Scrapping of tariffs
Bashir said that the two sides had completed negotiations on the deal in "record short time" since starting in August 2005.
"The agreement will cut tariffs to zero on hundreds of items for import and export between the two countries," he said.
Free trade talks began after Wen Jiabao, the Chinese premier met with Shaukat Aziz, the Pakistani prime minister, on a visit to Islamabad in April 2005.
China is currently holding free trade talks with 27 nations and regions including Singapore, Australia, New Zealand and the 10-member Association of Southeast Asian Nations (ASEAN).
Hu underscored that trade and business ties will be the "growth engine" for bilateral relations between China and India, and called on the two Asian giants to boost trade and investment to levels more compatible with the sizes of their economies.
The Chinese premier unfolded a five-point roadmap to achieve this, including expanding and upgrading trade and economic co-operation, strengthening focus on key areas like energy, infrastructure and information technology, and combining to explore opportunities in other countries.
Calling for a liberalised trade environment, the Chinese president said the "basic conditions" for free trade between the two countries were already in place.
The two countries have started a joint feasibility study on a regional free trade agreement which is expected to submit its report by October 2007.
Hu described India a "sincere friend and partner", and called on both Chinese and Indian enterprises to achieve the bilateral trade target.