India and New Zealand Forge New Trade Agreement: What It Means for Bilateral Relations

India and New Zealand have finalized a free trade agreement aimed at enhancing bilateral trade and investment. This agreement is expected to significantly reduce tariffs on a majority of exports, potentially increasing New Zealand's exports to India from USD 1.1 billion to USD 1.3 billion annually over the next two decades. The deal highlights the strong economic ties between the two nations, with India providing access to a vast consumer market. The agreement is set to benefit various sectors, including agriculture, textiles, and pharmaceuticals, while also emphasizing the importance of services trade in their relationship.

By Narendra Chaudhary Dec 22, 2025, 12:21 IST

New Trade Agreement Finalized

New Delhi: On Monday, India and New Zealand announced the successful conclusion of negotiations for a free trade agreement (FTA), aimed at enhancing trade in goods and investments between the two nations.

The discussions commenced in May of this year.

New Zealand's Prime Minister Christopher Luxon confirmed the completion of the FTA negotiations, which will significantly reduce or eliminate tariffs on 95% of New Zealand's exports to India.

Luxon projected that New Zealand's exports to India could rise from USD 1.1 billion to USD 1.3 billion annually over the next two decades, as he shared on social media.

He mentioned, "I just had a conversation with India's Prime Minister Narendra Modi regarding the conclusion of the NZ-India Free Trade Agreement. This agreement strengthens the already robust friendship between our nations. India is among the fastest-growing economies globally, providing Kiwi businesses access to 1.4 billion consumers in India."

In the fiscal year 2025, bilateral trade reached approximately USD 1.3 billion, with India exporting goods worth USD 711.1 million and importing USD 587.1 million.

New Zealand's average import tariff stands at just 2.3%, while India's is significantly higher at 17.8%. Notably, 58.3% of New Zealand's tariff lines are already duty-free.

India's exports to New Zealand are diverse, primarily focusing on fuels, textiles, and pharmaceuticals.

Leading the shipments was aviation turbine fuel (ATF) at USD 110.8 million, followed by clothing and textiles at USD 95.8 million.

Medicines accounted for USD 57.5 million, while machinery, including turbojets, contributed USD 51.8 million.

Petroleum products also featured prominently, with diesel exports reaching USD 47.8 million and petrol at USD 22.7 million.

Other significant exports included automobiles and parts (USD 19.3 million), paper products (USD 18.3 million), electronics (USD 16.5 million), iron and steel (USD 14.1 million), shrimps (USD 13.7 million), basmati rice (USD 11.9 million), and gold jewelry (USD 9.9 million).

Conversely, New Zealand's exports to India are largely composed of raw materials and agricultural products.

Wood and wood products accounted for USD 78.4 million, while wood pulp reached USD 39.8 million, highlighting connections in the paper and construction sectors.

Steel scrap exports totaled USD 71.2 million, and aluminium scrap reached USD 42.9 million, indicating India's reliance on recycled metal.

In the energy sector, coking coal exports amounted to USD 48.8 million, alongside high-value turbojets valued at USD 66.2 million.

Agricultural products also play a crucial role, with shorn wool (USD 47.3 million), milk albumin (USD 32.1 million), apples (USD 32.8 million), and kiwi fruit (USD 17 million) leading the way.

Services trade represents a vital aspect of the relationship, with India's services exports to New Zealand reaching USD 214.1 million in FY24, while New Zealand's services exports to India were USD 456.5 million.

India excels in IT and software services, telecommunications, healthcare, and financial services.

New Zealand's services exports are primarily driven by education, particularly from Indian students, along with tourism, fintech solutions, and specialized aviation training.