Executive Summary
Vietnam has painstakingly developed itself from a war-torn country into one of the world’s top 35 economies. Vietnam has been recognised as an established economy within East Asia, yet Vietnam’s rapid and continued growth holds promise for a significantly larger economy in the years ahead. This has been enabled by strong policy support from Vietnam’s government, who are sensitive to high potential sectors and have quickly directed resources to their development. Vietnam’s continually strengthening relationship with Japan opens more markets and sectors for free trade and cooperation, paving the way for long term mutual benefit.
Why Vietnam Matters to India
Latest Relationship
India and Vietnam share strong mutual ties, built through strengthening economic cooperation and frequent diplomatic interactions. Bilateral trade has grown significantly, from $8 billion USD in 2015-2016 to $16 billion USD in 2024-2025, with plans to hit $25 billion USD by 2030. This goal is made with the mutual recognition that Vietnam and India are two of the fastest growing economies globally. 2026 saw yet another sign of the strong and growing relationship between Vietnam and India. Relations were elevated to the Enhanced Comprehensive Strategic Partnership (ECSP). From 5 to 7 May 2026, a high level delegation from Vietnam, consisting of General Secretary and President To Lam and other ministers visited India, coinciding with the 10th anniversary of the Comprehensive Strategic Partnership first formed in 2026. The visit strengthened ties between the two countries, and facilitated further cooperation in the key areas of:
- Collaboration between technological firms
- Defence and security
- Innovation in science and technology
- Digital transformation
- Energy and education
India-Vietnam ties are not just limited to economic cooperation, but also extends into cultural exchanges, with both sides promoting increased people-to-peole exchanges, education, tourism, and cultural cooperation. This reflects the robust and multi faceted relationship that India and Vietnam have worked hard to build.
Strategic Regional Position
Vietnam has cemented itself as one of the major manufacturing and export bases in the East Asia region. Geographically, Vietnam controls a coastline of over 3000 km, and is embedded into major maritime trade routes travelling through the South China Sea. This puts Vietnam in an important position in one of the busiest shipping corridors globally. Vietnam’s manufacturing infrastructure has been growing, across all sectors. This is driven by policy support from the government, who has recognised the immense potential for growth and value in these industries, who then seeks to attract foreign investors. Foreign investors bring in capital, expertise, and transfer of knowledge and technology.
Meanwhile, Vietnam offers new markets and bases for growth, long-term stability, as well as a cost competitive workforce that is rapidly developing in its skills and capabilities. The Vietnamese government is long-sighted and pro-trade, evident by their signing of 17 FTAs with over 60 global partners. Regionally, Vietnam enjoys trade relations with Southeast Asia through the ASEAN Free Trade Area (AFTA) as well as pacific countries through the Regional Comprehensive Economic Partnership (RCEP). This monumental FTA involves all 10 member states of ASEAN, as well as Australia, China, Japan, South Korea, and New Zealand. Indian investors recognise that Vietnam offers access to numerous new markets and economies, as well as providing areas for long term growth.
Supply Chain Diversification
Vietnam is recognised as a key player in regional supply chains. The potential in Vietnam’s rapidly developing logistics industry has not gone unnoticed, and the government is channelling policy support to push its development. Firms and economies worldwide have also realised the danger of an overreliance on China, as proven by the pandemic when China closed itself off globally, seriously disrupting global supply chains. Vietnam emerges as a natural alternative, boasting many advantages. Vietnam has long coast lines and is geographically proximate to China, allowing supply chains to flow through Vietnam without much disruption. Vietnam’s supply chain and logistics infrastructure are rapidly developing, which promises long-term returns, with the government’s investor-friendly policies.
Key Investment Opportunities
Precision Electroncis Manufacturing & Artificial Intelligence
Vietnam has emerged as one of the premier hubs for electronics and semiconductor manufacturing. In 2025 alone, Vietnam attracted more than 170 FDI projects and almost 11.6 billion USD of capital into the semiconductor industry. Vietnam recognises the potential for growth and in late 2024, decree 182 was passed, encouraging foreign investment into semiconductors and artificial intelligence. Firms investing into the research and development of semiconductors or artificial intelligence can receive financial support from the Vietnamese government for up to 50% of initial costs. This is attractive for Indian investors, who recognise the rising global demand for precision electronics, and are looking to expand into new economies and capture demand abroad.
