India and the 10-country South East Asian bloc Asean have signed a free trade agreement after more than six years of talks.
Tariffs on electronics, chemicals, machinery and textiles will be reduced and eventually eliminated.
These products make up 80% of goods traded between India and Asean.
But India has been allowed to continue protecting its farm sector, and has excluded 489 products, including rubber, from the trade deal.
Computer software and information technology are also exempt.
A smaller list of products, described as "highly sensitive", such as palm oil and coffee, will see tariffs reduced over about 10 years, but only modestly.
The deal was signed in Bangkok at a meeting of economic ministers of the Association of South East Asian Nations - made up of Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.
Asean is India's fourth-largest trading partner. The value of trade between the two was $47bn (£28bn) in 2008.
Secretary-general of the Federation of Indian Chambers of Commerce and Industry, Amit Mitra, said the agreement, which comes into effect form January next year, was "a win-win for both sides".
"Our minds have met. Of course, a few will lose, but many more will gain."