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The pact would also enhance the current USD 9 billion trade to USD 15 billion by 2015 as both the countries would slash or eliminate duties on about 90 per cent of goods traded between the countries, and smoothen investment flows.
"Sectors such as accounting and auditing, architecture, urban planning, engineering, medical, dental, IT, management consultant services would get Malaysian market access," an Indian Commerce Ministry statement said.
The India-Malaysia Comprehensive Economic Cooperation Agreement (CECA) also has provisions to form joint ventures between the companies of both the nations in sectors such as healthcare, telecommunications, retail and environment.
When the pact will come into force from July 1, Indian mangoes, banana, guava, cotton, motorcycles, trucks and basmati rice will attract less duty in Malaysia, among other things.
As a quid pro quo, the Southeast Asian nation will face less barriers on the sale of its fruit, engineering goods and chemicals while exporting them to India.
On Wednesday, India had signed a similar pact with Japan.
This CECA is in addition to the Free Trade Agreement (FTA) India has with ASEAN, of which Malaysia is a key member.
India and Association of Southeast Asian Nations (ASEAN) implemented the FTA in goods in January last year.
"CECA has value-added to the existing ASEAN-India trade in goods agreement by subjecting more products to tariff concessions and advancing the timelines for reduction/elimination of tariffs," a statement from the Malaysian government said.
Apex body of Indian exporters FIEO said that there is a huge potential to enhance trade with Malaysia as it accounts for just 1.72 per cent of India`s trade.
Under the pact, Malaysia has also offered comparatively higher level of FDI in key sectors of interest to India such as construction services (51 per cent), computer and related services (100 per cent), management and consultancy services (100 per cent).
Malaysia is the third largest trading partner of India among the ASEAN.
ASEAN and India are also engaged in negotiations to include services and investments trade liberalisation in their existing FTA.
The pacts with Japan and Malaysia assume significance as they are in line with India`s `look east policy`, aimed at reducing its dependence on western markets for trade and investment.
