Aimed at opening new pathways for trade in goods and services, boosting investment flows, and enhancing labour mobility between the two nations, India and New Zealand have inked their long-awaited Free Trade Agreement (FTA) on Monday.
Union Minister of Commerce and Industry Piyush Goyal formalised the pact in the presence of his New Zealand counterpart Todd McClay. The FTA eliminates duty on 100 per cent of Indian exports and includes a USD 20 billion investment commitment over 15 years, strengthening long-term economic and strategic cooperation.
The FTA, which spans 20 chapters, saw the negotiations commence in 2010 and stall in 2015 after nine rounds. The negotiations were revived in March 2025 and were concluded in December 2025, becoming one of India’s fastest-concluded FTAs. The 20 chapters cover key areas such as trade in goods, rules of origin, services, customs procedures and trade facilitation, sanitary and phytosanitary measures, technical barriers to trade, trade remedies, dispute resolution and legal frameworks.
The FTA boosts MSMEs and jobs through zero-duty access for labour-intensive sectors, including textiles, apparel, leather, footwear, gems and jewellery, engineering goods and processed foods.
India has offered market access in 70.03 per cent of the tariff lines while keeping 29.97 per cent of the tariff lines in exclusion. Immediate Elimination (EIF) on 30 per cent, the rest is phased. Certain products are excluded, such as dairy (milk, cream, whey, yoghurt, cheese), animal products (other than sheep meat), vegetable products (onions, chana, peas, corn, almonds), sugar, artificial honey, animal, vegetable or microbial fats and oils.
Arms and ammunition, gems and jewellery, copper and articles (cathodes, cartridges, rods, bars, coils), aluminium and articles thereof (ingots, billets, wire bars), among others, are also excluded.
“Crucially, India has secured this without compromising its most sensitive sectors. Dairy, edible oils, sugar, spices, onions, and key agricultural commodities are explicitly excluded from India’s concession list, protecting domestic farmers and industry,” stated Agneshwar Sen, Trade Policy leader, EY India.
Enhanced Market Access
New Zealand’s market access offer covers the immediate elimination of duties on 100 per cent of tariff lines of New Zealand (8,284 tariff lines), from entry into force. New Zealand has maintained tariffs around 10 per cent in around 450 lines of key Indian exports in products including textile/apparel products, leather and headgear, ceramics, carpets, automobiles and auto components.
“The bilateral trade trajectory between India and New Zealand is expected to reach USD 5 billion by 2030, with a greater participation from MSMEs and labour-intensive exports. The pact will boost exports, services trade, tourism, and people-to-people linkages between both nations," highlighted Nirmal Minda, President, Associated Chambers of Commerce and Industry of India (Assocham)
Additionally, the average applied tariff of 2.2 per cent in 2025 will become zero from EIF. The offer extends gains to several products and sectors, including labour-intensive sectors like textiles and clothing, leather and footwear, emerging and advanced engineering sectors like transport/auto, pharmaceuticals, plastic and rubber, electrical and electronic machinery, mechanical machinery, chemicals, the Centre said while sharing the details in December 2025.
“The FTA is very comprehensive, very forward-looking. While it opens the door for goods and services in a massive way, it also has an investment commitment, which will encourage businesses to leverage the strengths and the scale that India offers. It will also encourage Indian businesses to look at the New Zealand market, both for access in goods and services and potential investment,” Goyal said at the signing ceremony.
Gains For Agriculture
In FTA, tariff coverage in agriculture is for 1,379 tariff lines, accounting for 17 per cent of all product tariff lines. New Zealand has agreed on focused action Plans for kiwifruit, apples and honey to improve productivity, quality and sectoral capabilities of these fruit growers in India. The cooperation includes the establishment of Centres of Excellence (CoE), improved planting material, capacity building for growers, technical support for orchard management, post-harvest practices, supply chains and food safety.
