Syllabus: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Background and Timeline
- India–New Zealand FTA was concluded in December 2025, after negotiations announced in March 2025.
- It is among the fastest concluded FTAs, finalised within a record nine-month timeframe.
- Agreement reflects India’s strategy to expand economic footprint beyond traditional markets.
Core Trade Commitments
- New Zealand grants zero-duty access on 100% of India’s exports.
- India reduces tariffs on 95% of New Zealand imports, with 57% duty-free from day one.
- India secured full market access without compromising sensitive domestic sectors.
Foreign Direct Investment (FDI) Provisions
- New Zealand committed $20 billion FDI in India by 2030, spread over 15 years.
- Investment includes strict clawback mechanisms for delayed or unmet commitments.
- FDI targets 118 sectors, promoting employment, growth, and skill mobility.
Services, Labour Mobility, and Skill Exchange
- Agreement facilitates mobility of Indian skilled professionals and service providers.
- Key beneficiaries include IT professionals, engineers, healthcare workers, educators, chefs, yoga instructors.
- Student mobility enhanced, allowing 20 hours weekly work permits during studies.
- Extended post-study work visas create global exposure for Indian youth.
- First-ever FTA provision covering Ayurveda, yoga, and traditional medicine services.
Boost to Labour-Intensive Sectors
- Major gains for textiles and apparel, leather and footwear, gems and jewellery.
- Engineering goods and processed food exports receive improved market access.
- MSMEs gain from employment generation and export diversification opportunities.
Sensitive Sectors Excluded by India
- India excluded dairy and key agricultural products to protect domestic farmers.
- Items excluded include milk, cheese, butter, yogurt, onions, sugar, edible oils, spices, rubber.
- Reflects India’s consistent policy of safeguarding agriculture and MSMEs.
Sectoral Cooperation Initiatives
- New Zealand will assist Indian growers through focused productivity action plans.
- Cooperation covers kiwifruit, apples, honey, and exotic fruit cultivation.
- Measures include centres of excellence, improved planting material, orchard management.
Strategic and Economic Significance
- FTA serves as gateway to Oceania and Pacific Island markets.
- New Zealand’s high-income economy strengthens India’s export positioning.
- Indian diaspora forms 5% of New Zealand’s population, enhancing people-to-people ties.
- Bilateral trade currently $1.3 billion, targeted to double in five years.
Rationale for India’s FTA Acceleration
- India seeks trade diversification away from U.S., EU, and China dependency.
- FTAs allow WTO-plus commitments in services, digital trade, and investment.
- Aligns with Make in India, GVC integration, and strategic realignments.
- Accelerated after U.S. tariff hikes impacted Indian exports.
Criticism and Concerns
- New Zealand coalition partners criticised exclusion of dairy and agriculture sectors.
- Critics termed agreement “neither free nor fair”, opposing ratification in Parliament.
- In India, concerns persist over trade deficits and asymmetric gains from FTAs.
Way Forward
- India must strengthen domestic competitiveness and quality standards.
- Requires robust rules of origin, anti-dumping safeguards, MSME strengthening.
- Greater investment in R&D essential for sustained global market integration.