The India-New Zealand Free Trade Agreement (FTA) will come into force on October 20, opening a new chapter in economic ties between the two countries. The agreement will give Indian exporters duty-free access to the New Zealand market from the first day of implementation.
India and New Zealand completed the ratification process on September 21, clearing the final step needed for the trade pact to take effect. The agreement was signed in New Delhi on April 27 by Commerce and Industry Minister Piyush Goyal and New Zealand Trade and Investment Minister Todd McClay.
Under the FTA, 100% of Indian exports to New Zealand will receive zero-duty access once the agreement becomes operational. This covers all tariff lines and is expected to improve the price competitiveness of Indian products in the New Zealand market.
Several Indian industries are expected to benefit from the removal of tariffs, including textiles and apparel, leather and footwear, gems and jewellery, engineering goods, processed food, ceramics, carpets, automobiles and auto components.
New Zealand’s tariffs on some of these products were as high as 10%. Removing those duties could give Indian exporters greater room to compete with suppliers from countries that already have preferential trade arrangements with New Zealand.
Indian manufacturers will also get tariff-free access to some important industrial inputs, including wooden logs, coking coal and metal scrap. This could help lower input costs for certain industries and support manufacturing activity.
What New Zealand gets
The agreement also opens India’s market to New Zealand products, although the tariff concessions are structured differently.
New Zealand will receive tariff-free access immediately for 57% of its exports to India, with that share expected to rise to 82% as the agreement is phased in. Overall, preferential treatment will cover about 95% of New Zealand’s current exports to India through tariff elimination or reductions.
New Zealand products such as forestry goods, wool, sheep meat and coal will benefit from tariff reductions. The agreement also provides preferential quota access for products such as kiwifruit and apples.
However, India has retained protection for several sensitive sectors. Dairy, sugar, onions, chickpeas, peas, corn and almonds, among other products, have been kept outside the tariff concessions. This allows India to open its market while maintaining safeguards for selected domestic sectors.
The pact also provides for an agricultural productivity partnership between the two countries. Cooperation is expected in areas such as kiwifruit, apples and honey, bringing together New Zealand’s agricultural technology and India’s large market.
$20 billion investment commitment
The FTA goes beyond goods and tariffs. New Zealand has committed to facilitate up to $20 billion of investment in India over 15 years.
The investment component is expected to create opportunities across manufacturing and other sectors. The Indian government has also indicated that New Zealand companies could use India as a manufacturing base to serve the domestic market and export to other countries.
The agreement includes provisions covering services, professional mobility, education and temporary entry of skilled workers. These measures are intended to expand the relationship beyond merchandise trade and create opportunities for professionals and businesses in both countries.
Trade target set for 2030
India and New Zealand have set a target of doubling bilateral trade in goods and services to around NZ$7 billion, or about ₹35,000 crore, by 2030. Bilateral trade has remained relatively modest compared with India’s trade with several other major partners, leaving room for expansion.
India’s exports to New Zealand include pharmaceuticals, textiles, engineering products and refined petroleum products. New Zealand exports goods such as wood and forestry products, wool, metals and agricultural commodities to India.
The immediate focus will now shift from the signing of the agreement to its implementation. Businesses will need to understand the new tariff schedules, rules of origin and other requirements before claiming preferential treatment under the FTA.
The October 20 start date therefore marks more than just the removal of import duties. It gives Indian companies a wider opening in the New Zealand market while creating new opportunities for New Zealand businesses and investors in India.
With global trade facing continuing uncertainty, both countries are looking to use the agreement to diversify markets, increase investment and strengthen supply-chain links. The success of the India-New Zealand FTA will ultimately depend on how quickly businesses convert the new market access into actual trade and investment.
