INDIA NEW ZEALAND FTA NEGOTIATIONS
Background:
- India and New Zealand have officially announced the resumption of negotiations for a Free Trade Agreement (FTA), nearly ten years after the discussions stalled.
- This decision comes after a meeting between Piyush Goyal, India’s Commerce and Industry Minister, and Todd McClay, New Zealand’s Minister for Trade and Investment.
- The announcement aligns with the visit of New Zealand’s Prime Minister Christopher Luxon to India from March 16, 2025.
KEY DETAILS
- Initial Talks (2010-2015): India and New Zealand had started negotiations in 2010, aiming to create a Comprehensive Economic Cooperation Agreement (CECA).
- The goal was to enhance trade in goods, services, and investment. However, after nine rounds of discussions, these talks were stalled in 2015.
- Resumption of Talks: In March 2025, the two countries declared the launch of renewed FTA negotiations. The FTA aims to:
- Promote supply chain integration.
- Improve market access for both nations.
- Promote balanced economic outcomes that benefit both sides.
- Current Bilateral Trade: Bilateral trade between India and New Zealand has been growing steadily, surpassing $1 billion during the period of April-January 2025.
- In 2023-24, trade between the two nations stood at $873.4 million, with exports amounting to $538.33 million and imports totaling $335 million.
POTENTIAL BENEFITS
- India’s Export Opportunities: India exports various goods to New Zealand, including:
- Clothing, home textiles, and fabrics.
- Medicines and medical supplies.
- Refined petrol, auto parts, and electronics.
- Iron and steel, agricultural machinery.
- Shrimps, basmati rice, and diamonds.
- New Zealand’s Export Opportunities: New Zealand primarily exports to India:
- Agricultural products like apples, kiwifruit, and dairy products.
- Meat products such as lamb and mutton.
- Coking coal, logs, timber, wool, and scrap metals.
- Cultural Link: The large Indian diaspora in New Zealand, with over 250,000 people of Indian origin, offers a strong cultural connection, which could further enhance trade ties.
CHALLENGES
- Tariff Concerns:
- New Zealand already offers duty-free access to a significant number of Indian goods (58.3% of New Zealand’s tariff lines are duty-free).
- India’s tariff rates are comparatively higher, with an average tariff of 17.8%, unlike New Zealand’s much lower average of 2.3%.
- Agricultural Concessions: One of the key areas of negotiation will be agricultural products like apples, kiwi, dairy, and wine.
- India has been cautious in offering significant duty concessions in agricultural products in its previous FTAs, including with Singapore, Japan, South Korea, and the ASEAN
- Hence, reaching a consensus on agricultural tariffs could be a tricky issue in the talks.
CRITICAL OBSERVATIONS
- According to the Global Trade Research Initiative (GTRI), the FTA might not have significant benefits for India’s domestic industries as they already have considerable access to the New Zealand market.
- This is due to the fact that New Zealand already offers duty-free access to many Indian products.
- Trade Growth: Despite the challenges, both nations are optimistic that the FTA will unlock new business opportunities, helping businesses and consumers in both countries by enhancing trade and market access.
ABOUT INDIA NEW ZEALAND RELATIONS
- Diplomatic ties between India and New Zealand were established in 1952.
- Both are part of the Commonwealth of Nations and share common law practices.
- Strong cultural and sporting ties, especially in cricket, hockey, and mountaineering.
Key Policies and Strategies:
- Opening Doors to India (2011):
- New Zealand made India a priority in foreign policy, renewed in 2015.
- NZ Inc. India Strategy (2011):
- Strategy to make India a key partner in trade, politics, and economy.
- India-NZ 2025 Strategy (2020):
- Focused on long-term, strategic
BILATERAL VISITS & HIGH LEVEL MEETINGS
Prime Ministerial Meetings:
- PM Modi and PM Luxon met during East Asia Summit (October 2024) and had phone discussions in July 2024.
- President Droupadi Murmu visited New Zealand in August 2024.
Ministerial Meetings:
- Commerce Minister Piyush Goyal and NZ Trade Minister Todd McClay met in December 2024.
- External Affairs Minister Dr. S. Jaishankar and NZ DPM Winston Peters met in November 2024.
Institutional Dialogue Mechanisms:
- India-NZ Foreign Ministry Consultations (FMC):
- 5th FMC held in August 2023, covering trade, defense, education, and cultural exchanges.
- Joint Trade Committee (JTC):
- Latest meeting in April 2024, focused on trade growth and pharmaceutical cooperation.
Bilateral Trade:
- Total Trade (2023-24): US$ 1.75 billion.
- India’s Imports from NZ: US$ 0.91 billion.
- India’s Exports to NZ: US$ 0.84 billion.
- Key Imports to India: Wool, Iron & Steel, Fruit & Nuts, Aluminium.
- Key Exports from India: Pharmaceuticals, Mechanical Machinery, Made-Up Textiles, Pearls & Precious Stones.
Trade Growth (Last Five Years):
- Total trade has been growing, with a peak in 2023 at US$ 1.75 billion.
DEFENCE COOPERATION
- Naval Visits:
- Rear Admiral David Proctor, Chief of the Royal New Zealand Navy, visited India in February 2024.
- Indian Navy ships INS Sahyadri and INS Kolkata visited New Zealand in September 2023.
- Combined Naval Task Force:
- New Zealand led the Combined Task Force 150 (CTF-150) in January 2025, with Indian Navy personnel.
- Customs Cooperation:
- India and New Zealand signed a Customs Cooperation Agreement in August 2024 to increase trade and fight crime.
Education and Cultural Ties:
- Indian Students in New Zealand: India is the second-largest source of international students in New Zealand with 8,000 students.
- IIT Delhi-NZ Collaboration: Agreement in 2020 to set up a NZ Centre at IIT Delhi for research in cybersecurity, robotics, and medical technology.
People-to-People Ties:
- The Indian community in New Zealand (around 292,092) plays a significant role in strengthening bilateral ties.
New Indian Consulate in Auckland:
- A new Indian Consulate opened in September 2024, further enhancing cultural and diplomatic relations.
CONCLUSION
India and New Zealand have a strong and growing relationship in many areas, including trade, defence, education, and cultural exchanges.
Both countries are committed to working closely on a range of issues, such as trade agreements, educational cooperation, and shared defence interests.
With more high-level visits, expanding trade, and deeper people-to-people connections, the future of their relationship looks promising.
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