Canada and India have entered formal discussions for a comprehensive free trade pact.

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Indian Prime Minister Manmohan Singh met with Canadian Prime Minister Stephen Harper in June. ((Dave Chidley/Canadian Press))

In Seoul, South Korea, for the G20 summit, Prime Minister Stephen Harper announced that negotiations for an agreement that could be worth as much as $6 billion a year to both countries has begun.

"Our government is committed to opening new markets for Canadian goods and services," Harper said in a statement. "Today, I am pleased to announce that we have taken another step on that path by launching trade negotiations with India."

The two countries have flirted with a trade agreement for years, before stepping up efforts of late. No timetable has been set for negotiations, however.

In recent months, Canada has been active in trade negotiations, as it seeks to diversify away from the increasingly wobbly U.S. economy. Negotiators are in the midst of a trade pact with the European Union that they hope to complete next year.

As it stands, trade between Canada and India is fairly low (two-way trade hit a modest record of $4.2 billion in 2009) but India is one of the world's largest and fastest growing economies. The two countries also signed a nuclear pact in June.

"This is a key milestone in our relationship. It demonstrates our increasing co-operation," Harper said.

Canada's free trade history with Asia has been rocky. Free trade talks with South Korea have quietly died because of irreconcilable differences over cars and Canadian beef. Talks announced years ago with Singapore have gone nowhere.

With files from The Canadian Press