India-New Zealand Free Trade Agreement (FTA)

Background & Strategic Importance

• Renewed FTA talks after a decade-long hiatus.
• India & New Zealand aim to finalize the deal within 60 days.
• Strategic timing:
  • New Zealand’s elections in October create urgency.
  • India’s Indo-Pacific influence is growing.
  • Global trade protectionism is increasing, especially with the US imposing reciprocal tariffs.
• India’s recent FTAs with UAE, Australia, and EFTA demonstrate its aggressive trade strategy.

Challenges in Negotiations

• Key sticking points:
  • Tariff disparities:
    • New Zealand’s average import tariff is 2.3% (many duty-free items).
    • India has higher tariffs, making a traditional FTA less attractive.
  • Dairy products:
    • India opposes dairy imports due to political sensitivities.
    • New Zealand wants dairy included but faces resistance.
  • Wine tariffs:
    • India imposes 150% import duty on wine (one of the highest globally).
    • New Zealand seeks reductions, possibly following India-Australia FTA’s phased model.

Trade Relationship Overview

• Bilateral trade in 2024: $1.54 billion
• India’s Exports to New Zealand ($752 million total):
  • Medicines, gems & jewelry, textiles, and agricultural equipment.
• India’s Imports from New Zealand ($791 million total):
  • Iron & steel, aluminum, forestry products, wool, apples, lamb, and dairy.
• Services Trade Focus:
  • India: IT, software services, fintech, telecom, and medical research.
  • New Zealand: Education, tourism, and financial services.
  • India seeks more work visas for skilled professionals.

Outlook & Implications

• Political will on both sides could drive rapid negotiations.
• India’s market access in New Zealand is limited due to its small size.
• A finalized FTA could boost India’s services exports and strategic position in the Indo-Pacific.
• Upcoming India-New Zealand cricket ties in 2026 could further strengthen diplomatic relations.