India vs Vietnam for Foreign Companies: Which Market Is Better for Business Expansion?

India and Vietnam are among the most important Asian markets being evaluated by international companies planning manufacturing investments, supply-chain diversification, technology operations and long-term business expansion.

However, choosing between India and Vietnam requires more than comparing labour costs or corporate tax rates. The right destination depends on the company’s customers, products, supply chain, foreign ownership requirements, export markets, workforce needs and long-term investment strategy.

India offers substantial domestic market opportunities, technology and professional talent, manufacturing potential and a mature Global Capability Centre ecosystem. Vietnam offers an established export-oriented manufacturing base, extensive trade agreements and close integration with East Asian supply chains.

This guide compares India vs Vietnam for foreign companies from the perspective of international investors planning operations in 2027 and beyond. It covers market opportunities, manufacturing, foreign direct investment, taxation, company registration, talent, incentives, logistics and regulatory considerations.

Companies evaluating India can also explore our India Market Entry Consulting Services for assistance with business structure, investment planning and regulatory implementation.

India vs Vietnam for Foreign Companies: Quick Comparison

India’s Strategic Advantages

India combines a large domestic consumer and business market with significant capabilities in technology, engineering, pharmaceuticals, professional services and manufacturing. Foreign companies can establish operations to serve Indian customers while developing production, research and shared-service capabilities.

Vietnam’s Strategic Advantages

Vietnam has developed a strong position in export-oriented manufacturing, including electronics, textiles, footwear, furniture and industrial products. Its proximity to China and participation in major trade agreements can support companies whose business models depend on international exports.

India vs Vietnam Comparison Table

Key takeaway: India may be particularly suitable for businesses targeting a large domestic market, establishing technology operations or building long-term regional capabilities. Vietnam may be attractive for businesses prioritising export manufacturing and integration with East Asian supply chains. Neither country is universally superior.

Why Are Foreign Companies Comparing India and Vietnam?

The China Plus One Strategy

International companies increasingly seek to reduce excessive dependence on a single manufacturing or sourcing location. India and Vietnam are therefore frequently considered under the China Plus One strategy.

India provides opportunities for production diversification, domestic-market access and technology services. Vietnam provides an established export-manufacturing environment connected with regional Asian suppliers.

Read our China Plus One Strategy in India guide for India-specific manufacturing and investment considerations.

Supply-Chain Resilience and Risk Diversification

Supply-chain diversification involves evaluating supplier concentration, import dependency, geopolitical exposure, customs duties, logistics, shipping routes and operational continuity.

For example, an electronics manufacturer dependent on components from China may evaluate Vietnam for proximity to suppliers, while a manufacturer seeking access to Indian customers may favour an Indian production facility.

Business Expansion Beyond Manufacturing

The India-versus-Vietnam decision also affects SaaS businesses, engineering companies, financial-service groups, consulting organisations, research centres and multinational shared-service operations.

Foreign investors can examine our Growth Sectors in India for Foreign Companies guide to identify promising Indian industries.

India vs Vietnam: Domestic Market Opportunities

India’s Domestic Market Potential

India offers access to a large consumer population and a broad B2B economy across manufacturing, infrastructure, technology, healthcare, retail, financial services and professional services.

Foreign companies establishing an Indian presence may benefit from proximity to customers, local distribution, after-sales support, domestic procurement and long-term market development.

Vietnam’s Domestic Market Potential

Vietnam has an expanding domestic economy supported by industrial development, urbanisation, consumer spending and foreign investment. Nevertheless, its international investment proposition has historically been particularly strong in export-oriented manufacturing.

How Domestic Sales Affect Location Decisions

A foreign company should estimate the proportion of expected revenue generated from domestic customers compared with export customers.

For example, a medical-device manufacturer primarily targeting Indian hospitals may benefit from manufacturing or distributing in India. A manufacturer primarily exporting products to several overseas markets may evaluate Vietnam’s trade connectivity and supply-chain advantages.

Our India Market Entry Strategy guide explains how overseas businesses can evaluate market potential before committing capital.

