India-Vietnam Investment Opportunities, Market Entry Considerations

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India and Vietnam relations have been steadily growing, marked by trade and commercial opportunities as well as and strategic engagement in the Indo-Pacific region. We briefly profile the India-Vietnam trade and investment relationship and discuss how enterprises can structure their operations for success in each of these markets.

India-Vietnam relations have been marked by growing economic, commercial, and strategic engagement in recent years. As of 2022, India ranked eighth among the top 10 trading partners of Vietnam. In 2022, the United Nations COMTRAD database indicated that India’s exports to Vietnam were US$7.08 billion, while Vietnam’s exports to India were US$7.96 billion.

In a virtual summit held on December 21, 2020, the Prime Ministers of the two nations decided to raise the number of Quick Impact Projects (QIP) projects from 5 to 10 per year to be implemented annually in Vietnam. So far, 37 QIPs have been completed in 33 provinces.

According to the Hanoi Embassy: “QIPs particularly support modest socio-economic infrastructure such as building classrooms, old age homes, facilitation of irrigation by developing canals and rural bridges identified by Vietnamese authorities and their implementation is carried out by authorities nominated by the Provinces of Vietnam in coordination with the Embassy of India.”

Market entry strategy in India

Market entry strategy in Vietnam

Foreign entities may establish their presence in Vietnam as a limited liability company with one or more members, a joint-stock company, a partnership, a branch, a business cooperation contract, or a representative office.

Limited-liability company

It may take the form of either:

  • A 100 percent foreign-owned enterprise; or
  • A foreign-invested joint-venture enterprise between foreign investors and at least one domestic investor.

Joint-stock company

A joint-stock company is a limited liability legal entity established through a subscription for shares. By law, this is the only type of company that can issue shares. A joint-stock company either may be 100 percent foreign-owned or a joint venture between both foreign and domestic investors.


A partnership can be established between two individual general partners.

Representative offices

Foreign companies with investment projects in Vietnam may apply to open representative offices in Vietnam. A representative office cannot conduct commercial or revenue-generating activities. This is the most common form of presence in Vietnam for foreign companies, particularly those in the first stage of a market entry strategy.

Business cooperation contract (BCC)

A BCC is a cooperation agreement between foreign investors and at least one Vietnamese partner in order to carry out specific business activities.

Public and private partnership contracts

A public and private partnership (PPP) contract is an investment form carried out based on a contract between the government authorities and project companies for infrastructure projects and public services.

Indian investments in Vietnam

In October 2023, it was reported that more than 400 Indian companies, small and large, had invested in Vietnam for a cumulative value of more than US$1 billion. In the energy sector, Tata Power, part of India’s Tata Group, is building a US$2.2 billion thermal power project in Soc Trang province. This plant will cater to about two percent of Vietnam’s power needs when it becomes fully operational by 2030. In 2017, the same group inked a US$54 million deal to build a 49-MW solar park in Vietnam’s southern province of Binh Phuoc.

In the agriculture sector, Tata International Vietnam signed an MoU with Agribank in 2017 to support Vietnamese farmers, cooperatives, and plantations in terms of credit support, equipment insurance, and access to a wide range of mechanization solutions.

In 2019, Tata Coffee inaugurated its US$50 million freeze-dried coffee plant in Binh Duong. To facilitate investment projects and SMEs, India’s state-owned Bank of India opened its first branch in Ho Chi Minh City in 2016.

According to the Engineering Export Promotion Council of India, in 2021, numerous Indian producers of pharmaceuticals and medical devices made investments in Vietnam in order to capitalize on the country’s expanding medical equipment sector.

In a meeting held in May 2023, the CEO of the Adani Group, Karan Adani, announced that the company is working on a seaport investment project in Vietnam at an investment of roughly US$2 billion.

The Indian government has been actively engaged in stimulating business with Vietnam. In 2014, it had offered a US$300 million line of credit to Vietnam as an impetus to accelerate textile trade and investment between the two countries. In 2017, it approved a Project Development Fund of INR 5 billion (approx. US$75 million) for supporting Indian companies to build production and supply chains in Cambodia, Laos, Myanmar, and Vietnam. This was to benefit India’s industries in terms of business expansion, maintaining cost-competitive supply chains, and increased integration with global production networks.

