Japan and India signed on Wednesday a bilateral free trade agreement that would abolish duties on more than 90% of trade for 10 years.
Japanese Foreign Minister Seiji Maehara and Indian Commerce and Industry Minister Anand Sharma concluded the pact in a ceremony at the foreign ministry in Tokyo.
The pact will "promote a strategic partnership between the two countries so that they can establish win-win relations and achieve growth", Maehara said.
Sharma said the pact "provides an overarching framework to promote our economic cooperation, both trade and investment, which will be rewarding for both India and Japan".
"We have noted in our mind that this will usher in a new era of economic engagement, which will bring development, innovation and also prosperity in both of our societies," he said.
The deal would eliminate tariffs on 90% of Japanese exports to India, such as auto parts and electric appliances, and 97% of imports from India, including agricultural and fisheries products, until 2021, the Japanese government said.
The two countries have been negotiating since January 2007.
Japan and India are also to continue talks on lifting employment restrictions to allow Indians to work in Japan as nurses and care givers. Japan, which is bracing itself for increasing health care requirements as its population ages, hopes to conclude the talks within two years, the government said.