Motivation And Significance of Promoting FTA Between Vietnam and India

In the current landscape of global trade and economic integration, Free Trade Agreements (FTAs) have become key instruments for fostering growth, deepening market access, and enhancing strategic partnerships between nations. Vietnam and India, as two of the most dynamically developing economies in Asia, have both participated in the ASEAN - India Free Trade Agreement (AIFTA) since 2010. However, the practical utilization of AIFTA remains limited, and bilateral trade potential has yet to be fully realized. Given the evolving global value chains and increasing geopolitical uncertainties, a comprehensive bilateral FTA between Vietnam and India emerges as a strategically important initiative to diversify trade relations, strengthen resilience, and promote inclusive regional growth. This research explores the motivations and long-term significance of promoting Vietnam - India FTA. It argues that beyond purely economic considerations - such as boosting exports, attracting investment, and optimizing comparative advantages - political and strategic factors also play a critical role. These include Vietnam’s desire to reduce reliance on traditional partners and India’s “Act East” policy aimed at strengthening engagement with Southeast Asia. The study also highlights structural complementarities between the two economies, especially in sectors like manufacturing, agriculture, information technology, and pharmaceuticals. By evaluating trade performance, investment trends, the current limitations of AIFTA, and the barriers to deeper cooperation, this study identifies both the opportunities and challenges in negotiating and implementing a bilateral FTA. Policy recommendations focus on institutional reforms, stakeholder engagement, and the need for adaptive regulatory frameworks. Ultimately, the findings underscore that a Vietnam - India FTA would not only contribute to stronger bilateral ties but also enhance the countries’ strategic roles in the Indo-Pacific regional order.