India and New Zealand have finalized a landmark Free Trade Agreement (FTA) expected to reshape their bilateral relations. The agreement, announced on December 22, 2025, after nine months of negotiations that began in March 2025, aims to boost trade and investment between the two countries. Both nations anticipate formally signing the FTA in the first half of 2026.
Under the terms of the agreement, India will receive tariff-free access to New Zealand's market, which is expected to significantly benefit key Indian industries such as textiles, engineering goods, leather, footwear, and marine products. New Zealand will receive reduced duties and improved market access for approximately 70% of India's tariff categories, covering about 95% of New Zealand's current exports to India, to be implemented over time. New Zealand hopes to increase its exports of wool, fruit, wine, wood products, and horticultural products.
A key component of the deal is New Zealand's commitment to invest $20 billion in India over the next 15 years. The FTA is also expected to facilitate the movement of skilled Indian professionals to New Zealand, addressing labor needs and enhancing professional mobility.
The FTA is projected to double bilateral trade within five years, reaching $5 billion. New Zealand's Prime Minister Christopher Luxon estimates that the agreement could increase New Zealand's annual exports to India by over $1.1 to $1.3 billion in the coming decades, leading to job creation and higher wages for New Zealanders. Indian Prime Minister Narendra Modi expressed confidence that the FTA will strengthen economic ties and strategic cooperation, creating new opportunities for innovators, entrepreneurs, farmers, MSMEs, students, and youth in both countries.
Specifically, the agreement will eliminate or reduce tariffs on 95% of New Zealand's exports to India. Almost 57% of New Zealand's exports will have duty-free access from day one, increasing to 82% upon full implementation, with significant tariff cuts on the remaining 13%. Immediate tariff elimination will apply to sheep meat, wool, coal, and over 95% of forestry and wood exports. India has protected sensitive sectors, ensuring no concessions on dairy, onions, sugar, spices, edible oils, rubber, rice, wheat, and soya.
Despite the overall optimism, the agreement faces some opposition. New Zealand First leader Winston Peters has criticized the deal, arguing that it concedes too much on immigration and does not sufficiently benefit exporters. He confirmed that his party would vote against the enabling legislation.
The India-New Zealand FTA is viewed as a significant step in diversifying trade connections and mitigating the impacts of global economic uncertainty. The agreement is expected to provide a stable framework for long-term economic partnership, leveraging the strengths of both economies.
