India seals FTA with New Zealand, gets $20 bn investment pledge, duty-free access

Commerce and industry minister Piyush Goyal on Monday said the India-New Zealand free trade agreement (FTA) carries a $20 billion investment commitment from Wellington, signalling confidence in India’s growth story. The pact—which provides duty-free access for Indian exports—will boost micro, small and medium enterprises, foster innovation and support women-led enterprises in global markets, he said.

Goyal and New Zealand's minister for trade and investment Todd McClay signed the agreement in New Delhi on Monday. This “marks a defining milestone in India’s engagement with the developed world”, Goyal said. “It reflects Prime Minister Narendra Modi’s vision of global economic partnerships for our farmers, women, youth, artisans and entrepreneurs.”

Describing the pact as a “once-in-a-generation” opportunity, McClay said it marks a significant chapter in bilateral ties, deepening engagement and a commitment to mutually beneficial growth. He said the FTA will create new avenues for exporters, generate employment and unlock economic potential.

In a statement, New Zealand prime minister Christopher Luxon, said the “historic” agreement will expand market access, support export growth and enable collaboration in areas such as agriculture and reinforce a shared commitment to stable, rules-based trade and deeper people-to-people ties.

Describing India as “one of the world’s most dynamic markets” he said the deal "will help diversify New Zealand’s export markets, support the goal of doubling the value of our exports over 10 years, and put New Zealand exporters on a more level playing field with competitors already enjoying preferential access in India.”

“For India, this deal means growth, innovation and new opportunities. It gives Indian exporters tariff-free access to the New Zealand market from day-one, and it gives Indian consumers improved access to our high-quality exports," Luxon said. "It creates new ways for India to partner with New Zealand on agricultural productivity and benefit from New Zealand’s world-leading agri-tech and food-production expertise.”

The agreement comes at a time of evolving global and regional dynamics, with New Zealand viewing India as a key partner in promoting regional stability, economic resilience and shared prosperity.

What it entails

The FTA will give duty-free access for 100% of India’s exports to New Zealand, covering all tariff lines, and is expected to significantly boost MSMEs and employment by enhancing competitiveness in labour-intensive sectors such as textiles, apparel, leather, footwear, gems and jewellery, engineering goods and processed foods. Earlier, New Zealand maintained peak tariffs of up to 10% on key Indian exports, including ceramics, carpets, automobiles and auto components.

Under the FTA, India has offered ‘tariff liberalization’ on nearly 70% tariff lines covering 95% of bilateral trade value, while excluding the rest to protect sensitive sectors. These exclusions include dairy products, animal products (other than sheep meat), agricultural products such as onions, chana, peas, corn and almonds, as well as sugar, artificial honey, edible oils, rubber and certain industrial goods. Market access for products such as apples, kiwifruit, Mānuka honey and albumins will be managed through tariff rate quotas with minimum import price safeguards to protect domestic farmers.

On services, New Zealand has provided market access commitment in about 118 service sectors, including computer-related services, professional services, audio-visual services, telecommunication, construction, distribution, education, environmental, financial and tourism-related services, along with most-favoured nation (MFN) commitments in about 139 sub-sectors.

For Indian professionals, the FTA has established a new temporary employment entry (TEE) visa pathway for skilled roles, with a quota of 5,000 visas at any given time and a stay of up to three years. It also creates mobility pathways for students by removing numerical caps, allowing a minimum of 20 hours of work per week during study, and offering extended post-study work opportunities of up to three years for STEM students and up to four years for doctorate holders.

The agreement also provides for multiple-entry working holiday visas for 1,000 young Indians annually, valid for 12 months.

For India's pharmaceuticals and medical devices sectors, the agreement has enabled acceptance of inspection reports from top comparable regulators to cut costs and time for compliance.

On intellectual property, New Zealand has committed to amend its Geographical Indications law within 18 months of the agreement’s entry into force to allow registration of India’s wines, spirits and other goods, a treatment similar to that accorded to the European Union.

The agreement also incorporates provisions on trade facilitation, including cargo clearance timelines of 48 hours for standard shipments and 24 hours for express and perishable goods, along with paperless and single-window systems.

Bilateral merchandise trade between India and New Zealand was at about $1.3 billion in FY25.

Prime Minister Narendra Modi said the agreement will open new avenues for growth and deepen synergy across sectors. “The investment commitment of $20 billion by New Zealand will further strengthen our cooperation in agriculture, manufacturing, innovation and technology, paving the way for a more prosperous and dynamic future for both countries,” he said on X.

Industry view

Experts see the FTA driving India's export growth. “New Zealand’s offer to eliminate duties on 100% of its tariff lines on entry into force of the agreement, covering all 8,284 lines, means Indian goods in textiles, apparel, leather, pharmaceuticals, machinery and auto components enter New Zealand duty-free, erasing an average applied tariff of 2.2%," said Agneshwar Sen, trade policy leader at EY India, adding that "the average includes a 10% tariff on some of our labour intensive exports like clothing and leather products, which also now get the tariff-free treatment.”

Chandrajit Banerjee, director general of the Confederation of Indian Industry said that by eliminating tariffs for key sectors, the FTA “unlocks new avenues for scale, market diversification, and sustained export growth”. He said the pact will enhance productivity, reduce trade costs, and provide strong support to MSMEs.

"By fostering innovation, attracting investment, and strengthening global linkages, while safeguarding key sectors, it reinforces India’s long-term growth trajectory and resilience in the global economy,” Banerjee said.