India and Vietnam aim to turn ‘China plus one’ rivalry into trade gains

India and Vietnam could transform their rivalry for "China plus one" investments into a mutually beneficial partnership, according to analysts. Combining New Delhi's technological capabilities and scale with Hanoi's agile manufacturing and East Asian supply chain links, the two nations could enhance their roles in global production networks ranging from electronics and pharmaceuticals to renewable energy.

This shift would offer companies reliable supply chain alternatives as they diversify away from China. The idea gained traction after Vietnamese Prime Minister Le Minh Hung encouraged closer economic integration with India during a meeting with Indian Prime Minister Narendra Modi in Delhi, on the sidelines of the Brics summit. The leaders discussed accelerating a review of the Asean-India Trade in Goods Agreement, launched in 2010 to lower tariff barriers, and set a goal of boosting bilateral trade to US$25 billion by 2030.

Experts argue that this deeper partnership could revitalize various industries while bolstering global supply-chain resilience, moving beyond tariff reduction to co-creating integrated supply chains. Vietnam's success in export-focused manufacturing and East Asian integration contrasts with India's vast domestic market scale, design capabilities, and digital services expertise.

A potential free-trade agreement could unlock business opportunities in sectors like pharmaceuticals, agriculture, electronics, machinery, and services, but non-tariff barriers, administrative procedures, and cross-border logistics need improvement. Indian officials view Vietnam as a core pillar of the "Act East" policy, while Vietnamese officials seek diversification from China to maintain a balanced relationship.