Harshvardhan Mishra
On 22 December 2025, the Government of India and the Government of New Zealand successfully concluded negotiations on a landmark Free Trade Agreement (FTA) that is set to reshape bilateral trade, investment, people mobility, and economic cooperation between the two nations. Marked as one of India’s fastest-concluded FTAs, this agreement reflects strong political will, shared vision, and deepening economic engagement in an era of evolving global trade dynamics. (Press Information Bureau)
Background: Why the India–New Zealand FTA Matters
FTAs are strategic tools in global economic diplomacy — they reduce trade barriers, increase market access, and create transparent frameworks for trade and investment. India has been proactively pursuing high-quality trade agreements to enhance export competitiveness, integrate into global value chains, and attract investment into priority sectors.
In this context, the India–New Zealand FTA stands out for its comprehensive scope, promising benefits that go far beyond traditional tariff reduction — encompassing services, labor mobility, investment, regulatory cooperation, and cultural exchanges. (Press Information Bureau)
Fast Track Negotiations: A Breakthrough Achievement
Negotiations on the India–New Zealand FTA began in March 2025 and concluded by December 2025 — a timeline that underscores both countries’ determination to accelerate economic cooperation. This rapid conclusion reflects a shared commitment to deepening bilateral ties at a time when global trade is increasingly shaped by geopolitics, supply chain realignments, and rising protectionism. (Press Information Bureau)
The FTA is expected to be formally signed and ratified after completion of each country’s internal approval processes and is likely to enter into force in 2026. (www.ndtv.com)
Key Highlights of the India–New Zealand FTA
Zero Duty Market Access for Indian Exports
One of the headline features of the agreement is the elimination of customs duties on 100% of Indian exports to New Zealand from the date the pact enters into force. This unprecedented market access is expected to significantly boost India’s export competitiveness — particularly for labor-intensive sectors that create large numbers of jobs.
Industries poised to benefit include textiles and apparel, leather and footwear, engineering goods, ceramics, carpets, and automotive components among others. (Deccan Chronicle)
Strategic Investment Commitment
New Zealand has pledged to invest USD 20 billion in India over the next 15 years under the framework of this FTA. This long-term investment commitment is geared toward strengthening economic and strategic cooperation, supporting sectors such as infrastructure, manufacturing, technology, and services. (Press Information Bureau)
Such a large-scale investment commitment not only enhances capital flows but also lays the foundation for deeper industrial and technological partnerships between Indian and New Zealand firms.
Trade Balance and Growth Potential
Bilateral trade between India and New Zealand has been steadily growing over the past decade. Merchandise trade rose from around USD 855 million in 2015–16 to USD 1.3 billion in 2024–25, while total trade including services has reached approximately USD 2.4 billion. (Press Information Bureau)
Under the new FTA framework, both nations aim to double bilateral trade over the next five years, with Indian exports and New Zealand exports alike benefiting from improved market access and reduced trade barriers. (The Economic Times)
Sector-Specific Tariff Treatment
While India has agreed to considerable tariff liberalization, it has also protected sensitive sectors to safeguard domestic industries and livelihoods. India offered tariff concessions on about 70.03% of tariff lines, while approximately 29.97% of lines were kept in exclusion or under safeguard provisions. (Press Information Bureau)
India’s excluded products primarily include:
- Dairy products (milk, cream, yoghurt, cheese, etc.)
- Certain vegetables and pulses (onions, chana, peas)
- Sugar and edible oils
- Selected metals such as copper and aluminium
- Arms and ammunition
These exclusions demonstrate India’s calibrated approach to opening markets while ensuring that key domestic sectors — especially agriculture and small industries — are protected. (Press Information Bureau)
Conversely, New Zealand agreed to immediate zero duties on all 8,284 tariff lines, including lines that previously carried tariffs near 10%. This provides Indian exporters with duty-free access from entry into force, eliminating a significant barrier to trade. (Press Information Bureau)
Beyond Goods: Services, Mobility, and Cultural Exchange
Services Market Access
This FTA includes an ambitious services component, with New Zealand offering market access across a wide range of service sectors. Notably, 118 services sectors are covered under the agreement — encompassing areas like IT and computer services, professional services, financial services, tourism, construction, and telecoms. (India Briefing)
Such broad service liberalization presents new opportunities for Indian firms and professionals, particularly in sectors where India has strong global capabilities.
