Policy Update
Riddhi Suthar
Background
The once-in-a-generation free trade agreement between India and New Zealand is a comprehensive framework that encompasses market access, agricultural productivity, investment, talent mobility, collaboration in sports, tourism, and people-to-people ties, marking a historic milestone in bilateral economic relations.(Ministry of Commerce and Industry, 2025). The FTA is designed to benefit manufacturers, farmers, MSMEs, women entrepreneurs, students, and skilled professionals across both nations.
The idea of an FTA between India and New Zealand dates back to 2010, however the agreement was concluded on 22 December 2025 after five formal rounds of negotiations, making it one of India’s fastest negotiated FTAs (within 9 months). This reflected renewed geopolitical and economic priorities.
The FTA was driven by the relatively low bilateral trade volume ( $2.4 billion in 2024) despite growing economic ties, along with India’s strategy to diversify export markets and the need to enhance supply chain resilience, investment flows, and Indo-Pacific cooperation.
The main objectives of the India–New Zealand FTA are to enhance bilateral trade and economic cooperation by reducing trade barriers and facilitating smoother trade flows, expand market access through tariff reduction or elimination on a wide range of goods and services, promote investment flows, strengthen supply chains and economic resilience in the Indo-Pacific region, and encourage sectoral cooperation in areas such as agriculture, technology, education, and services.
The India–New Zealand Free Trade Agreement (FTA) is designed as a balanced trade framework featuring phased tariff liberalisation over a period of 3–10 years. It also provides protection to sensitive sectors and places a strong focus on MSMEs and labour-intensive industries. Efforts have been undertaken to strengthen regional and global value chains. The agreement further includes provisions to facilitate the mobility of professionals and students through improved visa pathways and services cooperation.
Functioning
The India–New Zealand FTA reflects a strategic and economic policy shift toward deeper bilateral relations. The main functions of the India–New Zealand FTA are as follows:
- The FTA eliminates 100% of tariffs on Indian exports to New Zealand, making Indian products more competitive in the New Zealand market. The agreement works as a framework to increase bilateral trade, investment, and long-term economic partnership between the two countries.
- New Zealand has committed around USD 20 billion in investment over 15 years, strengthening industrial and strategic cooperation. Joint strategies to promote investment, research, and innovation, particularly in renewable energy, digital services, and modern infrastructure, are fully covered under this agreement. Apart from promoting India’s AYUSH systems internationally, the agreement also encourages medical value travel, positioning India as a global wellness hub.
- A special emphasis is placed on helping MSMEs, labour-intensive industries, and women entrepreneurs gain export opportunities and market access. While the FTA also creates pathways for student mobility, post-study work visas, and skilled professionals in sectors like STEM, healthcare, and IT.
- India protects key domestic sectors such as dairy & animal products, vegetable products, Arms & ammunition, jewellery, copper and Aluminium Articles while selectively liberalising trade.
- The agreement promotes cooperation in services, traditional medicine, customs facilitation, digital trade, and regulatory coordination. And beyond economics, the FTA strengthens India–New Zealand strategic ties and broader Indo-Pacific engagement.
The agreement also needs strong dispute settlement mechanisms and continuous policy coordination to ensure long-term sustainability.
Performance
Performance Assessment of Important Sectors of the India–New Zealand FTA (2026)
| Sector | Current Export Performance | Trade Change with New Zealand | Tariff Benefit Under FTA |
| Agriculture & Processed Food | India’s agri exports reached USD 51.8 bn in FY25 | Growing exports of spices, tea, cereals, processed foods | Tariffs up to 5% eliminated on 1,379 tariff lines |
| Marine product | Marine exports crossed USD 7 bn | Exports to New Zealand rose from USD 15.35 mn to USD 15.89 mn | Tariffs reduced to zero on 363 tariff lines |
| Textile and Clothing | Sector exports reached USD 36.9 bn | Exports to New Zealand increased from USD 98.14 mn to USD 103.14 mn | Tariffs up to 10% eliminated on 1,057 tariff lines |
| Engineering Goods | Engineering exports reached USD 77.5 bn | Exports to New Zealand increased from USD 47.76 mn to USD 68.26 mn | Tariffs up to 10% eliminated on 1,396 tariff lines |
| Pharmaceuticals | Pharma exports reached USD 24.5 bn | Exports to New Zealand reached USD 57.52 mn | Tariffs up to 5% eliminated on 90 tariff lines |
| Services & Skilled Mobility | Services exports grew by 13% in 2024 | Expanded access for Indian professionals and students | Mobility commitments across 118 sectors |
Source: Author’s compilation using data from Press Information Bureau (PIB), Department of Commerce, Government of India, and DGFT Trade Statistics.