Bilateral engagement to promote trade and investment

Trade agreement

Both India and Vietnam are members of the ASEAN–India Free Trade Area (AIFTA), which came into effect in 2010. This free trade agreement (FTA) eliminates tariffs for over 80 percent of goods traded between ASEAN and India. The last period for tariff reduction or elimination under the various tariff categories for Vietnam is set for 2024.

In August 2023, Vietnam’s Deputy Minister of Industry and Trade Phan Thi Thang and Additional Secretary of the Indian Ministry of Commerce and Industry Rajesh Agrawal co-chaired the 5th meeting of the Joint Sub-Commission on Trade, whereby bilateral trade and investment relations were examined.

The Joint Working Groups on Agriculture, Healthcare, and Information Technology, and the Joint Sub-Committee on Science and Technology are examples of current bilateral institutional mechanisms for economic, trade, and investment promotion. 

Double tax treaty

India and Vietnam inked a protocol on their double taxation avoidance agreement (DTAA) in 2016.

The amendments introduced through the amending protocol aimed to bring the tax treaty in line with international standards and incorporate provisions outlined in the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The inclusion of an exchange of information clause and the introduction of Article 27A, which pertains to assistance in tax collection, serve to enhance transparency and combat tax evasion. The confidentiality of shared information is mandated, and the clause facilitates the routine or request-based sharing of such information. Moreover, the DTAA empowers contracting states to assist in the collection of the ‘revenue claim’ on behalf of the other country concerning any tax liability of the assessee.

Key provisions of the India-Vietnam DTAA cover various aspects of taxation between the contracting states. These include defining residency for tax purposes, taxation of income from immovable property and enterprise profits, dividends, technical fees, and capital gains. Additionally, provisions address taxation of professional services, directors’ fees, and income from personal activities.

The agreement aims to avoid double taxation by ensuring that income is taxed only once, with the laws of each contracting state governing taxation except where the DTAA provides otherwise.

Withholding tax rates under the DTAA are as follows:

India’s tax treaty partner Dividend Interest Royalty Fee for technical services
Vietnam 10 10* 10 10

*Dividend/interest earned by the government and certain institutions, like the Reserve Bank of India, is exempt from taxation in the country of source.

Import-export profile

Key imports

The top items of imports into India from Vietnam are electronics and electrical goods, metals and articles of metals, chemicals, machinery and mechanical parts, articles of steel, plastic articles, coffee and tea, footwear, rubber articles, fertilizers, and silk.

Key exports

Key items of exports from India to Vietnam include iron and steel, electrical machinery and equipment, machinery and mechanical appliances, auto components, meat and fishery products, cereal, maize, cotton, chemical and chemical products, ordinary metals, gems & jewelry, pharmaceuticals and ingredients, as well as animal fodder & materials.

Trade opportunities

India has enormous growth potential to provide IT and business services, zinc, steel, and fibers to Vietnam. Vietnam’s exports to India have a remarkable scope to increase in cotton, business support, and knitted clothing in addition to an already strong transport, storage, and trade services sector.

Per a 2020 Standard Chartered report, India had export opportunities worth US$475 million to Vietnam (11 percent of India’s total exports) while Vietnam had an export potential worth US$633 million (10 percent of total exports). Below are a few graphs which are indicative of the bilateral trade prospects – as India seeks a free trade agreement with Vietnam and is negotiating a review of the trade agreement with the ASEAN bloc, the two markets will need to find common ground to achieve better trade balance.

Reasons to invest

Increased market access

Both governments are actively working on key issues to facilitate trade and investment, such as increasing air connectivity and direct containerization. These efforts have materialized into the launch of direct flights by Vietnamese and Indian carriers Vietjet Air & Indigo, which connect India’s New Delhi and Kolkata with Vietnam’s Hanoi and Ho Chi Minh City.

In May 2020, Vietnam ratified an FTA with the EU named the EVFTA, which came into effect in August of that year. The FTA removes duties from 99 percent of the goods traded between the two regions.

In 2023, India began exploring an FTA with Vietnam, but no clear timelines have been presented to the public. India has an FTA in place with ASEAN, of which Vietnam is a member.

