It is the first deal by India with a developed economy and South Korea's eighth free trade deal after with United States in 2007 and the European Union last month.
South Korea's trade ministry said that the deal requires ratification by South Korea's Parliament but can effect without further steps by India.
In a joint news conference, India's Industry Minister Anand Sharma said, "It has the potential even to double (trade) over...the next 10 years. That's what we'll be aiming at."
The pact will eliminate tariff on three quarters of India's imports from South Korea by value, and more than 80 pc of South Korea's imports from India.
South Korea's main exports to India are automotive parts, petroleum products and mobile phones. Its largest import from India is naphtha, which accounts more than half of imports in 2008.