“Vietnam electrical exports charge ahead, driving up India's imports by 17%”
India has witnessed a significant surge in imports of electrical machinery and parts from Vietnam in the first seven months of 2024. According to Ministry of Commerce data analyzed, imports from Vietnam rose by 17% to reach $5.8 billion between January and July as compared to the same period last year.
A closer look at the trade numbers reveals that electrical machinery and parts, which constitute a major portion of imports from Vietnam, grew by a substantial 43% in the first five months of 2024 compared to a year ago. This strong double digit growth highlights Vietnam's rising prominence as a key supplier of electrical goods and components to the Indian market.
Experts attribute Vietnam's export success to Chinese firms shifting their base of operations to the southeast Asian nation. As per the Economic Survey 2023-24, the rerouting of Chinese supply chains through countries like Vietnam and Mexico explains their burgeoning trade with India. Vietnam has proved especially attractive for Chinese businesses seeking to bypass tariffs imposed by major economies.
Alarmingly for domestic manufacturers, India turned a net importer of steel for the first time in fiscal 2024 with overall deficit rising to 1.1 million tonnes. Vietnam emerged as a new exporter alongside traditional suppliers such as China, South Korea and Japan. July imports from Vietnam almost doubled year-on-year, signaling the rising influx is likely to persist.
With Chinese investments catalyzing Vietnamese exports globally as well as to India, the risks of excess capacity and predatory pricing cannot be overlooked. Strict monitoring of imports under existing FTAs is crucial to ensure fair play and protect local industries. Going forward, prudent FDI and quality trade agreements hold the key to balanced and sustainable growth in India's overseas commerce.
