New Zealand and India Finalize Trade Agreement to Boost Bilateral Relations

New Zealand and India have finalized negotiations on a free trade agreement (FTA) aimed at significantly enhancing economic relations and doubling bilateral trade over the next five years. Announced on March 4, 2024, the agreement will eliminate or reduce tariffs on approximately 95% of New Zealand’s exports to India, with over half of those exports expected to become duty-free immediately upon the pact’s implementation.

In exchange, all Indian goods will gain duty-free access to the New Zealand market. Additionally, New Zealand has pledged to invest $20 billion in India over the next 15 years, further solidifying the economic partnership.

Prime Minister Christopher Luxon expressed optimism about the agreement, 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 promise made by New Zealand’s governing National Party during the 2022 elections to finalize an FTA with India within their first term.

As reported by Reuters, two-way trade between New Zealand and India reached approximately $1.81 billion in 2024. India primarily exports pharmaceuticals to New Zealand, while New Zealand’s exports are largely made up 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.

Political Context and Future Implications

The swift conclusion of the negotiations, achieved in just nine months, reflects a strong political will to deepen economic ties between the two nations. Indian Prime Minister Narendra Modi noted in a social media post, “This historic milestone reflects a strong political will and shared ambition to deepen economic ties between our two countries.”

The agreement does, however, exclude certain sensitive sectors from market access, such as dairy, coffee, and sugar, among others. This exclusion is aimed at protecting domestic farmers and industries in India. The deal comes as India intensifies its trade negotiations with various global partners to diversify its export markets, especially following the United States’ recent imposition of a 50% tariff on Indian goods.

This FTA marks India’s third trade agreement in 2024, following agreements with Oman and the United Kingdom, as reported by credible sources.

Challenges Ahead: Parliamentary Approval

While the New Zealand government anticipates signing the agreement in the first half of 2026, parliamentary approval is not guaranteed. The National Party, which holds 48 of the 123 parliamentary seats, relies on coalition partners for support. One such partner, New Zealand First, which has 8 seats, has announced its opposition to the deal.

NZ First leader Winston Peters criticized the agreement, asserting that it does not adequately benefit New Zealand. He stated, “The deal gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy.” The governing coalition controls 67 seats, indicating they will need to navigate potential obstacles from dissenting partners to pass the legislation.

As discussions around the agreement continue, the outcome could have significant implications for New Zealand’s economic strategy and its relationship with one of the world’s fastest-growing economies.