By maximising the benefits of Vietnam’s government incentives, Indian firms can expect to set up a long-term base in Vietnam, and enjoy competitive labor costs. Indian investors can also expect to see considerable growth in semiconductor assembly and testing, components manufacturing, as well as profitable applications of artificial intelligence in areas such as smart manufacturing, cloud infrastructure, and digital services. Additionally, Indian investors will not be entering an undeveloped market. Vietnam hosts major multinational manufacturers such as Samsung, Intel, and LG. This provides Indian investors with opportunities to work together with these established firms, and to tap into existing ecosystems, thus lowering barriers to entry.
Renewable Energy Infrastructure
Vietnam is also rapidly emerging as Southeast Asia’s leader in renewable energy. The National Power Development Plan 8 (PDP8) announced in 2023 reflects strong policy support from the government to drive the development of renewable energy production infrastructure. While the policy has seen success in attracting investments into the development of renewable energy production plants, the market gap of energy transmission still persists. This bottleneck hurts profits, and hinders the economy from reaping the full benefits of renewable energy. However, this also presents a market opportunity. Indian firms’ significant expertise in renewable energy deployment, such as solar and wind power, grid infrastructure, and energy engineering will allow them to fully maximise this market opportunity. In return, Indian investors can enjoy high long-term growth, new energy markets abroad, as well as future government support when Vietnam transitions more towards clean and renewable energy.
Agriculture & Food Processing
Indian firms boast strong capabilities in agriculture and food processing technologies, as well as agrochemicals and irrigation systems. Indian firms are actively seeking foreign markets to export to, opportunities to modernise, as well as embedding themselves into food supply chains in the region. Vietnam opportunities align well with what Indian investors are seeking. Vietnam is a major global exporter, recording over $70 billion worth of exports in 2025. Vietnam’s key exports are seafood, coffee, rice, and other agricultural products, showing that Vietnam already has the existing infrastructure to support a high volume of exports.
On top of being able to support additional exports from Indian firms, Vietnam also offers opportunities to Indian investors through processing, packaging, and machinery. As Vietnam seeks to improve in sector-wide productivity, supply-chain efficiency and value-added food exports, Indian expertise can adequately fill these gaps, creating mutual benefit for all parties. Indian firms looking to produce in Vietnam can also target Vietnam’s growing middle class, meeting local demand for larger quantities of food as well as higher-value and higher-quality food products.
Key Considerations
Navigating Regulations
Investors would be prudent not to go into a foreign country blindly. Despite the promises for attractive returns and profitability, it cannot be realised if the government does not permit these economic activities. Acquiring licenses and navigating the boundaries of regulations can be complex and time-consuming to understand, especially in an unfamiliar foreign setting. Investors may not be aware of the differences in regulations across different provinces in Vietnam, may not fully understand administrative procedures to acquire licenses and permits, and may face various other obstacles. Engaging with an established local consultancy that comprehensively understands the needs and objectives of investors is the safe and efficient route to take.
Skilled Labor Development
Vietnam, being a developing economy, means that the workforce is too, still developing. Firms will not enter and find an already trained and competent workforce to carry out the more advanced and skill-intensive roles. Firms must be prepared to invest time and resources into the training of skilled workers to perform the more complex roles. Yet, the onus is not entirely for firms to bear. The Vietnamese government has recognised this gap, and has taken policy actions to address it.
The Vocational Education Development Strategy is designed to reform the curriculum of vocational education, ensuring that the skills taught remain relevant and translate well into the workplace. Additionally, Vietnamese workers have been benefitting from the transfer of knowledge and technology from large Japanese firms such as Toyota and Panasonic, over their long span of investment and presence in Vietnam. Firms can be assured that if their plan is to operate in Vietnam for the long-term, the costs spent on developing skilled workers will yield much greater returns.
Conclusions & Recommendations
Vietnam is an attractive investment destination to firms all over the world because Vietnam has already solidified its position regionally, and has embedded itself into global supply chains. On top of this success, Vietnam still has many sectors with ample room for development, offering to firms worldwide the opportunity to expand and capture new markets for growth. Vietnam and India’s economic relationship is strong, but has potential to grow to enrich both parties further. Both countries are developing, and are recognised for their potential to become significant economies within Asia.
Therefore it is to both countries’ advantage to aid each other in their development and to lay the foundation for long term cooperation when both countries have fully developed their economy. This signals that investment by Indian firms into Vietnam should focus on long term strategies, as that is the most optimal approach to maximise their investments. If your firm is evaluating Vietnam as a destination for expansion, the window for early-mover advantage is open now.
Viettonkin Consulting provides on-the-ground expertise across regulatory compliance, market entry strategy, and investment structuring. Contact our team today to discuss how we can support your entry into the Vietnamese market.
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