"We already have the approval of the programme. We are taking it very shortly to the Cabinet and I hope that in a matter of weeks, we will have the approval of the Cabinet to initiate the work in the CLMV region," Commerce Secretary Rita Teaotia said here at a function.
She was speaking at the launch of the Commerce Ministry's report on "India's Strategy for Economic Integration with CLMV" prepared by think tank RIS.
In the Budget, Finance Minister Arun Jaitley had said that the 'Act East' policy of the government endeavours to cultivate extensive economic and strategic relations in South-East Asia.
"In order to catalyse investments from the Indian private sector in this region, a Project Development Company, through separate special purpose vehicles (SPVs), will set up manufacturing hubs in CMLV countries," Jaitley had said.
The SPVs would help domestic firms set up projects in CLMV countries.
India is focusing on these four countries as they are one of the fastest growing economies in the region and holds huge potential for investments. These nations have been transiting from central planning to the market economy.
Teaotia said that these nations have huge potential for Indian investors.
Issues like inadequate connectivity, telecommunication and banking facilities needs to be addressed by India and CLMV regions, she said.
Speaking at the occasion, Joint Secretary in the Commerce Ministry Ravi Capoor said that Indian companies can set up textile units in Vietnam through which Indian products can get access to markets of developed member countries, including the US and Canada. Vietnam is part of a major trade deal.
India's exports to CLMV countries grew 38 per cent to USD 6.4 billion in 2013-14, while imports from the region increased 4.2 per cent to USD 4 billion during the same year.
The CLMV countries cover about 32 per cent of the geographical area of the Association of South East Asian Nations (Asean) region and accounts for about 9 per cent of Asean's GDP.
Asean includes Vietnam, Laos, Singapore, Thailand, Brunei, Cambodia, Indonesia, Malaysia, Myanmar and the Philippines.
Teaotia said that for years "we used to look at trade in terms of exports of goods" but now the global situation is changing time and during such times India needs to talk about exports of investments and capital.
She said that regional economic integration has become very important and India needs to become part of that.
Vietnamese Ambassador to India Ton Sinh Thanh said that this is the right time for India to 'Act East and Act Fast'.
"We have huge potential in terms of market. CLMV is market of about 200 million people. This region is rich in natural resources. So lot of potential is there for cooperation with India," he said.
Thanh further said that presence of India in this region is still moderate compared to other countries and that is why "it is the time for India to take action. Not only Act East but Act Fast".
Later a Commerce Ministry statement said that 'India's Strategy for Economic Integration with CLMV' report provides a rationale for establishing commercial and economic linkages between India and the CLMV region.
Prime factors that make economic cooperation between India and CLMV plausible include geographical proximity, economic dynamism, and cheap labour cost in CLMV, among others.
"The ASEAN region is characterised by the presence of strong production networks and Regional Value Chains (RVCs). While India's participation in RVCs has remained low, RVCs are also not well developed in CLMV too, as compared to the rest of ASEAN," it said.
The report argues for adopting an integrated approach towards trade in goods, services, investment and skills, while identifying sectors with untapped potential complementarities.
The current level of economic linkages between India and CLMV, both in trade and FDI, are weak, it said adding that some major challenges confronting India-CLMV economic relations include information and communication gap, skill unavailability, banking and integrating SMEs.
There are several sectors such as agro-processing, oil and gas, pharmaceuticals, engineering, garments, automobiles, education, IT, SMEs, tourism and skill development where India and these four countries can enhance their cooperation.
The report finds that "one of the important ways of utilising the CLMV's economic space is by setting up manufacturing units in the region. This will help in accessing the Chinese markets through exports originating from CLMV under the China-ASEAN FTA".
Additional export expansion to the tune of USD 100 billion is feasible, which in turn can address the trade deficit of India with China, as estimated in the report, it added.