India's cabinet approved a new bilateral investment treaty (BIT) with Cambodia yesterday that is designed to provide mutual protections for investors of each company, the Indian government said in a press release.

The treaty, which has yet to be ratified by Cambodian authorities, is expected to improve the flow of bilateral trade and investment.

The announcement by the Indian government follows a Joint Commission Meeting in New Delhi last month in which foreign affairs officials from each country met to discuss issues of bilateral cooperation and investment.

Cambodia currently benefits from a Duty Free Tariff Preference (DFTP), which has facilitated faster growth of exports to India, according to the Embassy of India in Phnom Penh’s website.

Total trade between the two countries reached $160 million during the 2014-2015 fiscal year after 4.2 per cent year-on-year growth, according to the Indian Ministry of Commerce and Industry. During that period, Indian exports to Cambodia amounted to $142 million, while imports from Cambodia were $18 million.

India’s primary exports to Cambodia are pharmaceuticals, chemicals, cotton and rubber, according to a report by Indian trade promotion group EEPC, while its main import is non-ferrous metals.

Vallabhaneni Pundari Baba, CEO of Indian-owned pharmaceutical distibutor Telpha Ltd, said he has seen trade between India and Cambodia flourish.

“The proportion of trade between India and Cambodia is increasing in all sectors,” he said. “It is getting more diversified into industries such as services, electricals, infrastructure and construction and agriculture.”

He added that his company was growing annually as a result of its pharmaceutical exports to Cambodia.