Seoul: India and South Korea signed a free trade deal on Friday that a minister said had the potential to nearly double the more than $15 billion in annual trade between Asia's third and fourth largest economies in the next decade.
It is the first such deal by India with a developed economy and South Korea's eighth free trade pact after it struck agreements to open up markets with the United States in 2007 and the European Union last month, both of which have yet to be implemented.
The deal requires ratification by South Korea's Parliament but can take effect without further steps by India, South Korea's trade ministry said.
"It has the potential even to double (trade) over...the next 10 years. That's what we'll be aiming at," India's Union Commerce and Industry Minister Anand Sharma told a joint news conference with South Korean Trade Minister Kim Jong-hoon.
The deal will eliminate tariffs on three quarters of India's imports from South Korea by value, and more than 80 per cent of South Korea's imports from India.
A study by the state-run Korea Institute for International Economic Policy said the pact could boost annual two-way trade by $3.3 billion in the near term and raise South Korea's GDP by 1.3 trillion won ($1.06 billion).
South Korea's main exports to India are automotive parts, petroleum products, and mobile phones. Its largest import from India is naphtha, accounting for more than half of imports in 2008.
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