The return of 2000-year-old stone statue of Buddha is expected to help smooth the way for a free trade agreement with India by the end of the year.

The Times of India says the Australian government told Indian authorities the National Gallery of Australia will soon return the statue where it will join two other statues, including the Dancing Shiva, a 900-year old bronze deity that had been stolen from an Indian temple.

Trade Minister Andrew Robb leads a trade mission to India on Friday. Credit:Alex Ellinghausen

The gallery purchased the seated stone Buddha in 2007 with the assistance of Roslyn Packer, the widow of the late Kerry Packer.

It was bought from a New York antiquities dealer for more than $1 million, and and is believed to have been looted from an Indian archaeological site.