India and New Zealand have finalized a landmark Free Trade Agreement (FTA) expected to significantly boost bilateral trade and offer unprecedented access to each other's markets. Trade and Investment Minister Todd McClay announced the agreement, highlighting the opportunities it creates for New Zealand businesses to tap into India's vast consumer base of 1.4 billion people.
The FTA eliminates or reduces tariffs on 95% of New Zealand's exports to India. Almost 57% of exports will be duty-free from day one, increasing to 82% upon full implementation, with the remaining 13% subject to substantial tariff cuts. Immediate tariff elimination will apply to key exports such as sheep meat, wool, coal, and over 95% of forestry and wood products. High-value milk albumins will see a 50% tariff cut within a New Zealand-specific quota that aligns with current export volumes.
The agreement puts New Zealand exporters on par with, or even ahead of, their global competitors across various sectors, opening doors to India's rapidly growing middle class. New Zealand Prime Minister Christopher Luxon described the agreement as a crucial step in strengthening ties with India, particularly following his visit earlier in the year and multiple ministerial exchanges. Both countries anticipate signing the agreement in the first half of next year.
Beyond tariff reductions, the FTA includes chapters on customs processes, biosecurity standards, sustainable development, and cultural cooperation, as well as a Treaty of Waitangi clause. A "most favoured nation" clause ensures New Zealand will benefit from any future trade liberalizations India extends to other partners. In return, New Zealand will offer India up to 1667 three-year skilled work visas annually, focusing on priority sectors facing skills shortages, such as healthcare, education, ICT, and engineering. Immigration screening and qualification requirements will remain in place.
India's economy is projected to reach NZ$12 trillion by 2030. The agreement is expected to significantly accelerate progress towards New Zealand's goal of doubling the value of exports over 10 years. Two-way trade in 2024 totaled approximately $3.14 billion, with New Zealand exports accounting for about $718 million, primarily in sectors like wood and forestry. To ensure the agreement remains effective and relevant, both countries have agreed to a review one year after its entry into force, providing a mechanism for future improvements. The deal is expected to deliver thousands of jobs and billions of dollars in additional exports for New Zealand. Negotiations for the FTA began in March of this year and concluded after nine months.
