With Vietnam’s promising economic growth despite the challenges posed by the Covid-19 pandemic, and strong bilateral relations between India and Vietnam through India-ASEAN FTA, there’s a huge investment opportunity for start-ups from India to expand to Vietnam. This article will discuss the specifics of business opportunities and expansion prospects for Indian startups in Vietnam.
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Indian Start-ups Seek Investment Opportunities In Vietnam
Indian startups want to expand their presence in Vietnam by collaborating with local businesses in areas like agriculture, industry, machinery and equipment, healthcare, education, and tourism. According to the Indian Industries Association, several major Indian companies such as Adani Group, Mahindra, SRF, and Suzlon are interested in investing in Vietnam.
During a recent online conference held in New Delhi, IIA President Pankaj Gupta advised that Indian companies invest in energy, mineral exploration, agricultural chemicals, sugar production, tea, coffee, information technology, and car components sectors in Vietnam due to the tremendous potential in these areas.
Reasons Why Indian Start-Ups Should Expand to Vietnam
The ASEAN-India Free Trade Area (AIFTA), of which Vietnam is a member, was established in 2009 as a consequence of a convergence of interests among all parties in the Asia-Pacific region. India’s 1.3 billion people have a strong middle class, and the country’s customs tax exemption for ASEAN items makes it a profitable destination for Vietnamese exports. Services linked to wholesale and retail trade, transportation and storage, business assistance, and trade prospects in cotton and knitted garments all have significant potential.
Bilateral trade between Vietnam and India has gradually increased over the last two decades, rising from US$200 million in 2000 to US$12.3 billion in the fiscal year 2019-2020. The two nations intended to increase bilateral trade to US$15 billion by 2020, but trade disruptions caused by COVID-19 resulted in a 9.9% drop to US$12.3 billion in the previous fiscal year. As a result of the promising bilateral trade relationship between the two countries, Vietnam is India’s 18th largest trading partner, whereas India stands as the seventh major trading partner of Vietnam.
Friendly Vietnam Investment Laws & Policies
According to the World Bank, Vietnam was 70th out of 190 economies in the Ease of Doing Business Index in 2020, with a score of 69.8. The reason being the two of the most significant measures by the administration in the areas of business capital and taxation.
In contrast to many other nations, Vietnam does offer lucrative incentives when it comes to taxes, Vietnam’s General Department of Taxation has considerably upgraded its IT infrastructure, allowing companies to settle their tax obligations much more quickly and easily.
Increased market access, advantageous investment policies, free trade agreements, economic development, political stability, cheap labor costs, and a young workforce are all attractive reasons to invest in Vietnam. Vietnam’s exports to India have the potential to expand by 10% yearly, or US$633 million, according to Standard Chartered research on trade possibilities. The export of products (53 %) and services (47 %) are expected to drive this predicted increase (46 %). Areas such as pharmaceuticals, agriculture, tourism, and other SMEs pose a welcoming possibility for Indian start-ups to expand their businesses.
With Vietnam’s recent rapid economic growth, a review of the India-ASEAN free trade agreement is expected to enhance further trade-in potential developing industries between the two nations and to provide a bright future for Indian start-ups operating in Vietnam. As of December 2020, India had almost 300 projects in Vietnam worth nearly US$900 million, according to Vietnam’s Foreign Investment Agency (FIA).
How Can Cekindo Help?
If you’ve decided to expand your startup in Vietnam, you should be aware that the process of establishing a business in Vietnam might be lengthy and tedious. Cekindo’s comprehensive business solution services will not only help you register your firm but will also keep you up to date on all legal requirements. We also offer HR and accounting services after incorporation.
NOTE: At this time Cekindo does NOT offer Visa services as a single service, to apply for a visa it must be done in conjunction with one of our other services.