Opinion Trade deal with New Zealand is much needed

The last few years have witnessed a welcome embrace of free trade agreements by the Indian government. Within this year, three trade deals have been wrapped up — one with the UK, another with Oman a few days ago, and now negotiations have concluded with New Zealand. The India-EFTA trade agreement (it includes the countries of Iceland, Liechtenstein, Norway and Switzerland), which was signed in March last year, also took effect on October 1. These agreements, which come after similar deals were signed earlier with the UAE and Australia, signal the desire to seek greater integration with global markets.

The India-New Zealand agreement provides for duty-free access for all Indian exports. Alongside, India has also received commitments in areas such as IT services, education, and financial services. Pathways for skilled employment have been opened through a new facility for Temporary Employment Entry Visas. For New Zealand, the deal offers tariff liberalisation on 70 per cent of lines that cover 95 per cent of bilateral trade. However, given the political sensitivities, Delhi has ensured that market access excludes dairy products. The agriculture and allied activities sector has also been a major sticking point in India’s trade talks with other countries such as the US. The India-New Zealand agreement, in addition to addressing tariffs, also looks at tackling non-tariff barriers “through enhanced regulatory cooperation, transparency, and streamlined customs, sanitary and phyto-sanitary measures”. This is a critical element of trade agreements as it leads to “meaningful market access”. Alongside, the two countries have sought to deepen their investment relationship, with New Zealand agreeing to facilitate investments of $20 billion into India over the coming decade and a half.

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In addition to these trade deals, Delhi is also in talks for entering into similar agreements with countries like Israel and Peru. This is welcome as FTAs will only improve market access for Indian exports. However, the gains from some of these trade deals are likely to be limited considering the size of the economies. Thus, alongside, the focus should also be on sealing the long-pending agreements with the largest markets in the world, the US and EU.