India and New Zealand have officially finalized a Free Trade Agreement (FTA), marking a significant step towards strengthening economic ties between the two nations. The agreement, unveiled jointly by Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon, is comprehensive, balanced, and future-oriented, aiming to boost trade, investment, and create shared opportunities.
Key Benefits for India
The FTA promises substantial benefits for Indian businesses and the economy. New Zealand will grant zero-duty access to 100% of Indian exports, eliminating the existing average tariff. This will provide a significant boost to several key sectors, including:
- Textiles and Apparel: Indian textile and apparel exporters will gain duty-free access to the New Zealand market, opening up opportunities for market diversification in ready-made garments, knitwear, fashion apparel, home textiles, and man-made fiber products.
- Engineering Goods: The engineering sector will also benefit from duty-free access, enhancing its competitiveness in the New Zealand market.
- Leather and Footwear: These sectors will also experience increased export opportunities due to the elimination of tariffs.
- Pharmaceuticals: The pharmaceutical industry is expected to gain from preferential access to the New Zealand market.
- Marine Products: Exporters of marine products will also benefit from the FTA.
New Zealand's Gains
In return, India will liberalize tariffs on approximately 70% of its tariff lines, covering nearly 95% of bilateral trade. This will provide New Zealand businesses with access to India's large and rapidly growing consumer market. Key sectors in New Zealand that are expected to benefit include:
- Horticulture: New Zealand will gain increased access for its horticultural products, including kiwifruit and apples. New Zealand is the first country to secure preferential access for apples in any Indian FTA, and the first kiwifruit exporter to secure tariff-free access for kiwifruit plus a 50% tariff reduction outside quota.
- Forestry: Over 95% of New Zealand's forestry exports will be able to enter tariff-free immediately upon the agreement's entry into force.
- Wool and Sheep Meat: Tariffs on sheep meat, a significant export for New Zealand, will drop from 33 percent to zero immediately.
- Wine and Manuka Honey: Tariffs on New Zealand wine will be reduced significantly over ten years, and tariffs on manuka honey will be cut by 75% over five years.
Investment and Mobility
The FTA also includes provisions to promote investment and mobility between the two countries. New Zealand has committed to facilitating US$20 billion in investment into India over 15 years. The agreement also includes provisions to support mobility, education links and investment, benefiting Indian professionals, students and businesses. There will be no numerical caps on Indian students in New Zealand, and guaranteed at least 20 hours of work per week during study. Select STEM graduates and PhD holders may also be eligible for extended post-study work visas. A new Temporary Employment Entry visa pathway for up to 5,000 Indian professionals at any time will be created, covering various sectors. Additionally, 1,000 working holiday visas will be available annually for young Indians.
Strategic Implications
The India-New Zealand FTA is strategically significant for several reasons. It strengthens India's global trade diversification, regional influence, and long-term economic cooperation with a developed economy. For New Zealand, the agreement strengthens its economic presence in South Asia and provides a long-term framework for growth and diversification beyond its traditional markets.
Looking Ahead
The formal signing of the agreement is expected in the first quarter of next year, after legal verification of the negotiated text. The FTA is expected to act as a catalyst for deeper trade, investment, innovation, and shared opportunities between India and New Zealand, paving the way for a stronger and more prosperous partnership.