India vs Vietnam for Manufacturing Investment

Manufacturing Opportunities in India

India offers opportunities across automobiles, electric vehicles, electronics, pharmaceuticals, chemicals, renewable-energy equipment, food processing, medical devices and engineering products.

Manufacturers should evaluate local demand, industrial clusters, availability of raw materials, labour, utilities, logistics and regulatory approvals.

Our Manufacturing Setup in India guide covers important establishment and operational considerations.

Vietnam’s Export Manufacturing Ecosystem

Vietnam has established manufacturing clusters in electronics, electrical equipment, garments, footwear, furniture and industrial products. Its integration with regional Asian production networks can reduce sourcing complexity for certain industries.

However, export manufacturers must assess imported-input dependency, local supplier capabilities, industrial land availability and the effect of changing trade policies.

Manufacturing Location Decision Matrix

The appropriate decision should be based on a detailed project feasibility study rather than country-wide assumptions.

India vs Vietnam: Free Trade Agreements and Export Access

Vietnam’s International Trade Agreements

Vietnam participates in important trade arrangements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP).

These arrangements may provide preferential market access for qualifying goods, depending on tariff classification, rules of origin and other agreement-specific conditions.

Businesses can review trade-policy information through Vietnam’s Ministry of Industry and Trade.

India’s Trade Agreements and Export Strategy

India has trade arrangements with several partner economies and continues to develop international economic relationships. However, tariff preferences must be examined for the specific product and destination market.

Companies should review current trade agreements, customs procedures and export requirements through India’s Directorate General of Foreign Trade and Department of Commerce.

Why Rules of Origin Matter

A free trade agreement does not automatically provide preferential duty treatment to every product manufactured in a participating country.

Businesses may need to satisfy regional-value-content requirements, tariff-classification changes or other product-specific origin rules. Merely importing components and performing limited processing may not be sufficient.

Practical recommendation: Compare the landed cost of finished products in the target export market after considering customs duties, origin eligibility, freight, insurance and compliance.

India vs Vietnam: Foreign Direct Investment Environment

Foreign Direct Investment in India

India permits foreign direct investment in many sectors under the automatic route, subject to applicable sectoral caps, investment conditions and restrictions. Other investments may require government approval.

Foreign investors should assess the applicable FDI policy, ownership structure, beneficial ownership, investment instruments and reporting obligations before proceeding.

Official information is available from the Department for Promotion of Industry and Internal Trade and the Reserve Bank of India.

Foreign Investment in Vietnam

Vietnam attracts substantial international investment in manufacturing, processing, infrastructure and technology-related industries.

Foreign investors should examine market-access restrictions, investment registration, enterprise registration, permitted activities, land arrangements and sector-specific licensing requirements.

India and Vietnam Investment Trends

Both countries attract international investment, but their sectoral investment profiles and economic structures differ.

India’s investment proposition includes domestic-market scale, manufacturing, digital services and multinational capability centres. Vietnam has developed a particularly strong position in manufacturing investment and international export supply chains.

Investors should distinguish between announced investments, registered investment commitments and actual realised investment when comparing official FDI statistics.

India vs Vietnam: Company Registration and Business Structures

Business Establishment Options in India

Foreign companies entering India may evaluate a wholly owned subsidiary, joint venture, branch office, liaison office or project office, depending on their activities and applicable regulations.

A subsidiary is generally suitable for long-term commercial operations where the relevant foreign ownership is permitted. Branch, liaison and project offices operate under different conditions and restrictions.

Read our Setting Up a Business in India and Foreign Company Registration in India guides.

Wholly Owned Subsidiary or Joint Venture

A Wholly Owned Subsidiary in India may allow an overseas investor to retain full ownership and control where 100% FDI is permitted.

Alternatively, a Joint Venture in India may provide access to an Indian partner’s distribution network, customer relationships, manufacturing capabilities or local expertise.

Ownership restrictions, governance, financing, profit distribution and exit provisions should be evaluated before selecting the structure.

Business Registration in Vietnam

Foreign investors in Vietnam may establish foreign-invested enterprises, enter into joint ventures or use other legally permitted investment arrangements.

