The approval to the agreement was given at a meeting of the Indian cabinet here on Thursday night.

Briefing reporters after the meeting, Information and Broadcasting Minister Priyanranjan Dasmunsi said as an interim measure, a limited scope agreement would be concluded between India and the five-nation Sacu, providing for exchange of tariff concessions on a selected list of products for both sides.

Sacu comprises South Africa, Namibia, Botswana, Swaziland and Lesotho.

The trade pact assumes significance in view of renewed thrust on regional trade arrangements following the failure of negotiations on global free trade at the World Trade Organisation in Geneva last week.

India's major exports to Sacu are cereals, primary and semi-finished iron and steel, transport equipment, machinery and instruments, pharmaceuticals, articles of apparel and clothing accessories, natural or cultured pearls, precious or semi-precious stones, gems and jewellery.

India imports from Sacu gold, iron and steel, organic and inorganic chemicals, metal scraps, pulp and water paper.

Officials here said the failure of WTO trade talks in Geneva and bleak prospects of multilateral trade liberalisation in near future are likely to lead to a rush of bilateral and regional FTAs.

India is considering a trilateral free trade agreement (FTA) with Sacu and Mercosur countries of Latin America including Argentina, Brazil, Uruguay and Paraguay. This is being pushed by the joint forum set up by India, Brazil and South Africa.

New Delhi is also expected to pursue aggressively other trade accords with regional forums like Asean, Safta (South Asia Free Trade Area), Gulf Cooperation Council, Mercosur besides countries like Japan, Thailand and Mauritius.

The FTA with Asean (Association of Southeast Asian Nations) has run into trouble following the Asean's objections to India's restricting the negative list of imports to 854 items from the original list of 1,454.

Asean says 854 items on the negative list account for some 30 percent of Southeast Asian countries' exports to India and wants this list to be drastically cut to around 60 items, which India has rejected.

Indian commerce ministry officials say New Delhi's options are limited as it cannot liberalise import of its sensitive agriculture items, including palm oil, pepper, tea and coffee, which form majority of the 854 items placed on the negative list for FTA with Asean.

Malaysia and Indonesia, which want to export palm oil to India duty-free, has rejected India's compromise offer of permitting the same through Tariff Quota Restriction.

Trade officials of India and Asean are likely to meet in Kuala Lumpur next month when New Delhi could offer another compromise solution by offering phased cut in import tariffs of sensitive items.