India and New Zealand, bound by shared values and Indo-Pacific goals, can deepen ties through a balanced FTA. Tackling dairy sensitivities, NTBs, and visas could unlock trade, education, and climate cooperation, shaping a strategic, Australia-like partnership model.
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Picture Courtesy: NEWSONAIR
India and New Zealand concluded the third round of Free Trade Agreement (FTA) negotiations, reaffirming their shared commitment to strengthen trade and investment linkages.
It is a pact between two or more countries to reduce or eliminate customs duties, quotas, and non-tariff barriers on goods and services traded between them.
Core components of a free trade agreement
Reduced tariffs: Member countries agree to lower or eliminate import taxes on specified goods, lowering their cost.
Removal of non-tariff barriers: FTAs also address restrictions other than tariffs, such as complex customs procedures, import licensing, and quotas (limits on import quantity).
Rules of origin: To prevent a non-member from getting preferential treatment, FTAs establish criteria to determine a product's "economic nationality." This ensures that only goods originating in member countries receive tariff benefits.
Intellectual property protection: Include protections for intellectual property rights, safeguarding patents, trademarks, and copyrights.
Investment protection: FTAs create a more stable and predictable environment for investors, encouraging foreign direct investment between member countries.
Early Contacts: Indian immigrants settled in New Zealand in late 18th century.
Wartime Linkages: Indian soldiers fought alongside Australian and New Zealand Army Corps (ANZAC) forces in Gallipoli (1915) during World War 1.
Diplomatic Relations: India established a Trade Commission in Wellington in 1950, upgraded to a High Commission later.
Common Platforms: Both countries are members of the Commonwealth, support democratic governance, disarmament, and ecological preservation.
Diaspora Factor: Over 2,50,000 Indian-origin people live in New Zealand, acting as a strong cultural and economic bridge.
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Read all about: INDIA NEW ZEALAND RELATIONS |
India’s Importance for New Zealand
Market Access: India’s 1.4 billion population, rising middle class, and fast-growing services sector offer demand for dairy, meat, wine, horticulture, and digital collaborations.
Skilled Workforce: India is the largest source of skilled migrants and second-largest source of international students in New Zealand, addressing labour shortages in IT, healthcare, and engineering.
Digital Opportunities: With over 100 crore internet users, India provides fertile ground for NZ’s tech firms in AI, fintech, and e-commerce.
Strategic Balance: India’s role in the Indo-Pacific enhances New Zealand’s security architecture and reduces dependence on China.
New Zealand’s Importance for India
Agriculture & Food Security: NZ’s advanced dairy and horticultural practices can help modernize Indian farming and food processing.
Skill Development & Education: Indian students benefit from New Zealand’s world-class universities and vocational programs.
Climate Tech & Clean Energy: NZ’s leadership in sustainability and climate tech can support India’s green transition.
Maritime Security: With its vast Exclusive Economic Zone (EEZ) and Indo-Pacific concerns, NZ is a potential buyer of India’s naval equipment, radars, and patrol boats.
Niche Exports: NZ demand for organic, handcrafted products aligns with India’s artisanal exports (silk, wool, handicrafts).
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The “Opening Doors to India” Policy (2011) New Zealand launched this policy to diversify beyond China and Australia by:
However, implementation remained slow due to India’s protectionist policies and NZ’s over-reliance on dairy exports. |
Stalled FTA Negotiations
Talks started in 2010 but stalled in 2015 due to Indian tariffs protecting domestic dairy and agriculture. NZ’s demand for dairy access clashes with India’s small farmer sensitivities.
Trade Imbalances & Low Volumes
In 2024–25, trade was just USD 1.3 billion. India exports pharma, textiles, and machinery but imports mostly logs, wood pulp, and dairy.
Non-Tariff Barriers (NTBs)
Indian grapes, okra, mangoes face SPS (Sanitary and Phytosanitary) restrictions in NZ. Lack of Mutual Recognition Agreements (MRA) on standards complicates certification.
Geopolitical Divergences
NZ foreign policy is influenced by Australia, US, and reliance on China, which may not always align with India’s strategic outlook.
Limited Defence Cooperation
Unlike India’s robust ties with Australia or Japan, NZ remains peripheral in India’s Indo-Pacific military engagements.
Mobility & Visa Issues
Indian students face high tuition and visa barriers. Irregular migration concerns strain people-to-people trust.
Trade and Economic Cooperation
Conclude FTA: Start with an Early Harvest Agreement, focusing on horticulture, pharmaceuticals, IT, and education.
Balance Dairy Disputes: Explore quota-based or phased market access for NZ dairy while protecting Indian farmers.
Boost Market Awareness: Business delegations, trade fairs, and Small and medium-sized enterprises (SMEs) collaborations can unlock untapped opportunities.
Address Non-Tariff Barriers (NTBs): Fast-track an Mutual Recognition Arrangement (MRAs) for standards to facilitate smoother exports.
Strategic and Security Cooperation
Enhance maritime collaboration under Indo-Pacific Oceans Initiative (IPOI).
Conduct joint naval patrols, information-sharing, and exercises for maritime domain awareness.
Explore defence equipment sales (surveillance drones, radars, patrol boats).
Climate and Sustainability Cooperation
Encourage Co-develop projects in renewable energy, disaster resilience, and sustainable agriculture.
Promote Partnership in International Solar Alliance (ISA) for joint R&D on solar and wind tech.
A balanced FTA addressing dairy, NTBs, and visa issues can transform India–New Zealand ties into a strategic Indo-Pacific partnership, unlocking trade, education, and climate opportunities akin to India–Australia relations.
Source: NEWSONAIR
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PRACTICE QUESTION Q. Analyze the key challenges hindering a comprehensive Free Trade Agreement between India and New Zealand. 150 words |
In the fiscal year 2024-25, the bilateral merchandise trade between India and New Zealand stood at $1.3 billion.
New Zealand supports the need for UN reforms, including the expansion of the Security Council. It has consistently supported India's candidature for a permanent seat in a reformed and expanded UN Security Council, recognizing India's growing global role.
NTBs, such as complex Sanitary and Phytosanitary (SPS) standards on Indian agricultural products and a lack of mutual recognition arrangements for certifications, hinder smooth trade flow and market access.
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