Datanomics: Why trade imbalance with Vietnam is a concern for India

India and Vietnam on May 6, 2026, elevated their ties to an enhanced comprehensive strategic partnership and agreed to take bilateral trade to $25 billion by 2030. However, the bilateral trade over the past decade has largely been one-sided — India’s exports to Vietnam have stagnated, while its imports from Vietnam have risen manifold.

 

Trade deficit with Vietnam widening since FY19

 

India faced a trade deficit with Vietnam in FY19 for the first time. Since FY22, the trade deficit has gradually risen. Comparably, India’s trade deficit with China rose significantly in the first decade of the 21st century. 

Source: CMIE, BS calculations

 

 

Minuscule rise in exports

 

India’s exports to Vietnam increased marginally from $6.27 billion in FY15 to $6.7 billion in FY26. However, the share of agricultural goods in total exports by India to Vietnam declined from 69 per cent in FY15 to 38 per cent in FY26. 

 

Indians flocking to Vietnam

 

India and Vietnam also signed an MoU to increase tourism. Indian tourists going to Vietnam more than trebled in 3 years from 123,731 in 2022 to 398,673 in 2024.