High growth of bilateral trade, sharp rise in Vietnam’s exports to India and signing of the FTA are the main highlights of this decade.
Ladies and gentlemen, very soon the present Indian government will be completing the first year of its five year term. Our Prime Minister Mr. Narendra Modi’s policy is “sab ka saath, sab ka vikaas” which means that we all should work hand in hand to achieve progress for all and to eliminate poverty from the country. He has launched several new initiatives in this direction starting with the “Jan Dhan Yojna”, a comprehensive financial inclusion scheme, under which over 140 million Indians have opened new bank accounts in less than one year. The ‘Make in India’ program is a path-breaking initiative that aims to transform India into a center of excellence in manufacturing and services. It also aims at taking India several notches up to top 50 in the world in terms of ease of doing business. Our new Foreign Trade Policy (2015 – 2020) has replaced the Served from India Scheme (SFIS) by the Service Export from India Scheme (SEIS). The objective of the new Service Export from India Scheme is to encourage export of notified services from India and it will apply to all service providers located in India instead of only the Indian service providers. Our government has also introduced in Parliament the new land acquisition bill and has initiated the much needed reforms in the labor law. These reforms will not only protect the interest of our fellow workers across the nation, but will also provide impetus to foreign direct investment into India. As we know, India’s economy is now growing at over 7.5% and our GDP (nominal) has risen to over 1.80 Trillion US Dollars, making India the 10th largest economy in terms of GDP nominal and 3rd largest economy in terms of purchasing power parity. Given the large domestic market, driven by nearly 40% of the population in middle class, high rate of growth in rural areas and a high consumer confidence, India offers a vast reservoir of opportunities to the world.
All these developments in India, combined with the rapidly changing economic scenario in Vietnam make India – Vietnam cooperation more attractive, more relevant and more beneficial for both countries. Being amongst the fastest growing economies in the world, India and Vietnam have a vast potential for cooperation. If we look at the trade figures of the last few years and go by the Indian financial year (April to March), our bilateral trade which was a mere 200 million dollars in financial year 2000-01 rose to 3.90 billion dollars in 2010-11, 5.40 billion dollars in 2011-12, 6.30 billion dollars in 2012-13 and to nearly 8 billion dollars in 2013-14. These figures include imports and exports via third countries as well. Despite the reasonably good progress in the last 10 years, it is necessary for me to point out that what we have achieved is not enough and a lot more still remains to be done. India and Vietnam have a vast potential for cooperation & much of it still remains untapped. Our trade is only 8% of India’s trade with ASEAN and knowing the two countries well, I am convinced that there is enough potential for our bilateral trade to exceed 20 billion dollars by 2022, the year we celebrate 50 years of establishment of full diplomatic relations. Both sides should assign this as the next common goal and the next milestone in our cooperation. It might sound to be an optimistic target but it is achievable provided governments and business communities take new initiatives to facilitate the process. I would like to put forward a few suggestions at the macro level that can pave the way for enhanced efforts towards our common goal.
1. A very large number of Indian companies, in fact over 130, I believe, have established representative offices in Vietnam. However, so far to my knowledge no Vietnamese company has opened office in India. This gap is causing hurdles in proper flow of information and in reducing the ‘comfort level deficit’ that exists on both sides.
2. Bridge the information gap through regular and timely dissemination of information through important channels like the Center for Indian Studies, FIEO, ASSOCHAM, VCCI, FICCI, CII, Incham etc.
3. Promote greater people-to-people connect through cultural exchanges.
4. Create better land, sea and air connectivity. The India – Thailand – Myanmar trilateral highway should be extended to Vietnam. Direct sea routes between major ports of both sides should be considered as Trans-shipments are expensive and time-consuming.
5. Simplify and implement effective customs rules and regulations in both countries.
6. Develop logistic systems / hubs around Mekong – India economic corridor.
7. Encourage and facilitate investment from Vietnam to India. The time is ripe for the change of mindset in this regard and I request Vietnamese companies to seriously explore investment opportunities in India.
8. Promote flow of investment from India to Vietnam through road shows, seminars and similar promotional activities. We should explore investment opportunities in the fields of Engineering, Renewable Energy, Infrastructure, Textile, Transport, Telecom, Healthcare, Herbal Products, Food Processing, Education, Agriculture, Forestry, Mining, Tourism, Information Technology, Consultancy Services, Banking and Investment.
9. Small & Medium Enterprises play a vital role in our economies and we should take specific measures to promote cooperation between the SMEs and share experiences in their respective areas of expertise.
10. Promote Tourism cooperation. This will provide enhanced people-to-people contact and better understanding of our cultural diversity.
11. Eximbank’s offer of buyer’s credit to finance project exports from India and the government of India’s line of credit are extremely useful and should be made use of in areas that provide visibility. However, the terms and conditions of these credit facilities need to be reviewed in order to make them more attractive.
12. Bilateral trade and investment showing positive signs of growth, it is now necessary that Indian banks open their branch in Vietnam.
13. In order to minimize the dependence on foreign exchange and risks arising out of exchange-rate fluctuations, we should consider entering into a limited Rupee Trade Agreement.
14. Promote cooperation in Education, Scientific Research and Human Resource and Skill Development.
15. Set up the India – ASEAN Trade and Investment Center.
16. Conclude the RCEP negotiations in a time bound manner.
17. Finally, I recommend that the two governments consider giving long term multiple entry visas to business travelers. Short term visas create hurdles for regular travelers who have ongoing projects and who need to travel at short notices.
Ladies and gentlemen this was an overview of what happened during the last 40 years and what needs to be done for the next 10 years. I do hope my suggestions will stimulate and encourage both sides to take further initiatives. The last decade saw immense growth in India – Vietnam cooperation. Bilateral trade grew many folds and FDI also witnessed an increase. However, a huge reservoir of opportunities still remains untapped and it is necessary for the Governments and business communities of the two countries to explore new areas and widen the bandwidth of cooperation. India and Vietnam have a lot to offer each other and should emerge as successful partners in progress. Together we have to forge stronger bonds for mutual benefit and take the centuries old friendship between India and Vietnam to new heights truly reflecting the love that exists between the two countries.