The recently finalized Free Trade Agreement (FTA) between India and New Zealand is expected to boost India's export diversification and attract significant investments, particularly in agriculture and infrastructure, according to experts. The agreement, concluded after nine months of negotiations that began in March 2025, aims to double bilateral trade in goods and services within five years. The FTA is expected to be formally signed in the first half of 2026.
Under the terms of the agreement, India will receive tariff-free access for all its goods to New Zealand. Wellington, in turn, will receive duty concessions and market access for about 70% of New Delhi's tariff lines, covering 95% of its exports in a phased manner. Specifically, tariffs will be eliminated or reduced on 95% of New Zealand's exports to India. Around 57% of exports will be duty-free when the deal takes effect, rising to 82% once fully implemented, with the remaining 13% seeing significant tariff cuts.
The FTA is expected to enhance the competitiveness of Indian products and boost employment-generating sectors. Key sectors in India that will benefit from tax-free exports include textiles, apparel, engineering goods, leather and footwear, and marine products. New Zealand's major gains will be in horticulture, wood exports, and sheep wool. New Zealand has committed to investments worth $20 billion in India over 15 years as part of the agreement. These investments will be directed towards manufacturing, infrastructure, services, innovation, and employment generation in India, aligning with the "Make in India" initiative.
While India has offered tariff liberalization in 70% of lines covering 95% of New Zealand-India bilateral trade, it has also protected sensitive sectors. Dairy imports such as milk, cream, yogurt, and cheese, along with certain animal and vegetable products, including goat meat, onions, and almonds, have been excluded from the deal, citing "domestic sensitivities".
The agreement also addresses workforce mobility, with New Zealand set to issue 5,000 temporary work visas every year for Indian professionals, allowing stays of up to three years. In addition, there will be a quota of 1,000 work and holiday visas.
Experts note that the FTA strengthens India's access to a high-income, rules-based Pacific market and supports its broader Indo-Pacific economic strategy. For New Zealand, the deal offers more secure entry into one of the world's fastest-growing large economies amidst rising global trade uncertainty.
However, not everyone is in agreement. New Zealand First leader Winston Peters has voiced opposition to the trade agreement, calling it "neither free nor fair". Peters argues that the deal gives too much away, especially on immigration, and does not get enough in return for New Zealanders, particularly concerning dairy.
Despite this opposition, both governments have expressed confidence that the FTA will help double bilateral trade within the next five years. 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.
