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New Delhi : India and Vietnam are set to begin talks on a potential trade agreement to boost bilateral trade and investment.
A joint India-Vietnam working group will be formed in the coming months to consider the feasibility of a trade deal, a person familiar with the matter said. Evaluations of the study will then be taken up by both governments, the people said, asking not to be identified.
This is on the back of strong growth in bilateral trade volume between India and Vietnam. Bilateral trade surged from just $200 million in 2020 to $14.14 billion in 2021-22, according to the Indian Embassy in Hanoi. The person said India and Vietnam have already achieved his $15 billion target set for bilateral trade.
Prospects for a trade deal will also be discussed at a joint meeting between the two countries scheduled to take place by the end of March, the person said, adding that India has signed free trade agreements with selected partners such as the UAE, Australia, and others. It added that it has an active interest in (FTA). The UK has also piqued Vietnam’s interest in discussing a possible trade deal.
Vietnam is a key partner in India’s Act East policy, and trade talks are set against the backdrop of an increasingly close strategic embrace between New Delhi and Hanoi to deter predictions of Chinese power in the region. It is
New Delhi has also been an important defense partner to Hanoi in recent years, providing a $500 million defense credit line to help the Southeast Asian country build up its military.
India’s largest exports to Vietnam include metals, machinery, electronics, electronics and agricultural products. India’s exports to Vietnam soared 34% to $6.7 billion in FY2022. In contrast, Vietnam exports $7.44 billion worth of goods to India, exporting products such as electronics, chemicals, machinery and animal feed. The Vietnamese embassy and the Indian Ministry of Commerce did not respond to inquiries.
Despite the rapid expansion of trade between India and Vietnam, investment levels remain low. India, with about $1.9 billion invested in Vietnam, is only her 25th largest investor in the country. Vietnam’s presence in India is even more limited, with just $28.55 million invested across six projects.
The person said that promoting investment is likely to be the focus of trade talks. Commerce Minister Piyush Goyal said in 2023 he could at least sign two free trade agreements (FTAs).
India is engaged in trade negotiations towards FTAs with a number of major economies including the UK, Canada, the EU and the Gulf Cooperation Council (GCC).
In addition, we began negotiating a comprehensive trade deal with Australia after the mini-trade agreement came into force last year.
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