India, New Zealand conclude Free Trade Agreement

• India and New Zealand concluded a Free Trade Agreement (FTA) on December 22.

• It marks a major economic and strategic milestone in India’s engagement with the Indo-Pacific region.

• The agreement stands out as one of India’s fastest-concluded FTAs.

• The negotiations were formally launched on March 16, 2025 during the meeting between  Commerce and Industry Minister Piyush Goyal and New Zealand’s Minister for Trade and Investment Todd McClay. 

• The agreement was concluded by holding continuous and intense discussions spread over five formal negotiation rounds.

• India-New Zealand economic engagement has shown steady momentum.

• Currently, New Zealand is India’s second-largest trading partner in Oceania. 

• The FTA provides a stable and predictable framework to unlock the full potential of this relationship.

• The agreement is expected to be signed in the first half of next year.

India-New Zealand relations

• Indians started arriving in New Zealand in the late 18th century on British East India Company ships, bringing supplies to Australian convict settlements. Most of the initial immigrants were from Gujarat followed by Punjab. In 1920, they formed the Auckland Indian Association, which celebrated its centenary in 2020.

• India and New Zealand have historically shared close and cordial ties. Similarities such as membership of the Commonwealth, common law practices and pursuing shared aspirations of achieving economic development and prosperity through democratic governance systems for diverse communities in both countries provide an excellent backdrop for deepening the friendly ties.

• Both countries became independent in the same year and diplomatic representation of India was established in 1950 with the opening of a Trade Commission, which was later upgraded to High Commission. 

• New Zealand identified India as a priority country in its “Opening Doors to India” policy notified in October 2011, which was reiterated in 2015. 

• Education and tourism are New Zealand’s growth sectors with India.

• India is the second largest source of international students in New Zealand.

• India’s key goods exports to New Zealand include clothing, fabrics, and home textiles; medicines and medical supplies; refined petrol; agricultural equipment and machinery such as tractors and irrigation tools; auto; iron and steel; paper products; electronics; shrimps; diamonds; and basmati rice.

• The main imports are agricultural goods, minerals, apples, kiwifruit, meat products such as lamb, mutton, milk albumin, lactose syrup, coking coal, logs and sawn timber, wool, and scrap metals. 

• Bilateral merchandise trade reached $1.3 billion in 2024-25, while total trade in goods and services stood at approximately $2.4 billion in 2024, with services trade alone reaching $1.24 billion, led by travel, IT and business services. 

• Around 300,000 persons of Indian origin and NRIs live in New Zealand, making up nearly 5 per cent of its population. 

• This diaspora acts as a cultural and economic bridge, supporting stronger bilateral ties and demand for Indian goods and services.

Highlights of the FTA:

• The FTA establishes a high-quality economic partnership that promotes employment, facilitates skill mobility, drives trade and investment-led growth, fosters innovation for agricultural productivity, and enhances MSME participation to strengthen long-term economic resilience.

• Elimination of tariffs on 100 per cent of its tariff lines, provides duty-free access for all Indian exports. 

• This market access enhances the competitiveness of India’s labour-intensive sectors including textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles, directly supporting Indian workers, artisans, women, youth and MSMEs and integrating them deeper into global value chains.

• India has secured commitments across a wide range of high-value sectors including IT and IT-enabled services, professional services, education, financial services, tourism, construction and other business services, opening substantial new opportunities for Indian service suppliers and high-skill employment.

• The FTA opens skilled employment pathways through a new Temporary Employment Entry Visa pathway for Indian professionals in skilled occupations, with a quota of 5,000 visas at any given time and a stay of up to three years. 

• This pathway covers Indian professions such as AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, as well as high-demand sectors including IT, engineering, healthcare, education, and construction, strengthening workforce mobility and services trade.

• Establishment of dedicated agri-technology action plans on kiwifruit, apples and honey, focus on productivity enhancement, technology, research collaboration, quality improvement and value-chain development, to strengthen domestic capabilities and supporting income growth for Indian farmers. 

• The agreement significantly strengthens the investment partnership between the two countries. 

• New Zealand has committed to facilitate investments of $20 billion into India over the next 15 years, thereby supporting manufacturing, infrastructure, services, innovation and employment under India’s ‘Make in India’ vision.

• Indian enterprises are also expected to benefit from their presence in New Zealand and access the wider Pacific Island markets.

• Overall, the agreement establishes a transparent framework that expands market access, enhances trade in services, creates mobility pathways, encourages long-term investment, and builds agricultural productivity.