India, New Zealand finally ink a free trade agreement
What's the story
India and New Zealand have signed a landmark Free Trade Agreement (FTA), marking a major milestone in their economic relationship. The deal was signed in New Delhi by Commerce and Industry Minister Piyush Goyal and New Zealand's Trade and Investment Minister Todd McClay. The FTA is expected to boost bilateral trade by eliminating tariffs on thousands of export items from both countries. Notably, total bilateral trade in goods and services stood at roughly $2.4 billion back in FY25.
Trade boost
100% tariff-free access to Indian export items
The FTA will give 100% tariff-free access to 8,284 Indian export items. These include textiles, pharmaceuticals, engineering goods, and certain agricultural products. In return, India will eliminate duties on about 70% of tariff lines covering nearly 95% of New Zealand's exports by value. This includes sectors such as clean energy, food processing, agritech, and manufacturing where New Zealand has pledged $20 billion investment over the next 15 years.
Strategic gain
Strategic and economic win for India
The FTA is expected to not just boost trade but also strengthen supply chain integration and long-term capital flows. It is seen as a major strategic and economic win for India, especially exporters. Indian goods in textiles, apparel, leather, pharmaceuticals, machinery, and auto components will enter New Zealand duty-free. This removes an average applied tariff of 2.2% including a 10% tariff on some labor-intensive exports like clothing, leather products which now get tariff-free treatment too.
Mobility provisions
Mobility pathways for Indian professionals
The FTA also creates mobility pathways for Indian professionals in IT, healthcare, engineering, and education. The agreement creates new opportunities for skilled workers through a Temporary Employment Entry Visa. This method will permit up to 5,000 Indian professionals in skilled jobs to stay and work in New Zealand for up to three years at any given time.
Steps
Fast-track mechanism for Indian food processors
It has a fast-track mechanism that allows Indian food processors to import New Zealand inputs duty-free for processing re-export. This is aimed at helping India realize its goal of becoming a global food processing hub. Currently, India's main exports to New Zealand are pharmaceuticals, textiles, engineering goods, petroleum products while imports are dominated by wood, wool, iron, steel, and agricultural commodities.