Favorable investment policies

To encourage FDI, Vietnam has put in place a series of incentives for foreign investors. These include preferential corporate income tax rates, import duty exemptions, exemption from taxes on royalties, exemption or reduction of land use or land rental fees, and privileges awarded to build-operate-transfer (BOT), build-transfer-operate (BTO), and build-transfer (BT) projects and projects in special economic zones. The incentives are meant to promote FDI in the high-tech sector, underprivileged regions, labor-intensive industries, and other priority sectors such as education and health.

On its part, India has implemented various reforms to facilitate foreign investments and offers competitive tax and regulatory incentives across top target sectors across the different states.

Despite the significant increase in trade activity between India and Vietnam, the levels of investment have, however, remained relatively modest. India’s investment in Vietnam stands at approximately US$1.9 billion, ranking it as the 25th largest investor in the country. Conversely, Vietnam’s footprint in India is notably small, with investments totaling just US$28.55 million across six projects. This could increase with the announcement of new projects like VinFast’s plant at Tamil Nadu.

Where to invest in Vietnam

Where to invest in India

India manufacturing hubs

Investment opportunities in India and Vietnam

Opportunities for investment in India

In the realm of investments, India’s appeal endures, offering global companies substantial scale, skilled talent, and cutting-edge technology. Micro, small, or medium enterprises (MSMEs) remain pivotal in fostering jobs, income, capabilities, and ecosystems for sustained growth in consumption, manufacturing, and infrastructure investments.

Key industries beckoning foreign investors to India include healthcare and insurance, fintech, renewable energy and climate tech, electric vehicles and automobiles, IT and services, real estate and infrastructure, fast-moving consumer goods (FMCG), and R&D, tech innovation, and artificial intelligence (AI). These have all been on a hot streak in recent years, as FDI policies have relaxed and production-linked incentive (PLI) schemes have promoted industry-wise capacity building.

India’s digital economy will continue to attract investors as technology-based solutions are sought to transform people’s lives, governance, and enterprise operations. The rapid growth in demand for online products and services is also a reflection of the increasing spending power of India’s non-metropolitan (tier-2 and tier-3) cities. The digital economy accounted for 4-4.5 percent of the total GDP in 2014 and is currently at 11 percent. The government projects the digital economy to make up more than 20 percent of Indian GDP by 2026.

Opportunities for investors in Vietnam

  • Agriculture: The country’s favorable climate and soil conditions make it ripe for investments in rice, coffee, and tea production. Additionally, advancements in technology and the development of the value chain offer lucrative prospects for investors.
  • Seafood: Indian seafood processing companies can tap into Vietnam’s potential, particularly in the Mekong Delta region. Tax benefits and incentives make this an attractive proposition, considering Vietnam’s significant seafood exports and limited domestic production.
  • Information technology: As Vietnam undergoes digital transformation, Indian IT firms specializing in e-commerce, digital payments, and smart solutions have ample opportunities. HCL Technologies’ entry in 2020 exemplifies this trend, with plans to provide advanced IT solutions across various industries.
  • Automotive components: India’s expertise in auto components presents an opportunity to support Vietnam’s burgeoning automotive manufacturing sector. With India’s dominance in tractor and two-wheeler production, there’s scope for collaboration to meet Vietnam’s growing demand.
  • Agricultural machinery: Given Vietnam’s emphasis on agriculture and incentives, there’s potential for investment in assembling and manufacturing agricultural machinery.
  • Infrastructure: With Vietnam’s fast urbanization and growing economy, infrastructure needs are escalating. Indian firms can explore projects in roads, renewable energy, vessel-building, hospitality, and healthcare to meet these demands.

Potential investors looking at the Indian and Vietnam markets are advised to seek expert guidance on investment and growth strategies, finding local partners, and managing bureaucracy requirements. For more information on doing business in Vietnam, you may write to us at: For support with your business or investment planning in India, please contact our experts at

About Us

India Briefing is one of five regional publications under the Asia Briefing brand. It is supported by Dezan Shira & Associates, a pan-Asia, multi-disciplinary professional services firm that assists foreign investors throughout Asia, including through offices in Delhi, Mumbai, and Bengaluru in India. Readers may write to for support on doing business in India. For a complimentary subscription to India Briefing’s content products, please click here.

Dezan Shira & Associates also maintains offices or has alliance partners assisting foreign investors in China, Hong Kong SAR, Dubai (UAE), Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Bangladesh, Italy, Germany, the United States, and Australia.

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