New Delhi, Oct 24 (IANS): The Union Cabinet on Wednesday approved a bilateral investment agreement between India and Taiwan that is expected top help project India as a preferred foreign direct investment destination to the East Asia.

"The Union Cabinet chaired by the Prime Minister Narendra Modi has approved the signing of Bilateral Investment Agreement (BIA) between India Taipei Association (ITA) in Taipei and Taipei Economic and Cultural Center (TECC) in India," an official statement said.

"The BIA is likely to increase investment flows between the parties," it stated.

"It will provide appropriate protection to investments on a reciprocal basis between ITA and TECC.

"BIA is likely to increase the comfort level and boost the confidence of investors by assuring a level playing field and non-discrimination in matters related to investments, thus providing conducive investment climate to investors."

India and Taiwan do not maintain formal diplomatic relations as Beijing claims Taiwan, officially called Republic of China, as a part of China.

Bilateral trade volume between Taiwan and India increased 27 per cent year-on-year to $6.4 billion in 2017, according to TECC Representative Tien Chung-Kwang.

Under Taiwanese President Tsai Ing-wen's New Southbound Policy (NSP) that looks to deepen the East Asian nation's relationships with South Asia, Southeast Asia, Australia and New Zealand, Taiwan boosted its external trade with these NSP countries by 15.61 per cent to $110.9 billion last year.