Depending on the project, investment registration and enterprise registration procedures may apply, along with industry-specific approvals and operating licences.

Foreign companies should obtain jurisdiction-specific advice before assuming that incorporation procedures, capital requirements or ownership rules are identical to those in India.

India vs Vietnam: Corporate Tax and Indirect Taxes

Corporate Taxation in India

India’s corporate income-tax treatment depends on whether the taxpayer is a domestic company or foreign company, the applicable tax regime, eligibility conditions and relevant tax year.

For example, qualifying domestic companies may elect the concessional tax regime under Section 115BAA of the Income-tax Act, 1961, subject to prescribed conditions, for periods governed by that Act. The corresponding provisions under the Income-tax Act, 2025 must be considered for applicable tax years from 1 April 2026.

Applicable surcharge, cess, withholding taxes and treaty provisions should also be considered. Foreign ownership of an Indian-incorporated company does not, by itself, make that company a foreign company for Indian income-tax purposes.

See our International Tax Advisory Services for cross-border tax planning and compliance.

Corporate Taxation in Vietnam

Vietnam generally applies a standard corporate income-tax rate of 20%, subject to applicable legislation, preferential rates, sectoral provisions and qualifying incentives. Certain smaller businesses and eligible projects may be subject to different rules.

Vietnamese tax considerations may also include VAT, foreign contractor tax, customs duties, transfer pricing and profit-remittance requirements.

Both countries’ tax regimes should be verified for the proposed investment period before making a final decision.

Effective Tax and Profit Repatriation Comparison

Headline corporate tax rates do not represent the complete tax cost of an investment.

A foreign company should compare:

• Corporate income tax and applicable surcharges.
• VAT or GST treatment.
• Withholding tax on cross-border payments.
• Transfer pricing and related-party transactions.
• Customs duties and import taxes.
• Available tax incentives and eligibility conditions.
• Dividend distribution and profit repatriation.
• Double taxation avoidance agreement benefits.

Indian businesses with international related-party transactions should also evaluate Transfer Pricing Compliance.

India vs Vietnam: Talent, Employment and Workforce

India’s Technology and Professional Workforce

India offers a substantial workforce across software development, engineering, accounting, financial services, analytics, research, consulting and other knowledge-intensive industries.

Its established professional-services and technology ecosystem can be valuable for multinational companies requiring large specialist teams.

Vietnam’s Manufacturing and Technical Workforce

Vietnam has developed an experienced industrial workforce supporting electronics, garments, footwear and other manufacturing sectors.

Foreign employers should compare employee availability, technical training, language requirements, wage inflation, retention and applicable labour regulations in the specific industrial location.

Comparing Total Employment Costs

Employee salary alone is insufficient for evaluating workforce costs.

Companies should consider statutory contributions, employee benefits, recruitment, training, overtime, management costs, productivity and attrition.

For India, our Accounting and Bookkeeping Services can support the establishment of appropriate financial reporting and payroll processes.

India vs Vietnam for Technology, SaaS and GCC Operations

India’s Established Technology Ecosystem

India has established technology clusters supporting software development, SaaS, product engineering, artificial intelligence, research and multinational professional services.

For international companies planning technology or knowledge-based operations, access to specialist talent, digital infrastructure, customer markets and scalable operations may be more important than manufacturing wages.

Global Capability Centres in India

India is a major destination for multinational Global Capability Centres undertaking finance, technology, analytics, engineering, research, human resources and other shared functions.

Companies can explore our Global Capability Centre Setup in India services to evaluate appropriate legal structures and operational requirements.

Vietnam may also be considered for regional technology and service operations, particularly where a business already has significant Southeast Asian activities.

India vs Vietnam: Infrastructure, Logistics and Location

India’s Industrial Infrastructure

India continues to develop highways, ports, airports, freight corridors, industrial parks and manufacturing infrastructure.

However, the availability and quality of infrastructure can differ significantly between states and industrial clusters.

Foreign manufacturers should compare potential locations based on suppliers, customer proximity, electricity, water, logistics, land, labour and regulatory conditions.

