Japan on Wednesday signed a bilateral free trade agreement (FTA) with India aimed at boosting trade between export-dependent Japan and rapidly-growing India.

Foreign Minister Seiji Maehara and Indian Commerce and Industry Minister Anand Sharma affirmed the agreement at a ceremony at the Foreign Ministry in Tokyo.

The bilateral accord, which will make Japan and India each other's largest free trade partner, will be endorsed in parliament promptly, Japanese officials said.

The two countries have been in discussions about the trade accord since 2007 and the final pact will scrap tariffs on 94 percent of goods within 10 years.

However, some of Japan's fiercely protected agricultural commodities, such as rice, wheat and some dairy products will be exempt from the tariff cut, officials said.

Analysts expect that the Japan-India FTA will pave the way for Japan to invest heavily in the development of rare-earth minerals, which are used in a vast number of products including mobile phones.

Foreign Ministry spokesperson Takeshi Matsunaga said that while the pact will not make reference specifically to rare earths, the deal could make it easier for Japanese companies to invest in developing India's rich natural resources.

"Diversifying the sources of rare earths and other natural resources is a major effort of the (Japanese) government," Matsunaga said.

The Indian trade minister floated the idea of setting up a 9 billion U.S. dollar revolving fund with Japan to help finance an industrial corridor. Such a move is believed to be a testament to India's resolve to enhance its infrastructure to cope with the demands of a rapidly growing economy.

Under the pact, the two countries will continue discussions over whether to allow Indian nationals to work in Japan as nurses and caregivers as Japan's population continues to shrink and age.

And regarding service trade, Delhi will relax its restrictions on Japanese investment in retailers and telecommunications.

The new pact with India is also a bid by Japan to catch up with South Korea, which is overtaking Japan when it comes to the number of global FTA agreements it has inked to enhance its own global competitiveness.