India and a group of Southeast Asian nations signed a free trade pact Thursday that slashes tariffs on goods and aims to boost the US$40 billion in annual trade between the two regions, India’s Ministry of Commerce said.

The agreement, which takes effect Jan. 1, 2010, will gradually eliminate tariffs on 80 percent of traded goods. Agreements covering trade in services – crucial for India’s large information technology sector – and investment should be concluded by December, the Ministry of Commerce said in a statement.

Trade between the two regions has grown an average of 27 percent a year, compounded, since 2000, reaching $40 billion last fiscal year. It is expected to grow to $60 billion by 2016, according to Thai Commerce Minister Pornthiva Nakasai.

The ten nations that make up the Association of Southeast Asian Nations, or ASEAN, account for 10 percent of India’s global trade and are India’s fourth-largest trading partner, after the European Union, the United States and China, the ministry said.

The agreement “comes at an opportune time as part of the region’s response over the growing concern of a global economic and financial crisis,” the bloc said in a statement. (The Jakarta Post)