The recently concluded Free Trade Agreement (FTA) between India and New Zealand is poised to be a catalyst for increased trade and strengthened bilateral relations, according to Prime Minister Narendra Modi. The agreement, finalized in a record nine months, signals a strong political will from both nations to deepen economic ties and marks a "historic milestone" in their partnership.
Negotiations for the FTA began in March 2025 during New Zealand Prime Minister Christopher Luxon's visit to India. Both leaders have expressed confidence that the FTA will double bilateral trade within the next five years and facilitate a $20 billion investment from New Zealand in India over the next 15 years.
The FTA is expected to significantly deepen economic engagement, enhance market access, promote investment flows, and strengthen strategic cooperation between the two countries. It aims to create new opportunities for innovators, entrepreneurs, farmers, MSMEs, students, and youth across various sectors in both nations.
New Zealand is set to eliminate or reduce tariffs on 95% of its exports to India. Duty-free access will be granted immediately on almost 57% of New Zealand's exports, increasing to 82% upon full implementation, with remaining 13% subject to sharp tariff cuts. Key exports such as sheep meat, wool, coal, and over 95% of forestry and wood exports will have immediate tariff elimination. Most seafood exports, including mussels and salmon, will have duty-free access within seven years, while most iron, steel, and scrap aluminum will have it in 10 years or less. Duty-free access for most industrial products will be granted over five to ten years.
In return, New Zealand will provide an average of 1,667 three-year skilled work visas per year for Indian professionals, targeting priority roles in sectors facing skill shortages like healthcare, education, ICT, and engineering. An expanded Working Holiday Scheme will also provide up to 1,000 places annually to ensure adequate staffing in tourism and rural work sectors.
While the FTA is largely welcomed, there is some internal disagreement within New Zealand's coalition government. New Zealand First leader Winston Peters has voiced his opposition, calling the deal "neither free nor fair" and describing it as "quick", "low quality", and a "bad deal".
Despite these concerns, the Indian government has emphasized that it has protected the interests of its farmers and dairy producers during the negotiations. Concessions on imports of dairy, onions, sugar, spices, edible oils, and rubber were not made. Union Minister for Commerce Piyush Goyal stated that the government has been "sensitive in protecting interests" of farmers and dairy persons and that products like rice, wheat, and soya have not been opened up for access.
The agreement is expected to benefit labor-intensive sectors in India, such as apparel, leather, textiles, rubber, footwear, and home decor. It will also encourage exports of automobiles, auto components, machinery, electronic goods, electrical equipment, and pharmaceuticals. The temporary employment visas will also cover AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, alongside professionals in IT, engineering, healthcare, education, and construction, thus strengthening workforce mobility and services trade.
External Affairs Minister S. Jaishankar described the FTA as a landmark development that will significantly boost trade, investment, and economic cooperation. The FTA is expected to be signed in the first half of 2026.
