Key Takeaways
- India and New Zealand have announced a free trade deal that will make a majority of goods trade between the two countries duty-free
- The trade pact will eliminate and reduce tariffs on 95% of New Zealand’s exports and allow mobility of professionals, skilled labor, and students from India to New Zealand
- New Zealand will invest $20 billion in India over the next 15 years
- India has secured a "zero duty market" on all its exports to New Zealand, including textiles, apparel, leather, footwear, marine products, gems, and jewelry
- The deal excludes dairy, coffee, milk, cream, cheese, yoghurts, whey, caseins, onions, sugar, spices, edible oils, and rubber to protect Indian farmers and the domestic industry
Introduction to the Free Trade Deal
India and New Zealand have recently announced a historic free trade deal that is expected to boost trade between the two countries. The deal, which will be reviewed after one year, will be signed in the first half of next year and will make a majority of goods trade between the two countries duty-free. This agreement is a significant step forward in the economic relationship between India and New Zealand, and is expected to have far-reaching benefits for both countries. The trade pact will eliminate and reduce tariffs on 95% of New Zealand’s exports, with nearly 57% of exports from the country becoming duty-free in India from day one.
Benefits for New Zealand
The free trade deal is expected to have numerous benefits for New Zealand, including increased access to the Indian market. New Zealand Trade and Investment Minister Todd McClay stated that the agreement eliminates and reduces tariffs on 95% of New Zealand’s exports, which will provide a significant boost to the country’s economy. The pacific island nation will also invest $20 billion in India over the next 15 years, which will help to strengthen the economic relationship between the two countries. Additionally, the deal will allow mobility of professionals, skilled labor, and students from India to New Zealand, which will provide opportunities for Indians to learn, work, and grow on a global stage.
Benefits for India
The free trade deal is also expected to have numerous benefits for India, including increased access to the New Zealand market. India has secured a "zero duty market" on all its exports to New Zealand, which includes textiles, apparel, leather, footwear, marine products, gems, and jewelry. This will provide a significant boost to India’s exports and will help the country to achieve its ambition of becoming an export powerhouse. The deal will also give Indian businesses and youth an opportunity to learn, work, and grow on a global stage, which will help to drive economic growth and development in the country. India’s Commerce Minister Piyush Goyal stated that the deal is about building trade around people and launching opportunities, and will provide a stable and predictable framework to unlock the full potential of the relationship between the two countries.
Protection for Indian Farmers and Domestic Industry
However, to ensure protection to farmers and the domestic industry, New Delhi has excluded certain products from the deal, including dairy, coffee, milk, cream, cheese, yoghurts, whey, caseins, onions, sugar, spices, edible oils, and rubber. This will help to prevent any adverse impact on Indian farmers and the domestic industry, and will ensure that the benefits of the deal are shared equitably. Ranjeet Mehta, chief executive officer and secretary general of the Indian industry body PHDCCI, stated that the trade pact provides policy certainty and lowers input costs for manufacturing, creating a vision for long-term economic resilience.
Current Trade Relationship
The current trade relationship between India and New Zealand is significant, with bilateral merchandise trade standing at $1.3 billion in 2024-25, and total trade in goods and services standing at $2.4 billion in 2024. The free trade deal is expected to boost trade between the two countries and provide a stable and predictable framework to unlock the full potential of the relationship. The deal comes at a time when India is looking to diversify its exports to make up for the impact of U.S. tariffs, which have had a significant impact on India’s exports to the U.S. After steep tariffs came into force in August, India’s exports to the U.S. fell nearly 12% in September and 8.5% in October, before a sharp growth of 22.6% in November.
Conclusion
In conclusion, the free trade deal between India and New Zealand is a significant step forward in the economic relationship between the two countries. The deal is expected to have numerous benefits for both countries, including increased access to each other’s markets, increased investment, and mobility of professionals, skilled labor, and students. The deal is also expected to provide a stable and predictable framework to unlock the full potential of the relationship between the two countries, and will help to drive economic growth and development in both India and New Zealand. With the deal expected to be signed in the first half of next year, it is likely to have a significant impact on the trade relationship between the two countries in the coming years.