Vietnam’s Supply-Chain Connectivity

Vietnam’s proximity to China and other East Asian production centres can be valuable for manufacturers relying on imported components and regional supplier networks.

However, logistics advantages should be evaluated against port capacity, shipping schedules, industrial-zone availability, transport costs and the location of final customers.

India vs Vietnam: Government Incentives for Investors

Manufacturing and Investment Incentives in India

India offers sector-specific manufacturing and investment support through applicable central government programmes and state-level industrial policies.

Potential incentives may relate to eligible investment, manufacturing output, employment, research, industrial infrastructure or qualifying capital expenditure.

Eligibility depends on the specific scheme, sector, project size, location and compliance conditions. Investors should not assume incentives are automatically available.

Investment Incentives in Vietnam

Vietnam offers investment incentives for certain qualifying industries, projects and locations. These may include preferential corporate tax treatment and other benefits under applicable legislation.

Investors should compare post-incentive project returns, approval requirements, minimum investment conditions and the period during which benefits remain available.

India vs Vietnam: Regulatory and Compliance Requirements

India’s Foreign Investment and Corporate Compliance

Foreign-owned Indian companies may need to comply with company law, FEMA, RBI reporting, income tax, GST, transfer pricing, accounting standards, labour laws and industry-specific requirements.

Incorporation is only the beginning. Businesses should plan for capital infusion, bank account opening, tax registrations, licences and recurring statutory filings.

Our Post-Incorporation Compliance Guide explains important requirements for Indian subsidiaries.

Vietnam’s Investment and Operational Compliance

Foreign investors in Vietnam should evaluate investment approvals, enterprise registration, employment requirements, accounting and tax compliance, environmental permissions and industry-specific licences.

Regulatory complexity depends on the actual project. A software company and a large manufacturing facility will face different approval and compliance requirements in either country.

Which Country Is Better for Different Business Models?

Businesses That May Prefer India

India may be particularly relevant for companies seeking:

• Access to Indian consumers and industrial customers.
• Technology, engineering and professional talent.
• Global Capability Centre operations.
• Pharmaceutical, healthcare and diversified manufacturing opportunities.
• Long-term domestic-market growth.
• A scalable Indian subsidiary or distribution network.

Businesses That May Prefer Vietnam

Vietnam may be particularly relevant for companies seeking:

• Export-oriented manufacturing operations.
• Proximity to East Asian component suppliers.
• Access to qualifying international trade preferences.
• Integration with Southeast Asian manufacturing networks.
• Production in established electronics, garment or footwear clusters.

Companies evaluating additional Asian destinations may also review our India vs Southeast Asia for Foreign Companies comparison.

Should Foreign Companies Invest in Both India and Vietnam?

Dual-Country Manufacturing and Market Access

For some multinational groups, India and Vietnam may serve complementary rather than competing purposes.

For example, a company may locate selected export-oriented manufacturing activities in Vietnam while establishing an Indian subsidiary for local sales, customer support, distribution or manufacturing for Indian customers.

India for GCC Operations and Vietnam for Production

Another model may involve establishing technology, engineering, finance or shared-service operations in India while maintaining manufacturing or sourcing operations in Vietnam.

Such structures require careful analysis of intercompany pricing, supply agreements, customs, taxation, intellectual property, employment and management responsibilities.

A dual-country strategy should be adopted only where the commercial benefits justify the additional management and compliance costs.

How to Choose Between India and Vietnam in 2027

Step-by-Step Investment Decision Checklist

Before selecting an investment destination, foreign companies should complete the following assessment:

1. Define the primary objective: Domestic sales, exports, manufacturing, sourcing, technology or shared services.
2. Identify customers: Determine where current and future customers are located.
3. Map suppliers: Evaluate raw materials, components and import dependency.
4. Compare operating costs: Include labour, utilities, property, logistics, taxes and compliance.
5. Assess ownership rules: Confirm foreign investment eligibility and legal structures.
6. Evaluate incentives: Consider only benefits for which the project may qualify.
7. Review tax exposure: Model effective tax, indirect taxes and profit repatriation.
8. Compare talent: Assess workforce availability and productivity.
9. Analyse risks: Include regulatory, currency, geopolitical and supply-chain risks.
10. Prepare a long-term roadmap: Consider expansion, additional investment and exit options.