Projects for premium apple cultivators and sustainable beekeeping practices will enhance production and quality standards. This is paired with market access for the selected agricultural products (apples, kiwifruit, manuka honey) from New Zealand in India. This access will be managed through a Tariff Rate Quota (TRQ) system with Minimum Import Price (MIP) and seasonal imports, ensuring consumer choice while protecting domestic farmers.
Opportunities Beyond Goods
New Zealand has signed annex on student mobility and post-study work visa for the first time with any country. Indian students can work up to 20 hours per week while studying, even if there are policy changes in future, with extended post-study work visas (Stem bachelor: three years; Master’s: up to three years; Doctorate: up to four years).
The FTA also includes a quota of 5,000 visas for skilled Indians for a stay upto three years in the sectors of interest to India, which include Indian iconic occupations (Ayush practitioners, Yoga Instructors, Indian chefs and music teachers) and other sectors of interest such as IT, engineering, healthcare, education and construction. 1,000 young Indians annually can avail multiple entries in New Zealand for a period of 12 months.
For the first time, New Zealand has signed an annex to facilitate trade in Ayurveda, yoga and other traditional medicine services with India. This provision promotes the global recognition of India’s Ayush systems, supports medical value travel and encourages collaboration in wellness services.
The FTA also includes engagement with New Zealand’s indigenous Maori communities to promote cultural exchange and mutual respect, annexes for expedited regulatory pathways and recognition of inspections from trusted regulators (US, EU, UK, Canada). For customs and trade facilitation, it includes provisions for advance rulings, electronic documentation and faster clearance times (within 48 hours, 24 hours for perishables). On the Rules of Origin (ROO) front, it has a framework to prevent circumvention and ensure the integrity of preferential access.
Sectoral Highlights
Centre earlier said that the marine sector is covered across 363 tariff lines (4.4 per cent of total). India’s marine exports to New Zealand rose from USD 15.35 million in FY24 to USD 15.89 million in FY25. New Zealand’s marine imports from the world averaged USD 0.26 billion.
In textiles and clothing, 1,057 tariff lines are covered under the FTA, representing 13 per cent of total tariff lines. Pre-FTA peak tariffs were up to 10 per cent, now fully eliminated, to ensure Zero-duty market access, the Centre said in December. New Zealand’s imports of textiles and clothing from the world averaged USD 1.90 billion over the last three years. In the engineering sector, the FTA covers 1,396 tariff lines (16.9 per cent of total). New Zealand’s engineering imports from the world averaged USD 11 billion in the last three years and the pre-FTA average duty peaks up to 10 per cent now stand eliminated.
On the leather and footwear front, the FTA marks the removal of tariffs across 181 tariff lines covering footwear, leather goods, and accessories. The move enhances India’s market access and supports higher exports in mid- to high-value segments, including leather footwear, finished leather, bags, belts, wallets and fashion accessories.
In Pharmaceuticals, the tariff coverage is across 90 tariff lines, with Centre noting that pre-FTA peaks up to 5 per cent are now reduced to zero. In plastic and rubber, the coverage is across 397 tariff lines. New Zealand’s plastics and rubber imports from the world averaged USD 2.05 billion in the last three years, the Centre pointed out.
India-New Zealand Trade Status
India and New Zealand's merchandise bilateral trade increased from USD 855 million in 2015-2016 to USD 1,298 million in 2024-2025. The exports increased by 130 per cent, whereas imports only increased by 7.21 per cent in 10 years. In 2024-25, the exports from India to New Zealand was higher than imports from New Zealand, maintaining a positive trade balance with the country.
India’s services exports to New Zealand grew by 13% in 2024, reaching USD 634 million. Major sectors include travel, IT, and business services.
Currently, New Zealand is India’s second-largest trading partner in Oceania. In 2024, New Zealand’s imports stood at USD 47 billion, while exports were USD 42 billion. New Zealand invests nearly 8 per cent of its GDP annually overseas, with total overseas investment valued at USD 422.6 billion as of March 2025. Around 300,000 persons of Indian origin and NRIs live in New Zealand, making up nearly 5 per cent of its population. |
