India-New Zealand Free Trade Agreement (FTA)

India and New Zealand have signed a comprehensive Free Trade Agreement (FTA), set to be implemented by the end of the year. This agreement marks India’s seventh FTA in the past five years.

Key Features of the FTA

• India will gain 100% duty-free market access.
• A commitment of $20 billion in Foreign Direct Investment (FDI) from New Zealand over 15 years.
• Enhanced labour mobility and new mobility pathways for Indians.

Trade and Tariff Details

• Elimination of duties on 100% of tariff lines will benefit Indian exports such as textiles, garments, leather, and auto components.
• India will open about 70% of tariff lines, covering 95% of New Zealand’s exports, safeguarding sensitive sectors like dairy and sugar.
• Specific conditions for imports like apples, kiwifruit, mānuka honey, and albumins.
• Tariff reductions on New Zealand wine based on price brackets.

Services and Mobility

• New Zealand offers commitments in 118 sectors and most-favoured nation (MFN) treatment in 139 sectors.
• India offers services market access in 106 sectors and MFN treatment in 45 sectors.
• Key provisions include 20-hour student work rights, post-study visas, 5,000 skilled worker slots, and 1,000 work-and-holiday visas annually.

India’s services exports have crossed $400 billion, but only $650-700 million worth are directed to New Zealand, presenting opportunities for growth.

Investment and Economic Implications

• Ajay Srivastava from the Global Trade Research Initiative highlights the potential but cautious outlook on the $20 billion investment promise.
• New Zealand’s average import tariff is 2.3%, providing Indian exporters with substantial market access even before the FTA.

Historical Context and Strategic Importance

FTA negotiations between the two nations initially began in April 2010 but ended in 2015. This agreement aligns with India's withdrawal from the Regional Comprehensive Economic Partnership in 2019.

Statements and Future Outlook

Prime Minister Narendra Modi emphasized the synergy between India’s Make in India initiative and New Zealand’s investment commitments. He highlighted the FTA's potential in supporting start-ups, MSMEs, and innovation-driven growth.

Australian Prime Minister Christopher Luxon noted the FTA’s role in fostering stable and rules-based trade, offering New Zealand diversified opportunities in dynamic markets.