New Delhi: India and New Zealand on Monday said they have concluded talks on a free trade deal that will give India tariff-free access to the island nation’s markets, bring in USD 20 billion of investment over the next 15 years, and help double bilateral trade in the next five years.
The third free-trade agreement this year, following a similar pact with the UK in July and another with Oman earlier this month, will give India more temporary employment visas, easier access for pharmaceuticals and medical devices.
While the agreement will eliminate or reduce tariffs on 95 per cent of New Zealand’s exports of items ranging from wool, coal, wood, wine, to avocados and blueberries to India, New Delhi made no concessions on allowing imports of dairy, onions, sugar, spices, edible oils and rubber to protect farmers and the domestic industry.
Currently, New Zealand’s cumulative FDI into India stands at around $9 million from 2000-2025.
“Prime Minister Narendra Modi held a telephone conversation with the Prime Minister of New Zealand, Christopher Luxon, today. The two leaders jointly announced the successful conclusion of the historic, ambitious and mutually beneficial India–New Zealand Free Trade Agreement (FTA),” according to an official statement released by the Prime Minister’s Office on Monday.
Once signed, the agreement will mark India’s seventh trade agreement since 2021 and a part of New Delhi’s diversification strategy, at a time when global trade is up for a major reset.
The deal will be signed in the next two to three months after the legal scrubbing of the text is concluded. Since New Zealand will need Parliamentary approval, officials expect the FTA to come into effect in the next six to seven months.
The elimination of tariffs will provide duty-free access for all Indian exports and will boost the competitiveness of India’s labour-intensive sectors, including textiles, apparel, leather, footwear, and marine products, among others.
According to commerce department officials, the FTA delivers India’s “most ambitious” services offer in any of its FTAs till date. The deal will open skilled employment pathways through a new temporary entry visa 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.
Considering India’s sensitivities, items like dairy and some other agricultural products have been excluded from the deal. In the case of items such as wine, lamb, and wool, India has made an offer that is similar to what it had offered under the interim trade pact with Australia.
Tariff rate quota-based market access has been offered to items such as manuka honey, kiwi, apples, and albumins, including milk albumins.
Bilateral merchandise trade reached $1.3 billion in FY25. Total trade in goods and services stood at around $2.4 billion in 2024, with services trade at $1.24 billion.
Government officials said that the FTA will be beneficial for Indian companies to gain a foothold not only in New Zealand, but also the Pacific Island Countries as a whole.
By 2045, New Zealand could be at least 250,000 workers short, threatening the sustainability of pensions and healthcare. The deal is an opportunity for India to position itself as a key supplier of skilled/semi-skilled workers to New Zealand, they said.
