NEW DELHI - INDIA and South Korea have negotiated a free trade agreement that is likely to come into effect next year, a report said.

The agreement, concluded after two-and-a-half years of talks, comes as India has been aggressively courting its Asian neighbours to boost trade.

'The deal is done and the agreement will be signed by December,' a senior Commerce Ministry official told reporters late on Tuesday in New Delhi, according to the Press Trust of India.

'It will go to our cabinet (for approval) while the Koreans would need a nod from their National Assembly,' the unnamed Indian official said, adding the deal was likely to come into effect next year.

South Korea has also been vigorously courting bilateral trade deals to spur its export-driven economy.

The India-South Korea agreement would abolish duty barriers for 90 percent of goods traded between the two countries, amounting to 11.2-billion-dollars (S$16.8 billion) worth of bilateral commerce, the report said.

A recent study by the state-run Korea Institute for International Economic Policy has said the pact could boost two-way annual trade by as much as a third.

South Korea's key exports to India are automotive parts, petroleum products, synthetic resins, electrical goods and mobile phones.

India's largest export to South Korea is naphtha, a product used as feedstock for petrochemical firms, accounting for more than half of exports to the country in 2007.

In its drive to integrate with its eastern neighbours, India has already signed free trade pacts with Thailand and Singapore and is negotiating similar deals with Japan, the European Union and China.

India hopes by 2011 to have in place a free trade accord with the 10-member Association of Southeast Asian Nations (Asean) grouping Brunei, Vietnam, Indonesia, Thailand, Laos, Malaysia, Philippines, Singapore, Myanmar and Cambodia.

Eventually, New Delhi envisages an integrated market arcing from the Himalayas to the Pacific embracing Asean plus Japan, South Korea, India and China that would rival the European Union. -- AFP