Context:
India and New Zealand first began negotiating the Comprehensive Economic Cooperation Agreement (CECA) in April 2010.
Key Highlights:
- Talks stalled in February 2015 after 10 rounds of discussions.
- March 2025: The two nations officially resumed negotiations for a mutually beneficial Free Trade Agreement (FTA).
- Announcement followed a meeting between Commerce Minister Piyush Goyal and New Zealand Trade Minister Todd McClay.
- New Zealand PM Christopher Luxon is on a four-day visit to India.
Key Objectives of the FTA
- Enhance supply chain integration.
- Improve market access for businesses and consumers.
- Strengthen bilateral trade, which surpassed $1 billion during April 2024 – January 2025.
Challenges in Negotiations
a) Tariff Disparity
- New Zealand
- Low average tariff of 2.3%.
- More than 50% of imports already duty-free → Indian goods already have significant market access.
- India
- Higher average tariff of 17.8%.
- Would require substantial tariff cuts, making the FTA less attractive for India.
b) Dairy, Meat, and Wine Exports
- New Zealand’s demands
- Greater access to India’s dairy market (previously resisted by India).
- Lower tariffs on dairy, meat, and wine exports.
- India’s stance
- Strong protectionist approach to dairy due to the millions of farmers dependent on the sector.
- Currently, India’s dairy imports from New Zealand are minimal ($0.57 million).
- Might allow limited imports of value-added dairy products but not raw dairy.
c) Movement of Skilled Professionals & Services
- India’s demand
- Easier mobility for Indian skilled workers.
- Better access for IT and service sector companies in New Zealand.
- Potential U.S. Influence
- Pressure on India to open its dairy and agriculture sector could impact negotiations.
Next Steps
- Both countries must find common ground on tariffs, market access, and services.
- The success of the FTA will depend on balancing India’s domestic interests with trade benefits.
