India and the Association of Southeast Asian Nations have signed a free trade agreement after more than six years of negotiations.
Indian Commerce Minister Anand Sharma and his counterparts from the Association of Southeast Asian Nations sealed the agreement in Bangkok Thursday. They met on the sidelines of the annual ASEAN Economic Ministers Meeting.
The agreement creates one of Asia's biggest trading areas and integrates India's fast growing economy with 10 of its neighbors.
Trade between India and ASEAN amounts to $40 billion each year. Under the pact, India and ASEAN will eliminate tariffs on various goods by 2016.
"India has got the market of 1.1 billion in population and ASEAN of 550 million," said Krisda Piempongsant, the spokesman of Thailand's Commerce Ministry, host of the meeting. "The size of the two combined will be much, much bigger than China, Japan and South Korea put together."
India has been playing catch up as other large economies in the region - China, Japan and South Korea - have already entered into agreements with ASEAN. Australia and New Zealand also have trade pacts with the grouping.
With these agreements, ASEAN stands at the center of what could become an even bigger free trade area, involving all six trading partners and ASEAN.
"All six countries are in one way or another have an FTA with ASEAN. The ASEAN plus six is a possibility," said Piempongsant.
The agreement comes at a time when global trade liberalization talks under the World Trade Organization have stalled, largely because of disputes between developed and developing nations over state subsidies on agriculture and trade in manufactured goods.
ASEAN comprises of Thailand, Singapore, the Philippines, Indonesia, Malaysia, Burma, Laos, Brunei, Vietnam and Cambodia.