Context:
India and New Zealand plan to sign a full fledged and comprehensive Free Trade Agreement (FTA) within the next 60 days. The proposed FTA is expected to increase bilateral trade 10 fold over the next 10 years.
Areas of Cooperation
- Agritech
- Dairy and Food Processing
- Pharmaceuticals
- Renewable Energy
- Critical Minerals
- Forestry and Horticulture
- Travel and Tourism
- Sports
FTA Negotiation Timeline
- Negotiations started 14 years back and after 10 rounds have remained stalled with no formal discussions since February 2015.
- Resumption of negotiations after 10 years was announced during the visit of PM Luxon to India from March 16 to 20, 2025.
Geopolitical Significance
- Timeliness is essential as international trade has begun a reset owing to geopolitical shifts and countries are now focusing on bilateral agreements.
- India is also negotiating FTAs with the US, UK, EU, Australia, and Oman and is hoping to conclude an agreement with the US, EU, and New Zealand by the end of this year.
Challenges and Sensitivities
- Demands from New Zealand: More access to the market for agricultural products and wines.
- Stand of India:
- Protecting agriculture from any imports by imposing a high import tariff.
- Dairy imports (milk, butter, cheese) have extremely strong political sensitivities and are a ‘red line.’
- India should get eased mobility for professionals and better access for its IT sector and services.
- According to the GTRI think tank, India will hardly buy New Zealand dairy ($0.57 million), thus showing limited existing trade in this sensitive sector.
After years of talks stalled, both countries are now pushing for swift FTA conclusion, utilising each other’s economic complementarity while being carefully sensitive to long standing issues. By boosting trade relations and strategic cooperation, the agreement would bring two countries farther along the path of engagement.