Practical Investment Scoring Matrix

Companies can assign a score from 1 to 5 to each country for the following factors and apply weights according to their business model.

The scores should be supported by actual commercial research and project estimates. Suggested weights are illustrative and should be adjusted for each investment.

Frequently Asked Questions: India vs Vietnam

Is India or Vietnam Better for Foreign Companies?

India may be better suited to companies prioritising domestic-market access, technology talent, GCC operations and long-term business scale. Vietnam may be attractive for export-oriented manufacturers and businesses integrated with East Asian supply chains. The decision depends on the specific project.

Is India or Vietnam better for manufacturing? India offers diversified manufacturing opportunities and a large domestic market. Vietnam has established export-manufacturing clusters. Compare products, suppliers, tariffs, logistics and incentives before deciding.

Can a foreign company own 100% of an Indian company? Yes, 100% foreign ownership is permitted in many sectors, subject to applicable FDI conditions, entry routes and other restrictions.

Can Companies Use Both India and Vietnam?

Yes. Some multinational groups may establish complementary operations in both countries, such as technology or market-facing activities in India and selected manufacturing activities in Vietnam.

Is India suitable for a China Plus One strategy? Yes. India may provide opportunities for manufacturing diversification, domestic-market access and technology operations, subject to the proposed industry’s economics and regulatory conditions.

Which country offers lower operating costs? There is no universal answer. Costs depend on the location, workforce, product, utilities, logistics, taxes, incentives and required operational scale.

India Market Entry Advisory and Contact EzyBiz India

How EzyBiz India Supports Foreign Companies

EzyBiz India Consulting LLP provides professional advisory and implementation support to overseas businesses planning to establish or expand operations in India.

Our services include:

• India market entry strategy and feasibility assessment.
• Selection of appropriate Indian business structures.
• Wholly owned subsidiary and joint venture registration.
• FDI and FEMA regulatory advisory.
• Company incorporation and post-incorporation compliance.
• International taxation and transfer pricing advisory.
• GST, accounting, payroll and regulatory compliance.
• Corporate restructuring and ongoing business advisory.

Our team includes Chartered Accountants and other professionals with extensive experience in Indian taxation, regulatory compliance and cross-border business advisory.

Speak With Our India Market Entry Experts

Planning to establish a subsidiary, manufacturing facility, technology operation or other business presence in India?

Contact EzyBiz India Consulting LLP to discuss your proposed investment, legal structure, regulatory obligations and implementation roadmap.

Mobile: +91 98992 17778

Email: anil@ezybizindia.in

WhatsApp: Speak with Our Experts

Website: www.ezybizindia.in

Related Services

• India Market Entry Consulting
• India Market Entry Strategy
• Setting Up a Business in India
• Foreign Company Registration in India
• Wholly Owned Subsidiary in India
• Joint Venture Registration in India
• Manufacturing Setup in India
• China Plus One Strategy in India
• Global Capability Centre Setup in India
• FEMA and RBI Advisory Services

Official Resources

• Department for Promotion of Industry and Internal Trade, India
• Reserve Bank of India
• Ministry of Corporate Affairs, India
• Directorate General of Foreign Trade, India
• Department of Commerce, India
• Ministry of Industry and Trade, Vietnam
• Organisation for Economic Co-operation and Development

Reviewed By: CA Anil Agrawal, FCA, Founder, EzyBiz India Consulting LLP. Over 20 years of professional experience in India market entry, taxation, FEMA, regulatory compliance and cross-border business advisory.

Last Updated: November 2026

Disclaimer: This article provides general information comparing India and Vietnam as potential business expansion destinations. Foreign investment regulations, taxation, corporate structures, incentives, employment requirements, trade agreements and regulatory obligations depend on the investor, sector, jurisdiction, proposed activities and applicable law. Information relating to 2027 represents planning considerations based on information available at the time of review and is not a guarantee of future legal or commercial conditions. Businesses should verify current requirements with the relevant authorities and obtain appropriate professional advice before making investment decisions.