India-New Zealand Free Trade Agreement: Winners and Losers in the Emerging Partnership
India and New Zealand Sign Landmark Free Trade Agreement
On April 27, India and New Zealand signed the India-New Zealand Free Trade Agreement, marking a significant milestone in bilateral trade relations. The agreement provides 100 percent duty-free access for Indian exports to New Zealand, while carefully calibrating New Delhi's own tariff concessions to protect sensitive sectors.
Key Trade Figures
| Sector | 2024 Trade Value (USD) | 2024-25 Trade Value (USD) | Increase Over Previous Year |
|---|---|---|---|
| Total Trade | $2.4 billion | $1.3 billion | 49% |
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The FTA, negotiated in a record nine months, is expected to boost trade in goods and services between India and New Zealand. The agreement will benefit a wide range of Indian sectors, particularly labour-intensive industries such as textiles, apparel, leather, footwear, gems and jewellery.
Indian Sectors to Gain
- Textiles and apparel, spanning garments, home textiles and handloom products
- Leather and footwear exporters, previously facing tariffs of up to 10 percent
- Gems and jewellery exporters
- Engineering goods, plastics and other manufactured products
- Agriculture and food products, including honey, spices, cereals, fruits, coffee and cocoa
The agreement will also enhance competitiveness in labour-intensive sectors, placing Micro, Small and Medium Enterprises (MSMEs) and job creation at the centre of the agreement's gains.
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New Zealand's Tariff Commitments
India has offered tariff liberalisation on 70.03 percent of tariff lines covering 95 percent of bilateral trade value, while keeping 29.97 percent of tariff lines in exclusion to protect India's sensitive sectors. New Zealand will eliminate duties on around 30 percent of tariff lines immediately, with phased reductions on another 35.6 percent, largely in areas that support domestic industry.
Tariff Rate Quotas (TRQs)
The following TRQs have been agreed upon:
| Product | TRQ (MT) | Duty Reduction |
|---|---|---|
| Mānuka Honey | 200 MT | 75% reduction over 5 years |
| Apples | 32,500 MT (Year 1) to 45,000 MT (Year 6) | 25% duty |
| Kiwifruit | 6,250 MT (Year 1) to 15,000 MT (Year 6) | Zero duty within quota |
| Albumins (including milk albumin) | 1,000 MT (Year 1) to 3,000 MT (Year 5) | 11% duty |
Beyond Tariffs
The agreement makes significant advances in services and mobility, including:
- A dedicated pathway on student mobility and post-study work visas for India
- Removal of numerical caps on Indian students
- Extended post-study work opportunities for STEM graduates
- Multiple-entry working holiday visas for 1,000 young Indians annually
- Streamlined regulatory access for pharmaceuticals and medical devices
- Commitment to amend geographical indications (GI) law within 18 months
The agreement also carries a proposed $20 billion investment commitment from New Zealand over 15 years, along with cooperation in areas such as agriculture, skills and services.
Investor Takeaway
The India-New Zealand Free Trade Agreement is expected to boost trade in goods and services between the two countries, with potential benefits for labour-intensive industries such as textiles and agriculture.
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