India Approves Trade Agreement with New Zealand, Boosting Ties

India’s Union Cabinet has approved a significant trade agreement with New Zealand, paving the way for formal signing from India’s side. This decision marks a strategic effort to enhance trade relations and diversify economic partnerships amid a shifting global trade landscape. The approval was reported by Business Standard, although no official confirmation was available at the time of publication. This new pact will become India’s seventh trade agreement since 2021.

Under the proposed agreement, India’s exports to New Zealand will encompass a variety of goods, including medicines, precious metals, gems, textiles, and agricultural machinery. Conversely, New Zealand’s key exports to India will include iron and steel, aluminium, logs, and various agricultural products such as apples, kiwi fruit, and lamb.

Resumption of Negotiations After a Decade

Negotiations for a comprehensive free trade agreement (FTA) between India and New Zealand resumed in March 2024, ending a hiatus of nearly ten years. The initial discussions began 14 years ago, with ten rounds of talks taking place before stalling in February 2015. Recent indications from Indian officials suggest that the negotiations are nearing completion.

Last week, New Zealand’s Trade Minister, Todd McClay, visited New Delhi to discuss the progress with India’s Commerce and Industry Minister, Piyush Goyal. Following the meeting, Commerce Secretary Rajesh Agrawal expressed optimism about concluding the agreement soon, stating, “We are in a good zone where we hope that the agreement will be closed and finalised soon.”

Trade Flows and Economic Impact

In terms of trade flows, India reported total exports of goods and services amounting to $752 million in 2024, while imports reached $791 million. Specifically, merchandise exports were valued at $538 million, compared to imports totaling $335 million for the same year.

The services sector presents a vital area for both countries, with India’s exports primarily driven by information technology, software services, and medical tourism. New Zealand’s services exports to India include education, tourism, and fintech services, reflecting a growing interdependence in various sectors.

As the two nations move forward with this trade agreement, it is expected to not only bolster bilateral ties but also contribute to economic growth in both countries, fostering a mutually beneficial partnership.