In a landmark move poised to reshape trade relations, Prime Minister Narendra Modi and Prime Minister Christopher Luxon have announced the successful conclusion of negotiations for the India-New Zealand Free Trade Agreement (FTA). Trade Minister Todd McClay confirmed the deal, stating that both countries expect to sign the agreement in the first half of next year.

The agreement, finalized earlier in December, had been awaiting Indian Prime Minister Narendra Modi's return to the country to convene a special cabinet meeting to approve the deal. Negotiations for the FTA commenced in March of this year and concluded after nine months of intensive discussions.

This "historic Agreement" is expected to provide unprecedented access for New Zealand exporters to India's 1.4 billion consumers. The FTA eliminates or reduces tariffs on 95% of New Zealand's exports to India, placing New Zealand exporters on par with, or in a better position than their competitors across various sectors while opening doors to India's rapidly expanding middle class.

Under the agreement, almost 57% of New Zealand's exports will be duty-free from day one, increasing to 82% upon full implementation, with the remaining 13% subject to significant tariff cuts. Immediate tariff elimination will be applied to sheep meat, wool, coal, and over 95% of forestry and wood exports.

New Zealand will have duty-free access for a large kiwifruit quota, nearly four times the current export volume, a world-first. A 50% tariff will be applied outside the quota. For the first time in an FTA, India has agreed to preferential market access for apples and mānuka honey.

The FTA also encompasses broad services coverage, building upon India's WTO commitments, focusing on financial services, e-payments, and FinTech, and includes a Most Favored Nation (MFN) clause to future-proof services trade. New Zealand will offer three-year visas to occupations on tiers one and two of the green list of skill shortages, with 1667 visas a year offered, which will be non-renewable and not offer a right to remain. The government will also expand the post-study work rights of some visas. Up to 1000 places would also be provided on New Zealand's Working Holiday Scheme, matching Australia's FTA with India.

India's economy is forecast to grow to NZ$12 trillion by 2030, and this 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 was about $3.14b, with New Zealand exports making up about $718m of that - primarily in .

The agreement includes chapters on customs processes, biosecurity standards, sustainable development and cultural cooperation, as well as a Treaty of Waitangi clause. Both countries have agreed to review the agreement one year after it comes into force.

While the agreement has been lauded as a major achievement, some concerns remain, particularly regarding access to the Indian dairy market. India is known to be protective of its domestic dairy sector, and the FTA does not significantly increase access for New Zealand dairy exports. NZ First has expressed that the access is not enough and has told the rest of Cabinet that it will vote against any enabling legislation if and when.

Despite these concerns, the New Zealand government maintains that this deal provides the best access of any Indian FTA, exceeding the access provided in recent agreements with Australia and the United Kingdom. Christopher Luxon had made getting a trade deal with India a key commitment during the 2023 campaign. He accused the prior Labour Government of neglecting India.