India and South Korea will establish a strategic partnership, as both countries scale up their political and economic relationship. The decision was announced during a visit by the South Korean President to India.
On Tuesday, South Korean President Lee Myung-bak was the guest of honor at a parade held in New Delhi to mark India's 61st Republic Day. It is an honor India usually reserves for close allies.
Earlier, the South Korean leader said the decision by both countries to establish a strategic relationship is a "significant development," and will help peace and stability in Asia.
President Lee Myung-bak says South Korea is only the ninth country with which India is establishing a strategic partnership.
The decision to upgrade ties was announced after talks between the South Korean leader and Indian Prime Minister Manmohan Singh, Monday.
Both countries are exploring collaborating in a host of areas.
The South Korean president has offered to help India build nuclear power plants and will begin negotiations on a civil nuclear agreement. They will also look at the possibility of cooperation in the manufacture of defense equipment.
South Korea was a key country supporting the lifting of a three-decade embargo on civil nuclear trade with India.
Both countries have set a goal of doubling trade by 2014 to $30 billion. Many South Korean companies already have a significant presence in India and are scaling up investments to benefit from India's huge domestic market.
The South Korean president's visit to the country is weeks after a free-trade agreement between the two countries came into force. South Korea is the second Asian country, after Singapore, with which India has signed a free-trade pact.
President Lee says the agreement underscores his country's desire to build closer economic ties with India.
Indian Commerce Minister Anand Sharma says the growing economic ties between the two countries will help in the integration of Asia.
"We view this as an important requirement," he said. "Though the regional economic communities have come up, but - unlike Americas and Europe - Asia still has to catch up when it comes to economic integration."
Several Asian economies, such as India and South Korea, have been relatively less affected by the global economic slowdown. As their traditional markets in the West may take longer to revive from the slowdown, they are looking to expand trade in the region to keep their economies humming. India and South Korea are Asia's third and fourth largest economies - behind China.