The results of the India-New Zealand Free Trade Agreement’s long-term implementation are still developing because it was recently concluded in 2026. However, sector-wise analysis can be used to evaluate early performance.
- Agricultural Productivity Partnership provisions will improve farming productivity and supply-chain integration as the Zero-duty access enhances the competitiveness of Indian agri-products in Oceania markets.
- The Indian exporters in the marine sector benefit from faster customs clearance provisions under the FTA as it leads to improved market access opportunities since New Zealand imports around USD 0.26 billion worth of marine products globally.
- The textile and clothing sector is one of the biggest beneficiaries of the FTA as zero-duty access significantly improves India’s competitiveness against countries like China and Vietnam. through increased export and employment generation. Labour-intensive industries and MSMEs benefit.
- The Reduced tariffs and enhanced competitiveness for machinery, industrial goods, & manufacturing exports have led to the highest export growth rates in the engineering sector.
- The FTA expands access to New Zealand’s pharmaceutical market. Recognition of inspections from trusted regulators reduces compliance costs and Regulatory cooperation.
- The agreement significantly strengthens India’s services diplomacy. International employment opportunities are opened especially for IT, engineering, healthcare, education, and construction sectors. Enhanced student mobility, strengthens educational cooperation and people-to-people ties.
- Overall, the India–New Zealand FTA is expected to strengthen India’s export competitiveness through tariff liberalisation, regulatory cooperation, and improved market access.
- The FTA expands access to New Zealand’s pharmaceutical market. Recognition of inspections from trusted regulators reduces compliance costs and Regulatory cooperation.
- The agreement significantly strengthens India’s services diplomacy. International employment opportunities are opened especially for IT, engineering, healthcare, education, and construction sectors. Enhanced student mobility, strengthens educational cooperation and people-to-people ties.
Overall, the India–New Zealand FTA is expected to strengthen India’s export competitiveness through tariff liberalisation, regulatory cooperation, and improved market access.
Impact
The India–New Zealand Free Trade Agreement (FTA), is expected to significantly deepen bilateral economic engagement by integrating supply chains, improving labour mobility, market access and investment flows. All the Indian exports entering New Zealand will be provided zero-duty access due to the FTA which is expected to increase India’s export competitiveness in labour-intensive and value-added sectors such as engineering goods, marine products, textiles and pharmaceuticals. The agreement aims to increase bilateral trade and improve the price competitiveness of Indian products. The relatively high-income small-scale market of New Zealand serves as an opportunity for Indian MSMEs to diversify exports beyond traditional Western markets. The FTA particularly benefits labour-intensive industries and supports the “Make in India” strategy by encouraging export-led industrial growth.
The agreement is strategically more important for services and mobility than for trade volume alone according to the Global Trade Research Initiative (GTRI). The FTA strongly focuses on increasing opportunities for Indian skilled workers and students, strengthening educational collaboration, improving remittance flows and enhancing India’s global talent mobility.
New Zealand’s long-term investments across sectors such as renewable energy, infrastructure, and agri-technology increase its strategic economic presence in the Indo-Pacific region. Simultaneously supporting India’s wider economic modernisation and diversification goals. Deeper economic connection with India aids New Zealand in diversifying away from an excessive dependence on regional economies. As a result, the FTA is important from an economic and geopolitical standpoint in the developing Indo-Pacific order.
