The proposed Free Trade Agreement (FTA) between India and New Zealand isn’t just another trade deal — it’s a potential goldmine waiting to be unlocked. With bilateral trade standing at a modest $1.7 billion, this agreement could explode that figure tenfold over the next decade. Imagine the scale of new opportunities: Indian pharmaceuticals in Kiwi hospitals, New Zealand’s world-class dairy products in Indian households — the possibilities are endless.
What’s In It for India?
l Tariff-Free Access – Indian exporters will get a smoother ride into New Zealand’s market, reducing costs and boosting profits.
l Tech Power-Up – New Zealand’s expertise in renewable energy and agri-tech could fuel India’s domestic production and exports.
l New Jobs & Skills – With relaxed visa rules, India’s growing pool of STEM graduates could find new opportunities in New Zealand’s booming tech and services sectors.
What’s In It for New Zealand?
l Access to 1.4 Billion Customers – India’s huge market is a golden opportunity for Kiwi agricultural and dairy producers.
l Pharma and Machinery – Indian pharma products and machinery are already gaining traction; this deal will accelerate that trend.
l Stronger Political Ties – The FTA is not just about trade; it’s about deepening strategic ties in the Indo-Pacific, where both countries face growing pressure from China.
Current Trade Status
India and New Zealand have maintained relatively modest trade volumes despite the immense potential. As of the 2023-24 financial year, bilateral trade between India and New Zealand stood at approximately $1.7 billion. India’s exports to New Zealand totaled $ 682 million in 2023, while New Zealand’s exports to India amounted to $369 million.
Notably, Indian exports to New Zealand have grown by 62% since 2019, with mineral fuels replacing pharmaceuticals as the top export item, accounting for 13% of total trade. But considering the size and diversity of both economies, this figure remains underwhelming.
The proposed FTA is a chance to change that dynamic, opening up new opportunities in agriculture, manufacturing, pharmaceuticals, tourism, and technology.
Potential Benefits of the FTA
1. Enhanced Market Access and Trade Growth
l Tariff Reduction – The FTA is expected to eliminate or reduce tariffs, thereby increasing the competitiveness of Indian exports in New Zealand and vice versa.
l Sectoral Opportunities – Indian sectors such as pharmaceuticals, textiles, and information technology stand to gain from expanded market access. Conversely, New Zealand’s dairy, agriculture, and horticulture industries could benefit from greater access to the Indian market, which has traditionally been protected by high tariffs.
2. Investment and Technology Transfer
l Foreign Direct Investment (FDI) – The agreement is likely to promote increased FDI in both countries, fostering joint ventures and facilitating technology transfer.
l Agri-Tech and Renewable Energy – Indian companies could benefit from New Zealand’s expertise in agri-tech, renewable energy, and food processing.
3. Skill Mobility and Workforce Exchange
l Professional Mobility – Provisions facilitating the mobility of professionals and skilled workers will strengthen people-to-people ties and boost the service sector.
l STEM Talent Exchange – Indian STEM graduates and IT professionals could find enhanced opportunities in New Zealand.
4. Strategic Collaboration in Critical Sectors
l Renewable Energy and Critical Minerals – Both countries have identified renewable energy and critical minerals as key areas for strategic cooperation.
l Joint Ventures – Joint ventures in solar, wind, and hydropower could accelerate India’s transition to sustainable energy.
5. Diversification of Trade Partnerships
l Economic Growth – Strengthening ties with New Zealand will help India diversify its trade partnerships, reducing reliance on major partners like China and the United States.
l Reduced Vulnerability – Diversification reduces dependency on single-market exposure, enhancing economic resilience.
Impact on Key Economic Sectors
1. Agriculture and Dairy
New Zealand is a major exporter of dairy products. India’s high tariffs on dairy have been a contentious issue in past trade talks.
A phased reduction in tariffs, coupled with domestic safeguards for Indian farmers, could create a balanced outcome.
2. Pharmaceuticals and Healthcare
India’s pharmaceutical industry, which is globally competitive, will benefit from better market access.
Regulatory harmonization and expedited approvals could further enhance growth prospects.
3. Renewable Energy and Critical Minerals
New Zealand’s expertise in clean energy and India’s growing demand for renewable energy infrastructure provide a natural synergy.
Joint ventures in solar, wind, and hydropower could accelerate India’s transition to sustainable energy.
4. Education and Tourism
New Zealand is a preferred destination for Indian students. Improved visa policies and exchange programs could increase student enrollment. Enhanced air connectivity and tourism promotion will contribute to the services trade.
5. Manufacturing and Technology
India’s “Make in India” initiative could benefit from New Zealand’s technological expertise. Lower input costs and supply chain efficiencies resulting from the FTA could enhance manufacturing competitiveness.
Risks
1. Trade Imbalance and Market
AccessIndia’s trade deficit with New Zealand could widen if dairy and agricultural imports increase without a corresponding rise in Indian exports. Sensitive sectors like dairy, agriculture, and wine could face resistance from domestic stakeholders.
2. Regulatory and Non-Tariff Barriers
Differences in standards, labeling requirements, and sanitary and phytosanitary measures could create friction. Streamlining regulatory frameworks will require political consensus and business alignment.
3. Political and Social Sensitivities
Protectionist tendencies within India, particularly in agriculture, could lead to domestic political pushback. Ensuring a balanced deal that benefits both nations without disproportionately impacting vulnerable sectors will be critical.
4. Global Economic Uncertainty
Trade disruptions due to geopolitical tensions, supply chain instability, and inflation could dampen the benefits of the FTA. A global slowdown may reduce the demand for exports and investment.
LESSONS FROM RCEP AND OTHER FTAs
India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) underscores the importance of addressing trade deficits and protecting domestic industries. Similarly, India’s approach to the New Zealand FTA will need to balance domestic interests with the strategic imperative of securing deeper market access.
Japan’s experience with RCEP illustrates the value of inclusive institutional balancing—building trade partnerships while protecting core economic sectors.
Strategic Importance in the Indo-Pacific
1. Geopolitical Influence
Strengthening ties with New Zealand aligns with India’s broader Indo-Pacific strategy. New Zealand’s participation in the Indo-Pacific Oceans’ Initiative reinforces regional maritime cooperation.
2. Soft Power and Cultural Exchange
People-to-people ties, including the Indian diaspora in New Zealand, provide a foundation for deeper cultural and economic ties.
Enhanced education and tourism exchanges will foster mutual understanding and cooperation.
3. Countering Chinese Influence
China’s dominance in the Asia-Pacific trade landscape poses strategic risks. Strengthening economic ties with New Zealand enhances India’s bargaining power and reduces dependency on China.
What to expect?
The India-New Zealand FTA isn’t just about trade — it’s about securing long-term strategic alignment and economic resilience. If executed well, this agreement could set the stage for a future where both countries emerge as stronger, more connected players in the global economic order.
Compiled by
Ruchira Talapatra
