Malaysia and India are expecting an increase in bilateral trade after both signed the Comprehensive Economic Cooperation Agreement (CECA) on Friday.
The agreement, deemed a significant step forward to both economies, was signed in Putrajaya, Malaysia's federal administration center.
Taking effect July this year, the agreement would translate into freer movement of good, services and professionals between the two nations, while facilitating the cross-flow of investments.
It would also hike bilateral trade volume from 9 billion U.S. dollars in 2010 to at least 15 billion U.S. dollars by 2015. The Malaysia-India trade is expected to hit 10 billion U.S. dollars in 2011.
Indian Commerce and Industry Minister Anand Sharma and Malaysian International Trade and Industry Minister Mustapa Mohamed signed the agreement, with Malaysian Prime Minister Najib Razak as a witness.
Sharma told the press that the agreement would deepen India's relationship with Malaysia, giving a boost in their collaboration in infrastructure, information technology, biotechnology and professional services.
"The agreement we have is an ambitious one. It embraces services, investment, trade and takes care of the interests and concerns of both countries, opening up sectors we have strength and interest in.
"And no doubt this will help us achieve the modest targets that we have set for ourselves by 2015 for 15-billion-U.S.-dollar trade. I feel it is doable and it will happen sooner than that," said Sharma
On the other hand, Mustapa thought lower tariffs and India's strength in manufacturing and services would bring about higher foreign direct investment in Malaysia.
Exports from Malaysia include electronic products, palm oil, crude and chemical goods.
The Malaysia-India CECA is a free trade agreement that covers trade in goods and services, investment, as well as economic cooperation.
The negotiations that began in February 2008 had been put on pause after two rounds as both sides wanted to focus on completing the ASEAN-India Trade in Goods Agreement.
India had recently signed a bilateral pact with Japan.