India-New Zealand Free Trade Agreement (FTA)

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.