India, New Zealand conclude fast-track FTA negotiations; deal to be signed later

New Delhi: In one of the fastest trade negotiations in recent years, India and New Zealand have concluded a comprehensive free trade agreement (FTA) in just nine months, aiming to significantly scale up economic engagement between the two countries from a relatively low trade base.

A key feature of the agreement is the elimination of tariffs on 100% of India’s tariff lines, which will provide duty-free access for all exports.

The pact, jointly announced by Prime Minister Narendra Modi and Christopher Luxon, New Zealand’s Prime Minister, through a statement by the Indian government, is the second this month after an agreement with Oman.

The formal signing of the FTA will be done at a later date, similar to the UK agreement, where trade negotiations concluded in May and the pact was signed in July.

Under the FTA, New Zealand has committed to facilitate investments of $20 billion into India over the next 15 years supporting manufacturing, infrastructure, services, innovation, and employment under India’s Make-in-India vision. In turn, Indian enterprises are expected to benefit from their presence in New Zealand and access the wider Pacific Island markets.

In FY25, trade between the two countries was at a relatively small $1.3 billion — India exported $711.1 million to New Zealand, and imported goods worth $587.1 million, according to data from the commerce ministry.

While that was a significant 49% year-on-year (y-o-y) rise, trade had dipped in FY24 — India's exports to New Zealand had dipped 1.73% to $538.33 million, while imports from New Zealand had dropped 29.89% y-o-y to $335.14 million.

The FTA was concluded after five rounds of negotiation and several in-person and virtual sessions. Officials on both sides described the pact as comprehensive in scope, covering goods, services, investment, rules of origin, customs facilitation, technical barriers to trade and sanitary and phytosanitary measures.

Correcting the imbalance

Indian exports to New Zealand are dominated by pharmaceuticals, textiles, engineering goods, and information technology services. Imports from New Zealand, a key agricultural exporter, largely comprise agri products such as wool, fruits and dairy-related items.

Officials said the agreement seeks to correct this imbalance by easing tariff and non-tariff barriers and encouraging two-way investment.

According to Ajay Srivastava, founder of Global Trade Research Initiative(GTRI), the FTA boosts India's access to a high-income, rules-based Pacific market and supports its broader Indo-Pacific economic strategy.

“For New Zealand, it offers more secure entry into one of the world’s fastest-growing large economies at a time of rising global trade uncertainty,” he added.

According to GTRI, while the FTA brings greater predictability in goods, services, mobility and investment, its real impact will depend on how both countries use it to strengthen practical economic links.

That will require moving beyond tariff cuts to build supply chains, expand services trade, deepen education and skills partnerships, and leverage the Indian diaspora and mobility provisions.

“With this more comprehensive approach, both sides should aim to double bilateral trade by 2030, using the FTA as a stable platform for a broader and more diversified economic relationship,” added Srivastava.

Farm produce in focus

“Today, this free trade agreement is about building trade around people and launching opportunities – for our farmers, for our entrepreneurs, for our students, for our women and for our innovators,” Union commerce and industry minister Piyush Goyal said in the statement.

“Boosting yields and farmer incomes, the agreement drives modern agricultural productivity. It opens doors for Indian businesses in the region through well-integrated directional exports and gives our youth choices to learn, work and grow on a global stage,” Goyal added.

According to the government statement, India has secured commitments across a wide range of high-value sectors including IT and IT-enabled services, professional services, education, financial services, tourism, construction and other business services, opening up new opportunities for Indian service suppliers and high-skill employment.

Commerce secretary Rajesh Agrawal called it “a new generation trade agreement… with complementarity at the core”.

"India’s strengths [will] expand exports, support labour-intensive growth, and power services. NewZealand gains deeper, more predictable access to India’s large and growing economy. The movement of people-students, professionals, and skilled workers converges these strengths,” Agrawal added in the statement.

Dedicated agri-technology action plans on kiwi fruit, apples and honey with a focus on productivity enhancement, technology, research collaboration, and quality improvement have been envisaged to support income growth for Indian farmers.

The cooperation also covers the establishment of centres of excellence, improved planting material, capacity building for growers, and technical support for orchard management.

Meanwhile, Winston Peters, the New Zealand coalition government's minister of foreign affairs, racing, and rail, and leader of the New Zealand First Party, has said they oppose the proposed deal.

“We consider the India-New Zealand Free Trade Agreement to be neither free nor fair,” Peters posted on social media platform X (formerly Twitter). “Regrettably, this is a bad deal for New Zealand. It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy.”

“New Zealand First urged its coalition partner not to rush into concluding a low-quality deal with India, and to use all three years of this Parliamentary cycle in order to get the best possible deal. We also indicated we felt it would be unwise for National to sign up to a deal with India when a Parliamentary majority for that deal was uncertain,” he added.

Freeing people movement

The FTA provides improved entry and stay provisions for Indian professionals, students and youth, including work opportunities during studies, post-study work options, dedicated visa arrangements and a working holiday visa framework.

Also envisaged is a new “temporary employment entry visa pathway for Indian professionals in skilled occupations, with a quota of 5,000 visas at any given time and a stay of up to three years,” the statement added.

This will cover Indian professions such as AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, as well as professionals from high-demand sectors such as IT, engineering, healthcare, education, and construction — strengthening workforce mobility and services trade.

“The agreement opens new and durable opportunities for Indian exporters, with services emerging as a clear winner. With wide-ranging commitments across IT and IT-enabled services, professional and business services, education, tourism, construction and financial services, the FTA provides Indian firms unprecedented market access and regulatory certainty in New Zealand,” said Agneshwar Sen, trade policy leader at EY India.

According to Sen, for merchandise exporters, zero-duty access across the full spectrum of Indian exports will improve price competitiveness and expand market presence for MSMEs and labour-intensive industries. Equally important, the agreement balances ambition with sensitivity; safeguarding critical domestic sectors while promoting cooperation in innovation, skills and investment.

Apart from tariff liberalization, the FTA includes provisions to address non-tariff barriers through regulatory cooperation, transparency, and streamlined customs, sanitary and phyto-sanitary (SPS) measures and technical barriers.

Preferential access for exports such as textiles and apparel, pharmaceuticals, engineering goods and certain agricultural products augurs well for India, a second trade expert said, while addressing long-standing issues around services mobility and mutual recognition of qualifications.

“For New Zealand, improved access to India’s education services has been part of the negotiations,” said Abhash Kumar, a trade economist and assistant professor of economics at Delhi University.

This is the seventh such trade agreement signed by governments under the National Democratic Alliance since it came into power in 2014.

Earlier agreements include: Mauritius in February 2021, the UAE (February 2022), Australia (April 2022), the European Free Trade Association (February 2024), the UK (July 2025), and Oman on 18 December this year.

India is in the final leg of negotiations with the European Union (EU) and the US on separate trade arrangements. New Delhi is also expected to begin trade talks with Qatar soon.