India and New Zealand Forge New Trade Agreement: What It Means for Both Nations
New Trade Agreement Set to Enhance Economic Ties
New Delhi: On Monday, India and New Zealand are set to finalize a free trade agreement (FTA) aimed at enhancing bilateral trade in goods and services while encouraging investment flows.
The agreement will take effect on a date mutually agreed upon by both nations.
Understanding the FTA:
A free trade agreement is a pact between two or more countries that aims to eliminate or significantly lower tariffs on a wide range of goods traded between them, while also reducing barriers that could impede trade and investment.
Overview of the India-New Zealand FTA:
Discussions for this agreement began in 2010 but faced delays, with negotiations stalling in 2015 after nine rounds. Talks resumed in March 2025, leading to the conclusion of negotiations on December 22, 2025, and the signing of the FTA scheduled for April 27, 2026.
The agreement encompasses 20 chapters, addressing various aspects such as trade in goods, rules of origin, services, customs procedures, and dispute resolution.
Advantages for India:
Under this agreement, Indian products, particularly from labor-intensive sectors like textiles, plastics, leather, and engineering, will enter New Zealand duty-free, where the average import tariff is only 2.3%.
New Zealand has pledged to invest USD 20 billion in India over the next 15 years.
India has also secured commitments in several high-value service sectors, including IT, education, finance, and tourism.
The FTA introduces a new Temporary Employment Entry Visa pathway for Indian professionals in skilled jobs, allowing for 5,000 visas at any time and a maximum stay of three years.
Additionally, Indian exports of wine and spirits will be duty-free, while New Zealand wines will enter India at reduced duties over a decade.
Advantages for New Zealand:
India has offered New Zealand market access on 70% of tariff lines, allowing duty-free entry for 54.11% of New Zealand's exports from day one of the FTA's implementation. This includes products like sheep meat, wool, and coal, which are expected to lower prices for Indian consumers.
Duty reductions will also apply to agricultural products such as apples and kiwifruit, with certain quotas and minimum import prices in place. Tariffs on seafood like mussels and salmon will be phased out over seven years.
Moreover, duties on various iron, steel, and scrap aluminum products will be eliminated within ten years.
Protection of Sensitive Goods:
To safeguard the interests of Indian farmers and small businesses, no duty concessions will be granted on sensitive sectors such as dairy, animal products, and certain vegetables.
The exclusion list includes dairy items, animal products (excluding sheep meat), and various agricultural products.
Investment Opportunities:
New Zealand aims to facilitate USD 20 billion in foreign direct investment into India over the next 15 years, a significant increase from the mere USD 89 million received from April 2000 to December 2025.
Strategic Importance for India:
This agreement enhances India's access to a high-income, rules-based market in the Pacific and aligns with its broader Indo-Pacific economic strategy. For New Zealand, it provides a secure entry into one of the fastest-growing economies amid global trade uncertainties.
The Indian diaspora in New Zealand, comprising over 300,000 individuals, serves as a vital link for trade and investment, with improved visa processes and lower education costs likely to boost service trade.
Bilateral Trade Overview:
In 2024-25, bilateral merchandise trade reached USD 1.3 billion, with India exporting USD 711.1 million and importing USD 587.13 million. Total trade in goods and services was approximately USD 2.4 billion, with services trade alone accounting for USD 1.24 billion, primarily driven by travel, IT, and business services.
India's exports include aviation fuel, pharmaceuticals, and machinery, while imports consist of wood products, iron and steel, and dairy items.