India and South Korea has announced that the two nations have settled their differences over signing a free trade agreement (FTA) in goods, services and investment and have agreed to sign the pact by end of the year, reports agency sources.

Issues were resolved after several rounds of negotiations for the Comprehensive Economic Partnership Agreement (CEPA) which had begun in 2006.

The solution was found in the current round of talks, which were held in Seoul on September 22-25. Commerce Secretary G K Pillai led the negotiating team from India.

``India and Korea have resolved outstanding issues in the negotiations. The agreement is expected to be signed by end of this year and would come into effect from first half of next year on a mutually agreed date,`` an official release said.

The two sides expect to finalise the formal text of the agreement by the end of next month.

Bilateral trade has been growing at an average 27% over the last three years and was USD 11.2 billion in 2007.