Cultural Relations also offers nearly 50 scholarships to Vietnamese students and scholars every year and the offer of PhD fellowship programme for ASEAN countries has also received a good response from Vietnam.

Defence Partnership

• Defence and security cooperation between India and Vietnam is an important pillar of the comprehensive strategic partnership with periodic exchanges among the defence and security establishments of the two countries.
• A Memorandum of Understanding on Defence Cooperation signed between the Ministries of Defence in 2009 and the Joint Vision on Defence Cooperation signed by the Defence Ministers in 2015 provided the institutional framework.
• The visit of India’s Defence Minister Mr. Rajnath Singh to Vietnam in June 2022 progressed the defence cooperation, including by the signing of a new "Joint Vision Statement on India-Vietnam Defence Partnership towards 2030” and a “Memorandum of Understanding on Mutual Logistics Support”.
• Apart from the cooperation between the Ministries of Defence of the two sides, this engagement has diversified to wider military-to-military dialogue and exchanges, training programmes and bilateral exercises.
• Cooperation in United Nations Peace Keeping Operations is another active area of our cooperation.
• Defence industrial collaboration is another area in defence relations.
• In June 2022, 12 High-Speed Guard Boats built by Indian manufacturer M/s Larsen & Toubro were handed over to Vietnam.
• In terms of ship visits, Indian Navy Ships INS Sahyadri and INS Kadmatt paid port calls to Ho Chi Minh City from 24-26 June 2022 in continuation to past exchanges.
• Bilateral military exercises are held periodically, including last maritime exercises, with Vietnam People’s Navy frigate VPNS Ly Thai To (HQ-012). Vietnam People’s Navy Frigate 016 Quang Trung visited India in February 2022 to participate in the Multilateral Naval Exercise MILAN in Vishakhapatnam, India.

Cultural and Academic Cooperation

• The Swami Vivekananda Indian Cultural Centre (SVCC) was established in Hanoi in September 2016 to promote further understanding of India and to foster closer links between people of the two countries through cultural exchanges. The Centre organizes cultural programmes, seminars, photo exhibitions, film screenings, lectures, workshops in varied areas such as Yoga, Indian classical dance, art and philosophy, languages, traditional medicine, shared Buddhist and Cham heritage etc.
• The two countries also have regular exchanges at the level of provinces, academic and thinktank institutions and youth delegations.
• The Vietnam Institute for Indian and South-West Asian Studies (VIISAS) under the Vietnam Academy of Social Sciences and the Centre for Indian Studies at the Ho Chi Minh National Academy of Politics are among the key centres in Vietnam focused on Indian studies and academic cooperation with Indian institutions.

Tourism and People Exchanges

• A simplified visa regime offering e-Visa in both direction supports travel and tourism in both the countries for leisure, business and cultural purposes.
• Embassy of India organized various events to celebrate Mahatma@150 during the years 2019 and 2020 and the two governments jointly launched a commemorative stamp on Mahatma Gandhi on Gandhi Jayanti on 2 October 2019.
• Under the “India for Humanity” initiative, the two countries have held at least four of artificial limb fitment programmes (Jaipur Foot) in Vinh Phuc, Quang Ninh and Yen Bai provinces in Vietnam.
• Yoga is very popular among the people of Vietnam and the Embassy and the Consulate General of India in partnership with local authorities has been organising International Day of Yoga at multiple locations in Vietnam in June every year.
• In June 2022, the 8th International Day of Yoga celebrations were held in 25 locations in Vietnam.

Indian Community in Vietnam

• Nearly 6000 people from India, including short-term visitors, constitute the Indian community in Vietnam.
• Majority of them are based in and around Ho Chi Minh City (HCMC) in the southern part of Vietnam. Most of the community members are professionals employed in business and trading companies and sectors such as IT, hotels/restaurants, mining, yoga institutions, civil aviation and schools.
• Indian businesses such as ONGC Videsh Limited, Bank of Idia, Bharat Electronics Limited, Hindustan Computers Limited and others have presence in Vietnam.

Closing Remarks

• Vietnam occupies a central position in India’s Act East Policy as also in the Indo-Pacific strategy.
• India has made positive contributions towards capacity building and the socio-economic development of Vietnam.
• India has also been providing assistance to Vietnam within the ASEAN framework.
• Under the Mekong Ganga Cooperation (MGC) framework, India has been taking up Quick Impact Projects (QIPs), each valued at US$50,000, in different provinces of Vietnam for the development of community infrastructure. India has 317 valid projects worth over 1 billion USD in Vietnam, ranking 23^rd out of the 129 countries and territories investing in that country.
• India realises that Vietnam is a potential regional power in South East Asia with great political stability and substantial economic growth. Its average 7% annual economic growth is very attractive. Even during the worst period of pandemic, its economic growth remained commendable at 3% while several other nations registered negative growth. Even more impressive is its growth which is driven by a record trade surplus, despite the collapse in global trade.
• The drivers for the growth of trade and commerce are both strategic and economic. Both countries desire to do away from their dependence on China. The problem related to supply chain emerging in the recent years, has also pushed them to consider an alternative supply line. Moreover, both the nations desire stable, open, free and inclusive Indo-Pacific Ocean region. Thus, both have common objectives.
• The question is: What are the future prospects for economic relations between the two countries in the current unpredictable global environment? India is pursuing the Act East Policy and is working to make Indo-Pacific free and open, that will promote Security and Growth for All in Region (SAGAR).
• Vietnam has set the priorities at the 13 th National Congress that include national digital transformation, development of a digital-based economy, greater stress science and technology development and creating more conducive environment for business development as well as for manufacturing concerns. These make the prospects for further growth of trade and commerce between India and Vietnam bright in the coming period.

PRACTICE QUESTION Q. Vietnam occupies a central position in India’s Act East Policy as also in the Indo-Pacific strategy. What are the future prospects for economic relations between the two countries in the current unpredictable global environment?

https://pib.gov.in/PressReleasePage.aspx?PRID=1946703