India–New Zealand seal FTA: Zero-duty access for Indian exports, $20 billion investment pledge
Along with zero-tariff access to India’s labour-intensive sectors such as textiles, garments, leather, footwear, seafood, handicrafts, engineering products and automobiles, New Zealand has pledged to invest $20 billion in the country over a 15-year period. India has offered tariff liberalization on 70% tariff lines covering 95% of bilateral trade.
“An important moment for India New Zealand relations, a strong impetus for bilateral trade and investment! My friend Prime Minister Christopher Luxon and I recently had a great conversation following the signing of the landmark India-New Zealand Free Trade Agreement,” Prime Minister Narendra Modi said in a post on channel X. he said.
Historical Turning Point: Prime Minister Modi
In his post on
Once signed, it will be India’s seventh trade agreement since 2021. The agreement will be signed within two to three months after the legal clearance of the text is completed. Officials expect the free trade agreement to come into force within the next six to seven months, as New Zealand will need parliamentary approval. The third free trade deal this year, following a similar agreement with the UK in July and with Oman earlier this month, will give India more temporary work visas and easier access to medicines and medical devices. New Zealand will initially receive zero tariffs on wool, coal and wood, lower duties on wine, avocados, blueberries and dates, and quota-based tariff cuts on kiwi and apple exports. “New Zealand is the first country to secure preferential access for apples in any India Free Trade Agreement and the first kiwifruit exporter to secure duty-free access for kiwis plus a 50% duty reduction outside the quota,” the New Zealand government said in a statement. The agreement will help Indian exporters diversify their shipments in the Oceania region, which has been hit by 50 percent tariffs imposed by the US on Indian goods. India has already signed a trade agreement with Australia.
Commerce and Industry Minister Piyush Goyal said the agreement was a “win-win” for both countries. “We have been very sensitive about protecting all sectors of interest to farmers, such as rice, wheat, dairy, soya and various other farm produce, agricultural products, which have no access,” he said. “We are also very conscious of ensuring that our MSMEs and startup innovators get huge opportunities in New Zealand.” Dairy and agriculture are posing hurdles in talks on the long-awaited India-US trade deal, and Washington is seeking greater market access. Talks on the US trade deal are at an “advanced stage”, Goyal said.
India’s demand for access to dairy and agricultural markets were among the reasons for India’s withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019. “Current bilateral trade with New Zealand is small but the potential for growth is huge,” Goyal said. Bilateral trade in goods was $1.3 billion in FY25.
Commerce Minister Rajesh Agrawal said that although only five official tours were held, both sides remained in constant touch to complete the talks. The $20 billion investment commitment is for foreign direct investment (FDI) only, particularly in manufacturing and infrastructure. “In the last 25 years, New Zealand has invested only $75 million. This will pave the way for cooperation with farmers and MSMEs and will also include investments in education and sports. We are preparing a field for the Olympics and sports will be a good area of cooperation,” Goyal said.
Key benefits
With New Zealand removing tariffs as high as 10 per cent, Indian textile and garment exporters will have zero duty access across 1,057 tariff lines. For wine, lamb and wool, India has made an offer similar to the one it made under the interim trade agreement with Australia. India has reduced tariffs on manuka honey by 75% over five years, making New Zealand the first country to grant preferential access to honey in any Indian Free Trade Agreement.
“Ficci welcomes the conclusion of the India-New Zealand FTA, which is an important step towards deepening economic engagement with the Indo-Pacific region. The agreement is expected to create new growth opportunities for businesses in both countries by enhancing bilateral trade, investment flows and greater cooperation,” said Anant Goenka, chairman of Ficci.
Excluded products
Products excluded under the agreement include dairy products (milk, cream, whey, yoghurt, cheese, etc.); animal products (except mutton); vegetable products (onion, chana, peas, corn, almonds, etc.); sugar; artificial honey; animal, vegetable or microbial fats and oils. The list also includes weapons and ammunition; precious stones and jewels; copper and articles (cathodes, cartridges, rods, rods, coils); aluminum and articles made of aluminum (ingots, billets, wire rods).
Quotas, import price
Under the agreement, India gained greater market access on certain agricultural products with quotas, seasonal import windows and minimum import prices (MIPs), including manuka honey, apples, kiwi fruit and albumins including milk albumin (used in pharmaceuticals and whey protein production).
Manuka honey, a niche product in New Zealand, currently faces a 66% duty. India granted customs duty concession on up to 200 tonnes per year with MIP of $20 per kg. The 75 percent tariff reduction will be spread over a period of five years. Beyond this quota, MIP will be increased to $30 per kg.
The current tax on apples is 50%. India will grant customs duty privileges on 32,500 tonnes of apples in the first year of the agreement. In the sixth year, the quota will be increased to 45,000 tonnes with a 25% customs duty at a MIP of $1.25 per kg. Beyond these quotas, a 50% customs duty will apply. Similarly, the current tax on kiwi fruit is 33%. The tariff rate quota (TRQ) will be issued at 6,250 tonnes (first year), which will be increased to 15,000 tonnes in the sixth year with a MIP of $1.80 per kg with zero duty. Beyond this quota, a 50% preference margin with a MIP of US$ 2.5 per kg will come into effect.
The current duty for albumins, including milk albumin, is 22%. Under TRQ, the quota will be 1,000 metric tons (MT) in the first year of the agreement, and the quota will be increased to 3,000 MT in the fifth year. Beyond this, the ordinary tax will come into force.
Services, visa
Officials said the agreement offers the “most ambitious” service offer in any of India’s free trade agreements to date. The agreement will open pathways to skilled employment through a new temporary entry visa for Indian professionals in skilled trades, with a quota of 5,000 visas at any one time and a stay of up to three years. This pathway covers Indian professions such as AYUSH practitioners, yoga instructors, Indian chefs and music teachers, as well as high-demand sectors such as IT, engineering, healthcare, education and construction, strengthening workforce mobility and trade in services.
Goyal said the India-New Zealand Free Trade Agreement will provide students and professionals with greater pathways for mobility and enhanced opportunities for education and employment. “Those who take undergraduate courses or a bachelor’s degree with honors will be eligible for a three-year work visa, while those who graduate or take a post-graduation degree in a STEM field will be eligible for a four-year work visa,” he said. By 2045, New Zealand could face a shortage of at least 250,000 workers, threatening the sustainability of pensions and healthcare. Officials said the deal was an opportunity for India to position itself as New Zealand’s main supplier of skilled and semi-skilled workers.
