India and New Zealand have formalized a free trade agreement (FTA) that is expected to bring a US$20 billion Foreign Direct Investment (FDI) commitment from New Zealand to India over the next 15 years. The agreement, finalized after nine months of negotiations, aims to significantly boost economic ties between the two nations.
Under the terms of the FTA, India will receive zero-duty access for all of its exports to New Zealand. In return, India will be cutting tariffs on 70% of its tariff lines, covering 95% of New Zealand-India bilateral trade. This comprehensive trade liberalization is expected to create new opportunities for businesses in both countries.
A key component of the agreement is New Zealand's commitment to increase FDI in India to $20 billion over the next 15 years. This investment is intended to support manufacturing, infrastructure, and services in India, with the goal of creating jobs and supporting India's economic growth vision. To ensure this investment target is met, the FTA includes a "rebalancing mechanism" that allows for the suspension of FTA benefits if the investment does not materialize as planned. Currently, New Zealand's cumulative FDI into India stands at approximately $9 million between 2000 and 2025, marking a substantial increase promised by the new agreement.
The FTA extends beyond tariff reductions to include cooperation on pharmaceuticals and medical devices, enabling mutual recognition of major regulatory inspections, which is expected to reduce compliance barriers and speed up product approvals. There are also enhancements regarding Geographical Indications (GIs), with New Zealand set to amend its laws to facilitate broader product registration rights. The agreement also includes disciplines on Sanitary and Phytosanitary (SPS) measures, Technical Barriers to Trade (TBT), and customs and regulatory transparency and streamlining. These measures aim to ensure that tariff cuts translate into real market access gains for businesses.
For Indian exporters, the FTA eliminates duties of up to 10% that previously applied to nearly 450 lines of key exports, including textiles, apparel, leather products, footwear, carpets, ceramics, automobiles, auto components, engineering goods, pharmaceuticals, plastics, rubber, chemicals, and electrical machinery. Agricultural exports from India, such as fruits, vegetables, coffee, spices, cereals, and processed foods, will also benefit from the elimination of duties.
India has secured tariff rate quotas (TRQs) for sensitive agricultural imports like apples, kiwifruit, Manuka honey, and milk albumin, combined with minimum import prices and seasonal restrictions. These TRQs are linked to dedicated agri-technology action plans, focusing on productivity enhancement, farmer capacity building, post-harvest practices, and food safety, overseen by a Joint Agriculture Productivity Council, ensuring consumer choice while safeguarding domestic farmers.
New Zealand has extended its most ambitious services and mobility offer to India, covering 118 services sectors with MFN treatment in 139 sub-sectors. Notably, India is the first country with which New Zealand has signed annexes on health and traditional medicine services and student mobility. Indian students will benefit from no numerical caps, guaranteed 20 hours per week work rights, and extended post-study work visas. A new temporary employment pathway provides 5,000 visas for skilled Indian professionals in IT, engineering, healthcare, education, construction, and iconic Indian occupations such as AYUSH practitioners, yoga instructors, chefs, and music teachers. Additionally, 1,000 young Indians annually will receive multiple-entry working holiday visas.
This FTA marks India's seventh such agreement in recent years, following deals with Oman, the UK, the EFTA countries, the UAE, Australia, and Mauritius. The agreement is expected to deepen India's footprint in New Zealand and the wider Oceania region, strengthening bilateral cooperation in the Indo-Pacific economic landscape.
