Description

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Picture Courtesy: THEHINDU

Context

India and New Zealand concluded negotiations for a comprehensive Free Trade Agreement (FTA) in December 2025.

Read all about: INDIA-NEW ZEALAND RELATIONS: CHALLENGES AND WAY FORWARD l ABOUT INDIA AND NEW ZEALAND RELATIONS

What is Free Trade Agreements (FTAs)?

An FTA is a pact between two or more countries to reduce or eliminate barriers to trade, such as tariffs (import taxes) and non-tariff barriers (e.g., quotas, complex regulations).

The primary goal is to boost the exchange of goods and services, encourage investment, and promote deeper economic cooperation, creating a predictable and transparent trading environment.

Key Objectives and Targets of the India-NZ FTA

Trade Expansion: To double bilateral trade within the next five years from current levels.
Investment Inflow: To facilitate $20 billion in investment from New Zealand into India over a 15-year period, aligning with initiatives like 'Make in India'.
Market Diversification: To provide Indian exporters with enhanced and predictable access to the New Zealand market, serving as a gateway to the wider Oceania region.
Services & Mobility: To strengthen services trade and create pathways for skilled Indian professionals and students to work and study in New Zealand.

Current State of India-New Zealand Bilateral Trade

Merchandise Trade: Reached $1.3 billion in 2024–25, up from $873 million the previous year.
Total Trade: Including services, bilateral trade reached approximately $2.4 billion in 2024.
Major Exports from India: Pharmaceuticals, mechanical machinery, textiles, precious stones, and vehicles.
Major Imports from New Zealand: Wood logs, forestry products, wool, coal, and fruits (specifically apples and kiwifruit).

Highlights of the India-NewZealand FTA

Tariff Liberalisation for India: New Zealand will offer 100% duty-free access to all Indian exports immediately upon the agreement's implementation, eliminating previous tariffs up to 10% on Indian goods like apparel, leather goods, and auto components.

Tariff Liberalisation for New Zealand: India has offered tariff concessions on over 70% of its tariff lines, covering 95% of New Zealand's exports to India. Over 54% of NZ exports will gain immediate duty-free access, increasing to over 80% eventually.

Protection of Sensitive Indian Sectors: India excludes sensitive farm sectors like dairy, rice, wheat, sugar, onions, and edible oils from market access concessions to protect farmer livelihoods.

Mobility for Indian Professionals:

A new Temporary Employment Entry (TEE) Visa allows 5,000 skilled Indian professionals to live and work in New Zealand for up to three years at any given time.
This covers sectors like IT, engineering, healthcare, and also includes Indian-specific professions like AYUSH practitioners and yoga instructors.
Provisions for post-study work visas for Indian students have been expanded, especially for STEM graduates.

Trade Facilitation: The agreement includes robust provisions on Rules of Origin, customs cooperation, and sanitary and phytosanitary (SPS) measures to reduce procedural delays and ensure smooth trade flows.

Cooperation in Traditional Medicine: For the first time, New Zealand has signed an annex to facilitate trade in Ayurveda, yoga, and other traditional Indian medicine services, promoting India's AYUSH systems globally.

Source: THEHINDU

Attempt Daily Quiz

PRACTICE QUESTION

Q. Analyse the strategic significance of the recently concluded Free Trade Agreement (FTA) between India and New Zealand for India's Indo-Pacific strategy. 150 words

Frequently Asked Questions (FAQs)

The biggest gain is securing 100% duty-free market access for all Indian exports to New Zealand from the first day of the agreement. This is particularly beneficial for labour-intensive sectors like textiles, apparel, and pharmaceuticals.

The dairy sector was a major sticking point, as highly efficient dairy exporter New Zealand clashed with India, the world's largest milk producer with over 80 million dependent rural families. India considered tariff-free access for New Zealand's dairy products a "red line," fearing severe impacts on Indian farmers' livelihoods.

The agreement opens new mobility pathways. It includes a quota of 5,000 temporary employment visas for Indian professionals in high-demand sectors like IT and engineering, and 1,000 work and holiday visas, enhancing people-to-people ties and trade in services.