Cotton Export Opportunities to Vietnam

Vietnam is India's fourth largest trading partner in the Association of South East Asia Nations (ASEAN) - the top three are Singapore, Indonesia and Malaysia. India-Vietnam trade is steadily growing - double-digit rates. From the past five years, it has grown by almost 80 percent.

With rising foreign investment and low labor costs, Vietnam has now become the top destination for the textile industry. For India, Vietnam is an export market and supplier of Textile & Clothing (T&C) goods in the South East Asia region.

India's T&C exports to South East Asian countries are improving and are up 18.64% year-on-year to USD 1745.51 million in 2018. Cotton is a major commodity exporter to the region, accounting for 58% of total T&C exports to South East Asia, and cotton exports reached $ 1008.92 million in 2018, a growth of 29.29% over the same period.

Of the eleven countries from South East Asia, Vietnam is India's T&C goods export market. In 2018, T&C exports to Vietnam totaled $ 505.83 million. Vietnam accounts for 37% of India's total T&C exports to the South East Asia region. Cotton, the largest commodity exported to Southeast Asia, surpassed its own records of $ 1008.92 million in 2018, with cotton exports to the region at US $ 478.06 million in 2011.

India's T&C exports account for 10% of total exports to Vietnam. To Vietnam, India exports mainly cotton products. Under the cotton commodity, the cotton was not carded or the comb was exported for US $ 320.27 million, an increase of 18.11% over the same period in 2018.Cotton card or comb was trading at US $1.62 million in 2018 and the cotton yarn (in which cotton is 85%) was traded at US $136.86 million. The second largest commodity exported to Vietnam is the single yarn of combed fiber. New exports are US $106.18 million in 2018, an increase of 98.28% over the same period, and production is trading at US $ 0.31 per kg.

Administrative aspects

The company does not need an import or export license to Vietnam to establish a commercial enterprise. A foreign investor must however register with the Department of Planning and Investment (Government of Vietnam) to conduct an import or export activity. Foreign investors who want to participate in import or export activities in Vietnam must obtain an investment certificate. 

All imports and exports must comply with relevant government regulations on restraint, quality standards must be checked by relevant government agencies before the customs clearance.

Vietnam imposes taxes on almost every type of product imported into the country. Import tax rates vary by product type, for example, consumer goods and luxury goods are taxed higher, while machinery, equipment and raw materials receive lower taxes and tax credits. Imports are subject to import tax, value added tax (VAT) and special consumption tax (SCT) for certain goods.

Special Priority Tax Rates apply to goods arising from countries, groups or territories that apply special emphasis on import tax to Vietnam. Currently, it applies mainly to Asian countries under Common preferential tariffs (CEPT).

References-

https://wits.worldbank.org/CountryProfile/en/VNM

https://www.fas.usda.gov/data/trade-opportunities-southeast-asia-indonesia-malaysia-and-philippines

https://www.textileexcellence.com/featured/south-east-asia-is-an-emerging-market-for-indias-tc-industry/

https://tradingeconomics.com/india/exports/vietnam/cotton