Emerging Issues
Despite its advantages, the India-New Zealand Free Trade Agreement raises certain new issues. Since many MSMEs still struggle with awareness, logistics support, and export financing, large companies are probably going to benefit more at first. In a similar vein, skilled mobility provisions can lead to brain drain and contribute to long-term migration ofskilled talent abroad.
The gradual opening of the wine and spirits sector under the India–New Zealand FTA is politically sensitive because domestic producers fear increased competition from imported alcoholic beverages, particularly premium wines and spirits from New Zealand. Indian state governments also derive significant revenue from alcohol taxation, making any tariff reduction a fiscal and political concern. Additionally, the cheaper or higher quality imports could affect small domestic manufacturers and grape growers, especially in emerging wine producing regions of India.
Way forward
More than just a traditional trade agreement, the India-New Zealand Free Trade Agreement reflects India’s broader strategy of creating robust supply chains, broadening export markets, strengthening Indo-Pacific partnerships and encouraging export-led growth under the goal of a “Viksit Bharat.”
India must strengthen MSME integration into global value chains through better finance, logistics, and compliance support while addressing concerns over brain drain and sensitive sectors like wines and spirits. Going forward, regular policy reviews and deeper cooperation in technology, renewable energy, agriculture, education, and services will be crucial to maximise the FTA’s benefits and if implemented effectively, the India–New Zealand FTA can emerge as a model of modern trade diplomacy.
References
Department of Economic Affairs. (2025). Economic survey 2024–25: External sector. Ministry of Finance, Government of India.https://www.indiabudget.gov.in/economicsurvey/
Indian Council of World Affairs. (2025). India–New Zealand relations: Emerging dimensions. https://www.icwa.in
Ministry of Foreign Affairs and Trade. (2026). New Zealand–India Free Trade Agreement. Government of New Zealand. https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-india-free-trade-agreement
Ministry of Foreign Affairs and Trade. (2026). Overview of the New Zealand–India Free Trade Agreement. Government of New Zealand. https://www.mfat.govt.nz/en/trade/free-trade-agreements/free-trade-agreements-concluded-but-not-in-force/new-zealand-india-free-trade-agreement/overview
Press Information Bureau. (2024). India and New Zealand bilateral trade and economic cooperation update. Government of India. https://pib.gov.in
Press Information Bureau. (2025). Cabinet approves launch of India–New Zealand FTA negotiations. Government of India. https://pib.gov.in
Press Information Bureau. (2026). India and New Zealand conclude Free Trade Agreement negotiations. Government of India. https://pib.gov.inThe Economic Times. (2026). India and New Zealand forge historic Free Trade Agreement to surge bilateral trade and investment. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-new-zealand-free-trade-agreement-2026-india-nz-fta-deal-benefits-bilateral-trade-pact-latest-news-exports-imports-economic-partnership-talks-once-in-a-generation-trade-pact/articleshow/130546841.cms
The Economic Times. (2026). India–New Zealand Free Trade Agreement: Benefits, trade opportunities and strategic significance. https://economictimes.indiatimes.com
The Economic Times. (2026). India–NZ FTA explained: Duty-free trade, services push and farm safeguards. https://economictimes.indiatimes.com/news/economy/foreign-trade/india-nz-fta-agreement-deal-explained-what-is-inside-deal-duty-free-trade-services-push-farm-safeguards/articleshow/130550366.cms
The Times of India. (2026). How India–New Zealand FTA creates new global pathways for Indian talent. https://timesofindia.indiatimes.com
About the Contributor
Riddhi Suthar is a researcher and policy enthusiast with interests in public policy, governance, international relations, maritime affairs, and strategic studies. Their work focuses on evidence-based policy analysis, geopolitical developments, and emerging global challenges, with particular attention to India’s strategic and developmental priorities. She is engaged in analytical writing, policy research, and academic discussions related to governance, security, and international affairs.
Acknowledgement
The author extends sincere gratitude to the IMPRI team for their expert guidance and constructive feedback throughout the process.
Reviewed by Varisha and Ameya Satam.
Disclaimer
All views expressed in the article belong solely to the author and not necessarily to the organisation.
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