India and Vietnam: New opportunities for investment and trade!

India and Vietnam: New opportunities for investment and trade!

The International Investment Promotion Alliance (Invest Global) recently signed a memorandum of understanding with the Research and Promotion Support Unit (MARS) of India to promote trade connectivity and investment cooperation between India and Vietnam. Dr. Bui Trong Thoan, Deputy General Manager of Invest Global, commented extensively on the promising investment prospects of Indian companies in Vietnam.

A striking example of this interest occurred in April 2025 when a delegation of 40 Indian companies visited Vietnam to explore potential investment opportunities. Of these, 25 representatives took part in the “India – Vietnam Multi-Industry Business Exchange” forum in Hanoi. Indian companies value the current investment environment in Vietnam, which features geographical advantages, political stability and continuous economic growth.

Strong trading relationships

Vietnam has signed a total of 17 free trade agreements (FTAs), including the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). These agreements facilitate access to global markets and significantly strengthen Vietnam's trading position. According to information from Duanemorris The EVFTA came into force in August 2020 and has significantly improved trade and investment relations between the EU and Vietnam.

The EU is one of Vietnam's largest trading partners and Vietnam is the EU's 16th largest trading partner. Vietnamese exports to the EU increased from about 35 billion euros in 2019 to over 48 billion euros in 2023, particularly in the electronics, textiles, footwear, agriculture and seafood sectors. The EU has also become the sixth largest source of foreign direct investment in Vietnam, with a total volume of 28 billion euros in 2,450 projects, mainly in high-tech sectors.

Indian Investments and Challenges

Indian investors are showing keen interest in various sectors in Vietnam, including textiles, energy, industrials, infrastructure construction and seaports. There is also growing interest in importing Vietnamese agricultural products, especially grains, into the Indian market. Backed by 441 direct investment projects initiated by Indian companies in Vietnam by May 2025, the total volume of these investments is more than $1 billion. India's ranking of 25th out of 150 countries in terms of investment in Vietnam highlights the importance of this bilateral relationship.

However, despite the promising prospects, there are also challenges for Indian companies. Procedural difficulties, high land rents in industrial parks and higher labor costs compared to India make investment decisions difficult. In order to increase Vietnam's attractiveness for Indian investments, an improvement in the investment environment, targeted infrastructure development and support for supplier industries are recommended.

The EVFTA and the upcoming Investment Protection Agreement (EVIPA) between the EU and Vietnam are intended to further improve the investment landscape. The EVIPA is expected to introduce an improved legal framework and dispute resolution mechanism between investors and states. These measures could increase foreign direct investment and strengthen economic ties between Vietnam and its trading partners, including India.

In conclusion, the prospects for Indian businesses in Vietnam and the wider trade relationship can be significantly enhanced through strategic partnerships and free trade agreements. Vietnam's dynamic market development, supported by important international agreements, creates a promising environment for investments in a wide range of industries.