India-Vietnam Trade: West Bengal’s Pivotal Role in Strengthening Bilateral Ties
Description: In this blog, we will delve into the dynamics of the India-Vietnam trade partnership, with a particular focus on West Bengal.
India-Vietnam trade has witnessed remarkable growth in recent years, with the state of West Bengal playing a pivotal role in enhancing this bilateral trade relationship. West Bengal’s strategic location, well-developed infrastructure, and industrial capabilities have made it a crucial gateway for trade between India and Vietnam. In this blog, we will delve into the dynamics of the India-Vietnam trade partnership, with a particular focus on West Bengal.
The bilateral trade between India and Vietnam has been on a steady upward trajectory, driven by favorable trade policies, increased economic cooperation, and complementary trade sectors. India has emerged as the eighth-largest economic partner for Vietnam, with bilateral trade turnover surpassing USD 15 billion for the first-time last year. However, while the trading value between the two countries has met the target, there’s still untapped potential.
India and Vietnam engage in trade across a wide range of commodities. Notably:
Agricultural Products: India is a significant supplier of agricultural products to Vietnam, including animal feed, fodder, rice, maize, wheat, tea, spices, and fruits. West Bengal’s agro-climatic conditions make it a substantial contributor to India’s agricultural exports to Vietnam. Conversely, Vietnam exports agricultural products like coffee, pepper, and cashew nuts to India.
Iron and Steel: India plays a major role in providing construction materials to Vietnam, and West Bengal’s abundant mineral resources contribute to this trade. The state’s exports of iron and steel account for a significant portion of India’s total exports.
Machine, Equipment, Tools, and Instruments: India, with its growing manufacturing sector, is a sought-after source for equipment and instruments by countries looking to enhance their manufacturing capacities, including Vietnam. West Bengal is expected to contribute to the export of mechanical products from India to Vietnam in the future.
As of 2022, Vietnam exports goods to India valued at USD 7,961,827,560, encompassing a variety of commodities. Below is a list of the top 5 commodities that Vietnam exports to India.
|Sr No.||Products||Value in USD|
|1||Telephones, mobile phones and parts thereof||1,522,199,493|
|2||Computers, electrical products, spare-parts, and components thereof||1,034,542,669|
|3||Machine, equipment, tools and instruments||804,243,018|
|4||Chemicals & Chemical products||707,011,003|
|5||Other base metals and other base metal products||671,674,766|
Land and Sea Connectivity: West Bengal is connected to Vietnam through both land and sea routes. The Kolkata Port, located in West Bengal, serves as a major maritime gateway for trade between the two countries, providing efficient connectivity for cargo movement. In addition, it offers connectivity to the rest of India through railways, roadways, ports, and airports, making it a valuable entry point for countries like Vietnam.
In July 2022, Vietnam launched a direct shipping route connecting the central region with Kolkata, which is expected to open significant trading opportunities, particularly with eastern India. Moreover, there are now 14 direct flights between Kolkata and Ho Chi Minh City, enhancing connectivity for both trade and tourism.
Special Economic Zones (SEZs): West Bengal has established SEZs such as the Haldia Petrochemical SEZ and the Falta SEZ, which offer favourable policies, incentives, and infrastructure to promote trade and investments. These SEZs attract Vietnamese companies looking to expand their presence in India.
Industrial Capabilities: West Bengal boasts a diverse industrial base, including textiles, chemicals, steel, and machinery, which aligns with Vietnam’s import requirements, thereby strengthening bilateral trade ties.
Several challenges and opportunities continue to shape the India-Vietnam trade relationship:
Tariff Barriers: Both countries impose tariffs on certain goods, limiting market access and hindering trade growth. Reducing or eliminating these tariffs through bilateral agreements could further boost trade between India and Vietnam.
Trade Imbalance: The trade balance tends to favour Vietnam, with India importing more than it exports. Exploring avenues to enhance India’s exports, especially in sectors where West Bengal has a competitive advantage, can address this imbalance.
Economic Cooperation: Strengthening economic cooperation through initiatives like joint ventures, technology transfers, and knowledge sharing can foster greater trade ties, with a focus on agriculture, textiles, manufacturing, and technology.
Logistics and Infrastructure: Continuous improvements in logistics, transportation networks, and port facilities in West Bengal are crucial to facilitate seamless trade between India and Vietnam. Investments in infrastructure projects can reduce transit times and costs, promoting trade efficiency.
India’s Act East policy serves as a crucial foreign policy initiative, focusing on enhancing India’s involvement with Southeast Asia and the broader Indo-Pacific region. This policy not only encompasses trade facilitation measures but also aims to strengthen overall engagement with Vietnam.
In summary, the trade between India and Vietnam has experienced significant growth, largely influenced by the strategic role of West Bengal. Capitalizing on West Bengal’s advantageous location, connectivity, and industrial potential, the trade partnership between the two countries can be further augmented. Overcoming market obstacles and promoting Indian exports to Vietnam are vital steps to diversify trade and foster mutual economic growth. West Bengal’s pivotal role in facilitating this trade relationship underscores the state’s significance in India’s Act East policy and its economic growth.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.