The Free Trade Agreement (FTA) signed between India and New Zealand formalises a balance with clarity and striking features.
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For much of modern economic history, the logic of trade was simple: comparative advantage. The system worked - until it didn’t. With a series of disruptions in recent years, marked by geopolitical tensions and the reconfiguration of global supply chains, the geometry of trade agreements is being reimagined. For like-minded democracies, the question is no longer whether to integrate, but how deeply and how fast. India, advancing toward its ambition of becoming the world’s third-largest economy, has increasingly cast its gaze eastward—this time to the Indo-Pacific—in search of partners that share its vision for economic integration and prosperity for its people. In New Zealand, it has found precisely that.
The relationship was long in the making, and at first glance, it extends beyond trade. There are people - approximately 300,000 persons of Indian origin living in New Zealand, nearly 5 percent of its population—forming a bridge that is as cultural as it is economic. It is therefore not surprising that bilateral merchandise trade, which reached USD 1.3 billion in FY 2024–25, is already witnessing a 49 percent increase from the previous year—a figure that signals acceleration. Services trade, too, has edged upward by 13 per cent. The coming together of two cricketing nations is not only exciting, but also indicative of a partnership already in motion.
Unlike trade pacts between competing manufacturing hubs, the strength of the partnership lies in its inherent complementarity. India offers scale: 1.4 billion people, a burgeoning middle class, and a digital and services infrastructure that is world-class. New Zealand offers specialization: high-tech agriculture, sustainable forestry, and niche manufacturing technologies. Together, this complementarity anchors the partnership.
Improved Market Access
The Free Trade Agreement (FTA) formalises a balance with clarity and striking features. India has excluded sensitive products such as dairy, most animal products, vegetables, sugar, artificial honey, fats and oils, arms and ammunitions, copper and aluminum articles. The elimination of duties on 100 percent of Indian exports—removes what had been a persistent constraint: tariffs of up to 10 percent on key tariff lines. This breakthrough provides an immediate competitive impetus to labour-intensive sectors such as textiles, apparel, leather, ceramics, and carpets, alongside high-growth automotive and engineering industries. India’s textiles and clothing exports, already rising globally, now enter a New Zealand market that imports nearly USD 1.9 billion worth of such goods annually with zero-duty access. Engineering exports, which grew beyond USD 110 billion worldwide, gain similar traction in a market that imports USD 11 billion in engineering products. Leather, pharmaceuticals, marine products, and plastics—each sector previously constrained by tariffs—now has room to grow and prosper.
Diversification and Scale in the Indo Pacific Region
The deal helps both countries’ trade diversification away from their traditional markets. On one hand, it provides India, duty free market access to New Zealand, a resource intensive developed economy, whereas to New Zealand companies it opens door to not only world’s most populated Indian market consisting of 1.46 billion people but also to world’s fastest growing major economy. Moreover, it helps New Zealand to reduce its exports dependence on China which account for over 28% of its merchandise exports and improve resilience in its imports supply chains. India now has access not just to a single developed economy, but to a broader regional ecosystem in the south pacific. This makes it easier for Indian exporters to operate with predictability and scale. It reduces fragmentation in market access and creates a more seamless pathway for businesses looking to expand into the Pacific region.
Trade-led growth in India offers choices. At the state level, the India–New Zealand FTA is expected to yield broad-based and structurally embedded gains, reflecting the geographically dispersed and sectorally specialised nature of India’s export base. Gujarat’s chemicals and gems, Maharashtra’s pharmaceuticals and automotive components, Tamil Nadu’s textiles, Uttar Pradesh’s leather and handicrafts, Punjab’s agri-based products, Karnataka’s pharmaceuticals and electronics, and West Bengal’s tea and engineering goods are all positioned to benefit from improved price competitiveness. Coastal economies such as Andhra Pradesh and Kerala will find enhanced value realization in marine exports, while the North-East could see improved access for tea, spices, bamboo, and organic produce. Exports can now further diversify.
Luckily, trade flows in both directions. India has granted tariff liberalisation across 70.03% of its tariff lines while keeping 29.97% tariff lines in exclusion, covering 95% of existing bilateral trade value with New Zealand. Immediate duty elimination comes on our key inputs for the industry. Imports such as wood and wood pulp will support the paper, packaging, furniture and construction sectors. The agreement also improves access to wool, waste and scrap of ferrous and non-ferrous materials, which will support domestic industries in making it competitive. These are the enablers of manufacturing. By lowering their cost, the agreement does something significant: it shifts the baseline of Indian manufacturing competitiveness.
For New Zealand, the calculus is different. India represents scale - an indispensable node in a diversification strategy, offering a magnitude of opportunity that few geographies can match. With overseas investments exceeding USD 422 billion, New Zealand’s global footprint is already substantial. India offers not just a market, but a partnership extending into production, technology, and human capital. Coming with an investment commitment of USD 20 billion, the relationship has a longer-term strategic character—one that is uniquely positioned to generate jobs, deepen capabilities, and evolve from transactional engagement into a partnership that is enduring, embedded, and built to last.
An FTA beyond Merchandise Trade
Perhaps the most defining dimension of this partnership lies in its return to fundamentals: agriculture. Agricultural technology emerges as a central pillar. The agreement outlines an Agricultural Productivity Partnership that moves to trade in knowledge. New Zealand’s expertise in cold-chain logistics, precision farming, and post-harvest management aligns closely with India’s need to enhance yields and reduce waste. Action plans for kiwifruit, apples, and honey, alongside Centres of Excellence and technical support for growers, are paired with calibrated market access. Imports of products such as apples, kiwifruit, and mānuka honey are governed through tariff rate quotas, minimum import prices, and seasonal windows, mechanisms designed to balance consumer choice with domestic protection. The architecture is careful, almost surgical.
With services, the agreement ventures into new territory: the institutionalization of talent. A dedicated quota of 5,000 visas for skilled Indian professionals—across IT, engineering, healthcare, and more—creates a structured pathway for temporary movement. Valid for up to three years, these visas are designed to address New Zealand’s projected labor shortages—estimated at 250,000 workers by 2045—while leveraging India’s vast professional base. Practitioners of AYUSH, yoga instructors, Indian chefs, and music teachers are formally acknowledged, expanding the definition of skilled mobility beyond conventional sectors.
Provisions on student mobility and post-study work visas guarantee the right to work up to 20 hours per week during studies and establish pathways for post-study residency—up to three years for STEM graduates and four for doctoral scholars. By embedding these provisions within a treaty framework, they are insulated from the volatility of domestic policy shifts.
Predictability First
The deal is an attempt to codify predictability in a world that rarely offers it.
The agreement’s scope extends further still: cooperation in MSMEs, intellectual property rights aligned with European standards for geographical indications, expedited pharmaceutical approvals, and digital customs processes, reducing clearance times to as little as 24 hours for perishable goods. By enshrining these provisions within a formal treaty, the FTA acts as a catalyst for wider collaboration and the development of human capital. The two countries have on 27th April 2026 codified a partnership that will shape their regional engagement for decades to come.
In the language of trade agreements, this is a success. In the language of geopolitics, it is alignment.
Rajesh Agrawal
(The author is Secretary, Department of Commerce, Ministry of Commerce & Industry)