New Zealand and India Finalize Landmark Trade Agreement

New Zealand and India have completed negotiations on a free trade agreement (FTA) that aims to significantly enhance economic relations between the two nations. Announced on March 25, 2024, the agreement is expected to double bilateral trade within the next five years.

Under the terms of the FTA, tariffs will be eliminated or reduced on approximately 95% of New Zealand’s exports to India. Notably, over half of these products will be duty-free from the outset of the agreement. In exchange, all Indian goods will gain duty-free access to the New Zealand market. This strategic move is complemented by New Zealand’s commitment to invest $20 billion in India over the next 15 years.

Christopher Luxon, New Zealand’s Prime Minister, emphasized the significance of the deal, stating, “The gains are wide-ranging and significant. India is the world’s most populous country and is the fastest-growing big economy, and that creates opportunities for jobs for Kiwis, exports, and growth.”

This agreement fulfills a campaign promise made by New Zealand’s governing National Party during the 2022 elections, pledging to finalize a free trade agreement with India within its first term.

Current Trade Landscape

In 2024, two-way trade between New Zealand and India was valued at approximately $1.81 billion. India primarily exports pharmaceuticals to New Zealand, while New Zealand’s exports are largely composed of forestry and agricultural products. Despite this growth, the trade volume remains modest compared to India’s total goods trade, which surpassed $1 trillion in the 2024–25 financial year.

Indian Prime Minister Narendra Modi described the agreement as a historic milestone, noting it was concluded in just nine months. He expressed that the deal reflects a strong political will and mutual ambition to strengthen economic ties.

India’s government has indicated that the agreement will not provide market access for sensitive sectors such as dairy, coffee, and various agricultural products. This decision aims to protect domestic farmers and industries from increased foreign competition.

Political Implications and Future Steps

The FTA is anticipated to be signed in the first half of 2026, but its passage through New Zealand’s parliament is uncertain. The New Zealand First party, a coalition partner of the National Party, has expressed opposition to the agreement. Leader Winston Peters stated that the deal “gives too much away, especially on immigration, and does not get enough in return for New Zealanders,” particularly concerning dairy.

The governing coalition holds 67 of the 123 seats in parliament, but the National Party only controls 48 seats. As such, they rely on support from coalition partners, including New Zealand First, to successfully pass the legislation.

The completion of this trade agreement marks a significant step for both nations as they seek to enhance their economic partnership, particularly in light of India’s broader strategy to diversify its export markets following recent trade tensions with the United States.