Traditional Medicine and Health Services
For the first time in India’s FTA history, New Zealand signed a special Annex on Health and Traditional Medicine Services. This landmark provision facilitates trade in AYUSH systems — Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy — and supports collaboration in wellness services, medical value travel, and global recognition of India’s traditional healthcare expertise. (Press Information Bureau)
This reflects India’s soft-power and cultural strengths, and positions India as a global hub for ancient health sciences and wellness practices.
Student and Professional Mobility
A key feature of this FTA is the inclusion of provisions that expand mobility pathways for Indian students and professionals. This includes:
- Post-study work visas: Extended work opportunities after completing STEM degrees (3 years for Bachelor and Master’s, and up to 4 years for doctorates). (Press Information Bureau)
- Professional stay pathways: A quota of 5,000 visas annually for skilled occupations including AYUSH practitioners, yoga instructors, chefs, IT professionals, engineers, healthcare and education professionals. (Press Information Bureau)
- Working Holiday Visas: Up to 1,000 young Indians could participate in cultural exchange and work programs in New Zealand each year. (Press Information Bureau)
These provisions significantly deepen people-to-people ties and provide Indian youth with opportunities for global exposure, skill development, and international work experience.
Sectoral Gains: Agriculture, Manufacturing, and MSMEs
Agriculture and Horticulture Cooperation
The FTA includes action plans to enhance agricultural productivity, quality standards, and supply chain linkages — particularly for products like kiwifruit, apples, and honey. These initiatives are designed to pair market access with enhanced technical support, capacity building, and sustainable agricultural practices. (Press Information Bureau)
India and New Zealand will establish mechanisms like a Joint Agriculture Productivity Council to balance market access with protection of sensitive sectors through tariff rate quotas and action plans. (Press Information Bureau)
Empowering MSMEs, Artisans, and Job Creators
The zero-duty access for Indian exports is especially significant for Micro, Small and Medium Enterprises (MSMEs), which form the backbone of the Indian economy and are key job creators. With reduced tariffs, simplified rules of origin, and streamlined customs procedures, MSMEs will find improved access to the New Zealand market — particularly in labor-intensive and value-added product categories. (The Tribune)
Investment, Regulatory Cooperation, and Future Outlook
Enhanced Regulatory Framework
To ensure that tariff cuts translate into real market access, the FTA incorporates disciplines on sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), customs facilitation, and regulatory transparency. These provisions aim to reduce non-tariff barriers, speed up clearances, and simplify cross-border trade. (India Briefing)
Intellectual Property and Standards
The agreement includes commitments to modernize and strengthen intellectual property rights, including amendments to provide enhanced protection for Geographical Indications (GIs) — an important factor for India’s diverse regional products. (Press Information Bureau)
Strategic Significance: A Broader Geopolitical Context
The India–New Zealand FTA comes at a time when global trade is increasingly influenced by geopolitical tensions, shifting supply chains, and nations seeking diversified partners. India’s active pursuit of high-quality FTAs — including agreements with Oman, the UK, and now New Zealand — reflects its broader strategy to:
- Increase export destinations
- Enhance global competitiveness
- Attract investment into priority sectors
- Strengthen regional and global economic integration
By securing preferential trade terms with a high-income economy like New Zealand, India not only expands market opportunities for its exporters but also signals greater economic resilience and diplomatic engagement in the Indo-Pacific region. (Press Information Bureau)
Conclusion: Transformative Benefits Across the Economy
The India–New Zealand Free Trade Agreement represents a comprehensive and forward-looking economic partnership that promises wide-ranging benefits across sectors, from goods and services to investment, mobility, and cultural exchange. With zero duty access for Indian exports, a USD 20 billion investment pledge, enhanced services cooperation, expanded visa pathways, and regulatory facilitation, this FTA is poised to:
- Grow bilateral trade significantly
- Create new opportunities for MSMEs, students, and professionals
- Boost job creation and innovation
- Deepen people-to-people ties
- Strengthen India’s position in global value chains
As the agreement moves toward formal signing and implementation in 2026, it is set to become a defining feature of India’s global economic engagement and a model for high-standard trade partnerships in the years ahead. (Press Information Bureau)
Reference: https://www.pib.gov.in/PressNoteDetails.aspx?id=156654&NoteId=156654&ModuleId=3®=3&lang=2
