India-New Zealand FTA to come into effect on October 20
What's the story
The India-New Zealand Free Trade Agreement (FTA) will come into effect on October 20, after both countries completed the necessary domestic procedures to ratify it. The deal was approved by New Zealand's Parliament on September 16 with a vote of 93-29 in favor. Under this agreement, all Indian exports will get duty-free access to the New Zealand market once it comes into effect.
Sectoral impact
Pact to benefit labor-intensive and manufacturing sectors
The India-New Zealand FTA is expected to benefit labor-intensive and manufacturing sectors such as textiles, apparel, leather, footwear, the engineering goods, gems and jewelry.
It will also provide duty-free access for several manufacturing inputs from New Zealand such as wooden logs, coking coal, and metal waste/scrap.
The deal seeks to enhance market access while ensuring protection for Indian producers in sensitive sectors like dairy.
Trade balance
India has offered NZ market access on 70% tariff lines
India has offered New Zealand market access on about 70% of its tariff lines, covering nearly 95% of bilateral exports by value.
Some tariffs will be eliminated immediately, while others will be phased out over time.
The FTA also provides improved access for several New Zealand products in the Indian market such as sheep meat, wool, and forestry products with significant tariff reductions.
Investment boost
FTA encourages $20B investment from New Zealand into India
The FTA includes a commitment to encourage $20 billion of private-sector investment from New Zealand into India over 15 years.
This investment is aimed at sectors like agriculture, manufacturing, infrastructure, start-ups, and emerging technologies.
New Zealand will promote investments into India, while India will set up a dedicated New Zealand Investment Desk to facilitate investors under this agreement.
Professional mobility
Services and movement of professionals
The India-New Zealand FTA also covers the services and movement of professionals.
A dedicated quota of 5,000 Temporary Employment Entry visas has been created for Indian professionals in specified occupations under this agreement.
It also provides post-study work pathways for eligible students, including STEM graduates and doctoral scholars, further strengthening the bilateral ties between the two nations.