AIMING TO double bilateral trade over the next five years, India and New Zealand Monday announced the conclusion of negotiations on a free trade agreement. Bilateral trade between the countries in 2024-25 was $1.3 billion.
Officials in New Delhi said while talks have concluded, the deal is expected to be signed in 2-3 months after “legal scrubbing”, a process where lawyers and trade experts from both sides finalise the agreement’s text. The implementation itself could take over six months once it is passed by the New Zealand Parliament. In India, the Cabinet has already given the deal a green light.
In a post on X, Prime Minister Narendra Modi said, “Concluded in just nine months, this historic milestone reflects a strong political will and shared ambition to deepen economic ties between our two countries… The India-NZ partnership is going to scale newer heights. The FTA sets the stage for doubling bilateral trade in the coming 5 years.”
Formal negotiations on the FTA had commenced on March 16 this year when New Zealand Prime Minister Christopher Luxon met Modi in New Delhi.
Describing the FTA as a “big deal”, Luxon said boosting trade would translate into more jobs, higher wages, and expanded opportunities for businesses. He also highlighted India’s scale and growth trajectory, noting that the agreement provides New Zealand exporters improved access to a market of over 1.4 billion consumers.
Describing the FTA as a “big deal”, Luxon said boosting trade would translate into more jobs, higher wages, and expanded opportunities for businesses.
Details released by the government showed that New Delhi has agreed to reduce tariffs on 95 per cent of products exported from New Zealand. Wellington would eliminate tariffs on 100 per cent of its tariff lines for all Indian exports. This alone may not result in immediate export growth since average tariffs in New Zealand are one of the lowest in the world, at about 2.3 per cent.
Bringing some parity into the deal, New Zealand has “committed” $20 billion investments into India over the next 15 years in exchange for receiving market access in a high-tariff (over 15 per cent) and fast-growing Indian consumer market. The lopsided nature of the tariff rates could result in higher gains for New Zealand than for India in goods trade, experts said.
ExplainedDiversifying exports
At a time when a bilateral trade agreement between India and its biggest export destination, the US, remains stuck, New Delhi has managed to conclude talks with New Zealand in a record nine months. So far this year, it has signed two deals, one with Oman last Thursday, and another with the UK in May.
The FTA removes numerical caps on Indian students, guarantees a minimum of 20 hours per week work during study, and provides extended post-study work opportunities-up to three years for STEM Bachelor’s and Master’s graduates, and up to four years for Doctorate holders-creating clear pathways for skills development and global careers, the ministry said. “For the first time with any country, New Zealand has created a dedicated pathway for student mobility and post-study work visas with India,” the Commerce and Industry Ministry said.
“The FTA establishes a new Temporary Employment Entry (TEE) Visa pathway for Indian professionals in skilled occupations, with a quota of 5,000 visas at any given time and a stay of up to three years. This pathway covers Indian professions such as AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, as well as high-demand sectors including IT, engineering, healthcare, education, and construction, strengthening skilled workforce mobility and services trade,” the ministry said.
In New Zealand, while Prime Minister Luxon said the deal reduces or eliminates tariffs on almost 95 per cent of his country’s exports, Foreign Minister Winston Peters said it was “neither free nor fair”. “Regrettably, this is a bad deal for New Zealand. It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy. New Zealand First urged its coalition partner not to rush into concluding a low-quality deal with India, and to use all three years of this Parliamentary cycle in order to get the best possible deal. We also indicated we felt it would be unwise for National to sign up to a deal with India when a Parliamentary majority for that deal was uncertain,” Peters said.
He said these concerns have been conveyed to Indian External Affairs Minister S Jaishankar.
Commerce Minister Piyush Goyal said, “This FTA opens doors for Indian businesses in the region through well-integrated directional exports and gives our youth choices to learn, work and grow on a global stage”.
Commerce Secretary Rajesh Agrawal, said, “India’s strengths are expanding exports, supporting labour-intensive growth and power services. New Zealand gains deeper, more predictable access to India’s large and growing economy. The movement of people, students, professionals, and skilled workers converges these strengths.”
Apart from tariff liberalisation, the FTA includes provisions to address non-tariff barriers through enhanced regulatory cooperation, transparency, and streamlined customs, sanitary and phyto-sanitary (SPS) measures and technical Barriers to trade disciplines, the Commerce and Industry Ministry said.
“All systemic facilitations and fast-track mechanisms for imports that serve as inputs for our manufactured exports ensure that tariff concessions translate into effective and meaningful market access,” it said. Cooperation has been agreed in AYUSH, culture, fisheries, tourism, forestry, horticulture and traditional knowledge systems, it sai
“Tariff asymmetry has shaped the deal. New Zealand’s average import tariff is just 2.3 per cent, compared with India’s 16.2 per cent, and 58.3 per cent of New Zealand’s tariff lines are already duty-free. As a result, Indian exporters already enjoy wide access in New Zealand markets,” former trade officer and founder of think tank GTRI, Ajay Srivastava said.
Srivastava said an FTA alone is unlikely to unlock the full potential of India–New Zealand economic ties, as trade volumes remain modest. Business groups on both sides say the pact must be backed by practical steps to deepen commercial links. New Zealand could expand dairy and horticulture exports to India even at MFN (Most Favoured Nation) tariffs, while India could scale up exports of pharmaceuticals, textiles and IT services to New Zealand, he said.
“For India, the agreement strengthens access to a high-income, rules-based Pacific market and supports its broader Indo-Pacific economic strategy. For New Zealand, the deal offers more secure entry into one of the world’s fastest-growing large economies at a time of rising global trade uncertainty. New Zealand could expand dairy and horticulture exports to India even at MFN tariffs, while India could scale up exports of pharmaceuticals, textiles and IT services to New Zealand. Wellington could also diversify by growing education, tourism and aviation training services for Indian students and professionals,” Srivastava said.
In a statement, the Ministry of External Affairs (MEA) said the two leaders agreed that the conclusion of the FTA in a record nine months reflects their shared ambition and political will to deepen ties between the two countries further.
In trade deal
- Zero-duty market access on 100% of India’s exports. India has offered tariff liberalisation in 70% lines covering 95% of New Zealand-India Bilateral trade.
- Quota of temporary employment visa for 5,000 professionals and 1,000 work and holiday visas.
- Despite New Zealand being one of the largest exporters of dairy products, India has kept dairy in the exclusion list.
As part of deal, New Zealand commits $20 bn investment over 15 years 
Describing the FTA as a “big deal”, Luxon said boosting trade would translate into more jobs, higher wages, and expanded opportunities for businesses.
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