India and New Zealand have recently inked a significant free trade agreement (FTA) that is set to bolster economic ties between the two nations. The deal, signed in April, aims to reduce tariffs on key fruit imports such as kiwifruit and apples, offering a plethora of opportunities for Indian exports and simplifying visa access for both countries.
The FTA, which was finalized after nine months of negotiations, is considered one of India’s swiftest trade agreements to date. It will see the elimination or reduction of tariffs on 95% of New Zealand’s exports to India, encompassing products like seafood, iron, steel, and scrap aluminum. New Zealand Prime Minister Christopher Luxon hailed the agreement as a gateway to the vast Indian market, providing access to 1.4 billion consumers.
During the signing ceremony, Indian Trade Minister Piyush Goyal highlighted New Zealand’s commitment to invest $20 billion in the Indian market. However, certain sectors like dairy, coffee, sugar, spices, edible oils, and rubber have been exempted from market access commitments to safeguard domestic producers. This decision was met with disappointment from New Zealand’s dairy industry, the country’s largest export sector.
The FTA is part of India’s strategy to diversify its exports amidst global trade tensions, including uncertainties surrounding U.S. tariffs and conflicts in the Middle East. In addition to the New Zealand agreement, India is actively engaging in trade talks with other major partners such as Britain, Oman, and the European Union to expand market access.
Under the terms of the deal, New Zealand will provide market access across 118 services sectors, ranging from professional services to construction and tourism. The agreement also includes provisions for 5,000 temporary employment visas for Indian professionals, 1,000 working holiday visas, and enhanced post-study work rights for Indian students.
The FTA will gradually reduce tariffs on wine over a ten-year period and offer immediate duty-free access for dairy and other food ingredients intended for re-export. Additionally, high-value dairy products like infant formula will see duty-free access phased in over seven years, with a tariff reduction on milk albumins within a specific quota for New Zealand.
New Zealand’s Trade Minister Todd McClay emphasized that the agreement aligns with the country’s goal of doubling exports within a decade, projecting the creation of thousands of jobs and billions in additional exports. More than half of New Zealand’s exports to India will become duty-free immediately, with tariffs on other products gradually decreasing over time.
The FTA is expected to provide a significant boost to key Indian export sectors like textiles, leather, pharmaceuticals, engineering goods, and automobiles. It will also facilitate duty-free access to industrial inputs such as wooden logs, coking coal, and metal scrap. Despite current modest two-way trade figures, the agreement is poised to enhance economic cooperation between India and New Zealand in the coming years.
In conclusion, the India-New Zealand FTA represents a landmark development in bilateral trade relations, offering mutual benefits and paving the way for deeper economic collaboration between the two nations.
(Additional reporting by Renu Jose in Sydney; Editing by Clarence Fernandez)
