Besides zero-duty access for India’s labour-intensive sectors including textiles, apparel, leather, footwear, marine products, handicrafts, engineering goods and automobiles, New Zealand has pledged to invest $20 billion in the country over a period of 15 years. India has offered tariff liberalisation in 70% tariff lines covering 95% of bilateral trade.
“An important moment for India New Zealand relations, with a strong push to bilateral trade and invest ment! My friend PM Christopher Luxon and I had a very good conversation a short while ago following the conclusion of the landmark India-New Zealand Free Trade Agreement,” Prime Minister Narendra Modi said in a post on X.
Historic Milestone: PM Modi
“Concluded in just nine months, this historic milestone reflects a strong political will and shared ambition to deepen economic ties between our two countries. This FTA ensures: Enhanced market access, Deeper investment flows, Numerous opportunities for innovators, entrepreneurs, farmers, MSMEs, students and youth,” PM said in the post on X.
Once signed, it will mark India’s seventh trade agreement since 2021. The pact will be signed in the next two-three months after the legal scrubbing of the text is concluded. Since New Zealand will need parliamentary approval, officials expect the FTA to come into effect in the next six-seven months. The third free-trade agreement this year, following a similar pact with the UK in July and another with Oman earlier this month, will give India more temporary employment visas, easier access for pharmaceuticals and medical devices. New Zealand gets zero tariff on wool, coal, wood to start with, lower duties on wine, avocados, blueberries and persimmons, and quota-based tariff cuts for kiwifruit and apple exports.“New Zealand is the first country to secure preferential access for apples in any Indian FTA, and the first kiwifruit exporter to secure tariff-free access for kiwifruit plus a 50% tariff reduction outside quota,” New Zealand government said in a statement. The pact will help Indian exporters, reeling under the impact of 50% tariffs imposed by the US on Indian goods, to diversify shipments in the Oceania region. India has already implemented a trade pact with Australia.
Commerce and industry minister Piyush Goyal said the accord was a “win-win” for both countries. “We have been very sensitive to protect all the sectors, like farmers’ interest in rice, wheat, dairy, soya and various other farmer products, agricultural products, which have not been opened up with any access,” he said. “We have also been very conscious of ensuring that our MSMEs and our startup innovators get big opportunities in New Zealand.” Dairy and agriculture have been stumbling blocks in talks over the long-awaited India-US trade deal, with Washington seeking greater market access. Goyal said discussions for the US trade agreement are at an “advanced stage.”
Demand for access to India’s dairy and agriculture markets was among the reasons that India had pulled out of the Regional Comprehensive Economic Partnership (RCEP) in 2019. “The current bilateral trade with New Zealand is small but the upside potential is huge,” Goyal said. Bilateral merchandise trade was $1.3 billion in FY25.
Commerce secretary Rajesh Agrawal said that although only five formal rounds were held, both sides remained in continuous touch to close the negotiations. The $20 billion investment commitment is for foreign direct investment (FDI) only, especially in manufacturing and infrastructure. “In the last 25 years, New Zealand has invested only $75 million. This will open up collaboration with farmers and MSMEs, and include investments in education, sports. We are making a pitch for the Olympics and sports will be a good area of collaboration,” Goyal said.
Key benefits
With New Zealand eliminating tariffs that had peaked at 10%, Indian exporters of textiles and clothing will receive zero-duty access across 1,057 tariff lines. For wine, lamb and wool, India has made an offer that is similar to what it had given under the interim trade pact with Australia. India has cut tariffs on manuka honey by 75% over five years, making New Zealand the first country to secure preferential access for honey in any Indian FTA.
“Ficci welcomes the conclusion of the India-New Zealand FTA, a significant step towards deepening economic engagement with the Indo-Pacific region. The agreement is expected to enhance bilateral trade, investment flows, and further collaboration, creating new growth opportunities for businesses in both countries,” said Ficci president Anant Goenka.
Goods excluded
Under the agreement, products in exclusion list are dairy (milk, cream, whey, yoghurt, cheese etc.); animal products (other than sheep meat); vegetable products (onions, chana, peas, corn, almonds etc.); sugar; artificial honey; animal, vegetable or microbial fats and oils. The list also includes arms and ammunition; gems and jewellery; copper and articles (cathodes, cartridges, rods, bars, coils); aluminium and articles thereof (ingots, billets, wire bars).
Quotas, import price
As per the agreement, India has given greater market access in certain agricultural goods but with quotas, seasonal import windows and minimum import prices (MIPs) including manuka honey, apples, kiwi fruit and albumins, including milk albumin (used in medicines and making whey protein).
Manuka honey, a niche New Zealand product, currently faces 66% duty. India has given duty concessions for up to 200 tonnes per annum with an MIP of $20 per kg. A 75% tariff reduction will be extended over a period of five years. Beyond this quota, the MIP will be increased to $30 per kg.
On apples, the current applicable duty is 50%. India will give duty concessions for 32,500 tonnes of apples in the first year of the agreement. The quota will be increased to 45,000 tonnes in the sixth year at 25% duty with an MIP of $1.25 per kg. Beyond these quotas, 50% duty will be imposed. Similarly, for kiwi fruit, the current applicable duty is 33%. The tariff rate quota (TRQ) will be given on 6,250 tonnes (first year), which will be increased to 15,000 tonnes in the sixth year at zero duty with an MIP of $1.80 per kg. Beyond this quota, a 50% margin of preference will come into force with an MIP of $2.5 per kg.
For albumins including milk albumin, the current duty is 22%. Under TRQ, the quota will be 1,000 metric tonnes (MT) in the first year of the agreement, which will be increased to 3,000 MT in the fifth year. Beyond that, the usual duty will come into force.
Services, visa
Officials said that the pact delivers India’s “most ambitious” services offer in any of its FTAs till date. The deal will open skilled employment pathways through a new temporary entry visa 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.
Goyal said the India-NZ FTA will provide students and professionals with greater avenues for mobility and enhanced opportunities for education and employment. “For those taking a degree course or a bachelor’s degree with honours, they will be eligible for a three-year work visa, while those graduating in STEM or taking a post-graduation degree will be eligible for a four-year work visa,” he said. By 2045, New Zealand could be at least 250,000 workers short, threatening the sustainability of pensions and healthcare. The deal is an opportunity for India to position itself as a key supplier of skilled and semi-skilled workers to New Zealand, officials said.