Syllabus: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Context
- India and New Zealand concluded negotiations on a Free Trade Agreement in 2025.
- The agreement is expected to be signed in the first half of 2026.
- It aims to deepen economic ties and expand India’s presence in the Oceania region.
Key Features of the India–New Zealand FTA
- India will gain tariff-free access to New Zealand’s domestic markets.
- The agreement targets $20 billion investment inflows into India over 15 years.
- Bilateral trade is expected to double to $5 billion within five years.
- Tariffs will be eliminated or reduced on 95% of New Zealand exports to India.
- Sensitive Indian sectors remain protected to safeguard farmers and dairy interests.
Safeguards for India
- India made no tariff concessions on dairy, onions, sugar, spices, edible oils, and rubber.
- Key agricultural products like rice, wheat, dairy and soya remain excluded.
- The approach reflects a balance between trade liberalisation and domestic protection.
Labour Mobility Provisions
- New Zealand will offer 5,000 temporary work visas annually for Indian professionals.
- Visas will permit a stay of up to three years.
- Covered professions include AYUSH practitioners, yoga instructors, chefs and music teachers.
- High-demand sectors covered: IT, engineering, healthcare, education and construction.
Sectoral Impact
- Labour-intensive sectors like apparel, leather, textiles, footwear and home décor will benefit.
- Export opportunities expand for automobiles, auto components, machinery, electronics and pharmaceuticals.
- The agreement supports MSMEs, innovators, entrepreneurs, students and youth.
Strategic and Economic Significance
- Helps Indian exporters diversify markets amid high U.S. tariffs on Indian goods.
- Complements India’s earlier FTA with Australia (2022).
- Enhances services trade and workforce mobility between the two countries.
- Strengthens India’s economic footprint in Oceania.
India–New Zealand Trade Profile
- India is New Zealand’s growing trade partner with steady bilateral trade expansion.
- In 2023-24, India recorded a trade surplus of $203 million.
- Trade crossed $1 billion during April–January 2025.
- In 2024-25 (till December), exports grew 21.49%, while imports rose 78.72%.
Conclusion
- The India–New Zealand FTA marks a historic milestone in bilateral economic relations.
- It reflects strong political will, trade diversification goals, and balanced economic integration.
- The agreement strengthens India’s long-term trade and investment strategy.