India to take initiative on the TPP trade deal in Vietnam

The Trans-Pacific Partnership (TPP) trade agreement, of which Vietnam is a member, will come to a conclusion late this year has turned the Southeast Asian country into a so popular destination for investment for export. Many other countries outside of the TPP have already poured billions into the group to grasp the chances for exporting to the remaining eleven members, especially the U.S., which almost every country in the world wants to sell their goods to. India is the latest to signal that it will take seriously the opportunities to invest in Vietnam for export to the other TPP member countries.

According to the Vietnam Textile and Apparel Association (VITAS), last week, the Indian government launched a preferential credit package worth US$300 million for investments in the garment and textile sector of Vietnam over ten years.

Accordingly, India will support investment projects in the garment and textile sector using Indian-made equipment and service up to 75 percent of the total funding estimated for a single project.

The entire credit package, with an interest rate of two percent per annum for a 10-year term, is conducted through Vietnamese Eximbank under the guarantee of the Ministry of Finance, the VITAS said.

The package will help Indian businesses develop new factories in Vietnam, as well as promote cooperation between Vietnamese and Indian partners in the same field. This is also an opportunity for businesses to gain more advantages after Vietnam joins the TPP trade pact, the VITAS said, citing a document from the Indian government.

With the huge credit support from the Indian government, Vietnamese textile enterprises will have a golden opportunity to access Indian capital and technology, the association commented.

India is the world’s second largest supplier of garment and textile materials, second only to China, so the credit package also means guaranteed supply for Vietnamese enterprises, according to the VITAS.

The Indian garment and textile industry earns $100 billion annually, of which exports, mainly cotton, silk, cloth and cotton cellulose, account for $40 billion

The Consul General of India in Ho Chi Minh City last week also recommended that Indian enterprises, apart from expanding trade with Vietnam, should invest in the Southeast Asian country to make use of future trade agreements.

Vietnam will soon sign many large-scale free trade pacts with important partners like the EU and the U.S., which will make the country more attractive as a destination for investment to serve ASEAN and other big foreign markets, Smita Pant, Consul General of India, said at a trade promotion and investment event held in the city on July 14.

India is planning to establish a $300 million industrial park specializing in garment and textile material production near the southern Vietnamese economic hub of Ho Chi Minh City. This was announced in the month of April by Vinod K. Ladia, chairman of the Synthetic and Rayon Textiles Export Promotion Council of India.

It is important for Indian companies to take the initiative on the Trans-Pacific Partnership trade deal, which will offer a boost to the Vietnamese garment and textile industry, Ladia said.

The TPP is a proposed regional free trade agreement aimed at eliminating tariffs and lowering non-tariff barriers that is being negotiated by 12 countries throughout the Asia-Pacific region, which collectively contribute almost half of global output and over 40 percent of world trade.

The 12 countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.