Taipei, March 9 (DPA) Taiwan and India have begun to explore the possibility of signing a free trade agreement, a research agency said Wednesday.

India's ministry of foreign affairs and Taiwan's economics ministry have funded a joint pilot project, to be carried out by research agencies from each country.

The research would focus on the possibilities of easing bilateral trade restrictions, said Kristy Hsu, associate research fellow with Taiwan's Chung-Hua Institution for Economic Research.

Hsu said there was no target date for signing a trade agreement, but the study was scheduled to take two years.

"We want more Taiwanese investment in India," said Gautam Bambawale, joint secretary for East Asia of the Indian ministry of external affairs.

"I think most Taiwanese businesses, or businesses around the world, don't want to put all their investments in China," he said.

"They are looking around for other alternatives to put some of their investments. I think India is a good alternative."

Two-way trade between Taiwan and India totals $6.5 billion, according to the India-Taipei Association.

Taiwan is recognised by only 23 nations, and considered a breakaway province by China. Its trading partners have been put off signing trade agreements with it for fear of spoiling their own relations with Beijing.

But a trade deal with China in September, the Economic Cooperation Framework Agreement, has paved the way for Taipei to consider similar deals with other countries.

Formal free trade talks have been launched with Singapore, and exploratory talks are believed to be under way with several other nations.