Policy Update
Aditi Bisht
Background
Electronics has become one of the most important sectors of the 21st century, powering industries from IT to consumer goods and energy transitions. For India and Vietnam, two of the fastest growing economies in Asia, electronics manufacturing is not just about exports but about higher income, jobs and global competitiveness.
Vietnam is a striking example. In 2005, its per capita GDP was around $700, slightly lower than India’s. By 2024, Vietnam’s per capita GDP had risen to nearly $4,500, more than 80% higher than India’s $2,500. Much of this divergence is because of Vietnam’s electronics export story. Today, electronics account for nearly 40% of Vietnam’s exports, roughly $1,400 per capita. This growth has been driven by the presence of global players like Samsung, Apple, Intel and LG, which have made Vietnam a global hub for consumer electronics and assembly.
India has set its eyes on becoming a major electronics manufacturing power. The Government of India has announced a target of $500 billion in electronics production by 2030 to capture 10% of global electronics output. This target aligns with the broader national goals of employment generation, value addition and reducing imports. The ASEAN-India Free Trade Agreement, which has been effective since 2010, has already opened up opportunities of deeper economic cooperation with countries like Vietnam. The electronics sector presents a new opportunity to take this partnership to new heights.
Functioning
The India-Vietnam electronics manufacturing partnership works through policy alignment, business collaboration and institutional engagement. According to Vietnam News (June 2025), both governments have been actively facilitating trade dialogues and industry specific seminars that bring together policymakers, associations and nearly 200 companies from both sides. These forums allow companies to explore cooperation opportunities in areas such as semiconductor manufacturing, IoT devices, electronic components and electric vehicle charging systems.
Vietnam’s model has worked well because of its focus on competitive industrial clusters, export-oriented incentives and a low tariff structure. It has an average weighted tariff of less than 1% on electronics, making it very attractive for foreign direct investment (FDI). India has a tariff of around 9% according to The Economic Times, which hampers seamless cross-border component flow. Learning from Vietnam, India is now working to streamline its own supply chain by reducing trade barriers and improving logistics.
The partnership also works through the development of Electronics Manufacturing Clusters (EMCs) in India, in areas like Greater Noida (Uttar Pradesh), Hosur and Sriperumbudur (Tamil Nadu). These clusters will replicate Vietnam’s model by providing shared infrastructure, worker accommodations and a simplified regulatory framework.
At the enterprise level, collaboration is encouraged through joint ventures, technology transfers and research partnerships. Vietnamese companies bring experience in high volume manufacturing and export logistics, while Indian companies bring in strengths in software design, embedded systems and innovation. Together, this synergy creates a practical ecosystem for co-production and regional integration.
Performance
Over the past few years, Vietnam’s electronics industry has grown rapidly. VietnamPlus (June 2025) says electronics now account for 40% of Vietnam’s industrial exports. Presence of big multinationals has not only boosted GDP but also created hundreds of thousands of skilled jobs.
India is scaling up fast. The Economic Times (Dec 2024) says India’s electronics exports are growing steadily, and the PLI scheme has attracted big investments from global players like Apple, Samsung and Foxconn. Make in India has encouraged domestic assembly, government backed infrastructure investments are improving logistics and energy access.
Trade between the two countries is also increasing, with a focus on electronics and electrical equipment. Through ongoing seminars and policy dialogues, both sides are identifying areas where complementary strengths can deliver tangible results. Vietnam is an established export base, and India is positioning itself as the next big hub to serve global markets as well as its massive domestic demand.
Impact
The progressing industrial cooperation between India and Vietnam is beginning to create a new regional dynamic in Asia. The two countries are rightly applying their comparative advantages to set up supply chains, attract investments, and erect an edifice for promising industrial growth.
According to Vietnam News (June 2025), recent trade talks, as well as online forums, brought together nearly 200 Indian and Vietnamese enterprises in an attempt to create opportunities for the production of electronic components, industrial equipment, and green technologies. They are an alliance not purely for business, sharing technical knowledge, overcoming barriers, and carrying through on new industrial cooperation programs.
Transformation in Vietnam into a worldwide manufacturing hub is well understood. After international branded companies such as Samsung, Apple, and LG, an effective production ecosystem was developed with the help of stimulating policies, well-equipped industrial parks, and the export-oriented growth approach. India, on the other hand, has pushed its electronics sector via the PLI scheme, among others, and the “Make in India” campaign.
Emerging Issues
Despite promising progress, a few issues deserve immediate attention to allow the partnership to realise its potential fully:
- Technology and R&D Cascading: Both nations have to augment their capacities in innovation and semiconductor design to maintain their competitiveness in global value chains.
- Tariff Imbalances: The Economic Times of December 2024 points out that the import tariff on electronics in India stands around 9%, whereas it is below 1% in Vietnam. This difference hinders the smooth flow of components and increases manufacturing costs.
- Competition for Foreign Investment: Vietnam and India are competing as premier investment destinations. They must work towards complementary investment strategies that focus on joint development instead of a straightforward quest for competition.
- Skills Development Challenges: VietnamPlus (June 2025) highlights that both countries lack sufficiently trained engineers and technical experts to overcome the enormous demand in advanced manufacturing. Joint training programs might be a great way to fill this gap.
- Bottlenecks in Infrastructure Development: India in comparison to Vietnam, still has some way to go in developing logistics and manufacturing zones equivalent to the industrial clusters of Vietnam. Continuous efforts in infrastructure planning and regulatory requirements are required.
Way Forward
The next stage of India-Vietnam collaboration in electronics must be grounded in longer-term goals and mutual benefits. A roadmap should thus be followed by the two nations turning intentions into quantifiable targets.
1. Create Joint Supply Chain Arrangement: A coordinated production set-up-with components manufactured in one country and assembly in another-can help in bringing down costs and improving efficiencies.
2. Upgrade and Expand Industrial Clusters: India can adapt from Vietnam the model of concentrated industrial parks with integrated facilities and digitalised single window approvals.
3. Promote Easy Trade and Trade Barrier Removal: Reduced tariffs and harmonised trade procedures will render bilateral manufacturing easy and cost-based.
4. Invest in Technology Partnerships: The ability enhancement of working areas in semiconductor, IoT, and renewable energy-based electronics should be given first priority.
5. Promote Human Capital Development: Training, research projects, and academic exchange will lay the basis of human talent in both countries.
6. Promote Environment-Friendly Production: The governments will pay special attention to the use of green energy and proper waste management.
Both the countries can have a win-win affiliation depending on Vietnam manufacturing and applying India’s policy-driven innovation as a model to regional self-reliance and competitiveness of the world market
References
Welcome To Zscaler Directory Authentication. (2025)
https://share.google/eo9O1NGJ0wGgImPWg
Vietnam+ (VietnamPlus. (2025, June 18). Vietnam, India explore cooperation opportunities in electricity, electronics sectors. Vietnam+ (VietnamPlus). https://share.google/tfyhZWKAHpe8PKEIV
Dhawan, A., & Ganguly, S. (2024, December 19). What can India learn from Vietnam to win 10% of global electronics production? The Economic Times; Economic Times.
https://share.google/JiBysGfWidYDmhDNw
About the Contributor:
Aditi Bisht is a Research Intern at IMPRI. She holds a bachelor’s degree in Journalism and Mass Communication from Vivekananda Institute of Professional Studies (VIPS). Her research interests lie in government policy and economics
Acknowledgment:
The author sincerely thanks Ms Aasthaba Jadeja and the IMPRI team for their valuable support.
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
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