A new era of trade is dawning! India and New Zealand have just announced a groundbreaking free trade agreement, poised to reshape their economic landscape. This deal promises to eliminate or significantly reduce tariffs on a vast majority of goods traded between the two nations, opening up exciting new opportunities.
On March 17, 2025, in New Delhi, Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon witnessed the exchange of MOUs, a pivotal moment captured in a joint press statement at Hyderabad House.
This landmark agreement, slated to be signed in the first half of next year, will have a profound impact. New Zealand Trade and Investment Minister Todd McClay highlighted that the deal will eliminate and reduce tariffs on 95% of New Zealand's exports. Astonishingly, nearly 57% of these exports will become duty-free in India right from the start!
But that's not all. New Zealand is also set to invest a staggering $20 billion in India over the next 15 years, and will allow for the mobility of professionals, skilled labor, and students from India. India, in return, has secured a 'zero duty market' for its exports to New Zealand, covering a wide range of products including textiles, apparel, leather, footwear, marine products, gems, jewelry, handicrafts, engineering goods, and automobiles.
India's Commerce Minister Piyush Goyal emphasized that this agreement is about 'building trade around people and launching opportunities,' providing Indian businesses and youth with a global platform to learn, work, and grow.
India will eliminate tariffs on key exports like sheep meat, wool, and coal, as well as nearly all forestry and wood products. Furthermore, New Delhi will allow duty-free access for dairy and other food ingredients intended for re-export.
But here's where it gets controversial... To safeguard farmers and domestic industries, certain products are excluded from this agreement, including dairy, coffee, milk, cream, cheese, yogurts, whey, caseins, onions, sugar, spices, edible oils, and rubber.
Ranjeet Mehta, CEO and Secretary General of the Indian industry body PHDCCI, believes this trade pact provides 'policy certainty and lowers input costs for manufacturing, creating a vision for long-term economic resilience.'
Bilateral merchandise trade between the two countries stood at $1.3 billion in 2024-25, with total trade in goods and services reaching $2.4 billion in 2024. The agreement aims to unlock the full potential of this relationship.
This FTA marks India's third major trade deal this year, following agreements with the UK in July and Oman earlier this month.
And this is the part most people miss... This deal comes at a critical time. India, aiming to become an export powerhouse, is seeking to diversify its exports, especially in light of the 50% tariffs imposed by the U.S., its largest trading partner. These tariffs include a 25% duty on India's purchases of Russian oil. India's exports to the U.S. fell nearly 12% in September and 8.5% in October, before rebounding with a 22.6% growth in November after the tariffs came into force in August.
What do you think of this new trade agreement? Will it be a win-win for both India and New Zealand? Share your thoughts in the comments below!
