Indian firms plan to set up shop in Vietnam. At least four Indian enterprises are exploring investment opportunities in the textile and dyeing sector in Vietnam. Vietnam is expected to quickly increase its fabric production capacity to meet the rules of origin in free trade agreements. While the ratio of locally-produced fabrics is low, the yarn-forward rule in the Trans-Pacific Partnership trade deal and the fabric-forward rule in the free trade agreement between Vietnam and the European Union require Vietnam’s fabric production capacity to rise.

Vietnam is a big yarn producer with a production volume reaching more than 9,00,000 tons last year. But two-thirds of it is exported. With textiles and garment exports amounting to over $24 billion last year, Vietnam needs around 8.5 billion sq. mt. of fabric.

Vietnam plans to increase the proportion of locally-made fabric. Around three billion dollars of foreign capital have been pledged for Vietnam’s textile and dyeing in the past 18 months. Supporting policies in terms of land and wastewater treatment for enterprises investing in textile and dyeing facilities are necessary. To produce an additional five billion square meters of fabric, much land and investment would be needed for construction of production and wastewater treatment facilities.