New Delhi: India and New Zealand have recently signed a significant free trade agreement (FTA), marking an important step in their economic relationship. This deal allows Indian exports to enter New Zealand without any duties. In return, India will gradually reduce tariffs on about 70% of its imports from New Zealand.
Sectors like textiles, leather, and processed foods are likely to see immediate benefits. However, sensitive areas such as dairy and certain agricultural products remain safeguarded. The agreement also focuses heavily on services, giving Indian professionals and startups expanded access to various fields in New Zealand.
Beyond just trade, the FTA promotes mobility and investment. It opens pathways for skilled workers and students, including post-study work opportunities and specific visa quotas. Collaboration in agriculture, technology, and traditional practices like Ayurveda is part of the agreement’s broader goals.
The proposed $20 billion investment pipeline highlights long-term ambitions to deepen ties between the two countries. Prime Minister Narendra Modi noted that this FTA could boost exports, support small and medium enterprises (MSMEs), and enhance opportunities for education and investment.
Importance of the FTA
The agreement was signed in a ceremony attended by India’s Commerce Minister Piyush Goyal and New Zealand’s Trade Minister Todd McClay. It’s set to be ratified by both governments within about six months. This FTA is India’s seventh signed in the last five years, joining agreements with countries like the UAE and Australia. Talks for the India-New Zealand FTA began back in 2010, but progress stalled until they resumed in early 2025.
Tariff Adjustments
A key aspect of the FTA is the difference in tariffs. New Zealand’s average import tariff is just 2.3%, while India’s stands at 16.2%. Interestingly, 58.3% of New Zealand’s tariff lines are already duty-free. Under the new agreement, New Zealand pledges to eliminate tariffs on all its export lines, benefiting Indian exports like textiles, engineering goods, and leather goods. Meanwhile, India will cover about 95% of New Zealand’s trade volume with its 70% tariff reduction, encompassing items like wool and coal. However, sensitive sectors like dairy, sugar, and certain agricultural products are carefully protected.
Strategic Perspective
Current trade between India and New Zealand is modest, around $2.1 billion in 2025. Yet, this FTA is more than just a trade agreement; it paves the way for deeper strategic cooperation. Experts suggest that this could enhance India’s access to a valuable Pacific market, while New Zealand benefits from entering one of the fastest-growing economies. The success of the FTA will depend on both countries’ ability to follow through on the promises made and strengthen supply chains across various sectors.
Moreover, New Zealand’s Indian diaspora—around 300,000 strong—can act as a vital link for expanding trade and investment opportunities. Simplified visa processes and direct flights could further enhance these connections.
Reactions from Experts
Industry leaders have voiced optimism about the agreement. Pankaj Chadha, chairman of the Engineering Export Promotion Council, stated that this FTA could provide new opportunities for the engineering sector, especially for MSMEs. He noted the growth in exports of automobiles and machinery, which are well positioned to thrive under the new trade terms.
Mohit Singla, chairman of the Trade Promotion Council, emphasized that lower tariffs will enable Indian exporters to compete more effectively in New Zealand’s market, particularly in high-growth sectors like organic foods. Similarly, Kirit Bhansali from the Gem and Jewellery Export Promotion Council anticipates significant growth in gems and jewellery exports under the FTA, potentially reaching nearly $50 million in just three years.
In a world with increasing economic uncertainties, such agreements help diversify markets. The India-New Zealand FTA, along with similar agreements, illustrates India’s strategy to strengthen its global trading relationships.
This agreement holds promise not only for trade but also for strengthening bonds between two countries, fostering an environment of mutual growth and opportunity.
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