India, New Zealand Sign Landmark Free Trade Agreement in Record Time

India and New Zealand have signed a comprehensive Free Trade Agreement (FTA), marking a significant development in their economic and diplomatic engagement. The agreement, concluded in a record nine months after negotiations began on 16 March 2025, is being described as one of the fastest trade deals finalised by India. It is also part of India’s broader push to expand global trade partnerships, with nine such agreements signed in recent years covering 38 developed countries.

The India–New Zealand FTA is designed as a wide-ranging framework that goes beyond trade in goods. It includes provisions on services, investment, agriculture, education, and mobility, along with cooperation in areas such as tourism, sports, and cultural exchange. The agreement is expected to create new opportunities for manufacturers, farmers, small businesses, students, and skilled professionals in both countries.

Growing Economic Ties

India and New Zealand already share steady economic relations, supported by strong people-to-people connections. New Zealand is currently India’s second-largest trading partner in the Oceania region. The country, with a per capita income of around USD 49,380, maintains a significant presence in global trade, with imports valued at USD 47 billion and exports at USD 42 billion in 2024.

Trade between the two nations has shown notable growth in recent years. Merchandise trade increased from USD 873 million in 2023–24 to USD 1.3 billion in 2024–25, representing a 49 percent rise. India’s exports to New Zealand reached USD 711 million during the same period, reflecting a 32 percent increase. Services trade has also expanded, with Indian exports growing by 13 percent in 2024 to reach USD 634 million, largely driven by sectors such as travel, information technology, and business services.

Over a longer period, bilateral merchandise trade has risen from USD 855 million in 2015–16 to nearly USD 1.3 billion in 2024–25. Indian exports have grown significantly faster than imports, increasing by 130 percent over the decade, while imports rose by just over 7 percent. This has helped India maintain a positive trade balance with New Zealand.

The presence of around 300,000 people of Indian origin in New Zealand, accounting for nearly 5 percent of its population, has also played a role in strengthening economic and cultural ties. The diaspora is seen as an important link in promoting trade, investment, and demand for Indian goods and services.

Key Features of the Agreement

A central feature of the FTA is the elimination of duties on 100 percent of Indian exports to New Zealand. This is expected to improve market access and competitiveness for Indian goods, especially in labour-intensive sectors such as textiles, apparel, leather, footwear, gems and jewellery, engineering goods, and processed foods.

At the same time, India has offered market access on about 70 percent of its tariff lines, while keeping nearly 30 percent excluded. These exclusions cover sensitive sectors, including dairy products, certain agricultural items such as onions and pulses, sugar, and selected industrial goods like copper and aluminium products. This approach aims to balance increased trade with the protection of domestic industries.

Some tariff lines will see phased reductions over periods ranging from three to ten years, covering products such as petroleum oils, vegetable oils, and selected machinery. A smaller proportion of goods will experience partial tariff reductions, including items like wine, pharmaceuticals, and certain metals. Limited quantities of products such as kiwifruit, apples, and Mānuka honey will be allowed under a tariff rate quota system.

Focus on MSMEs and Industry

The agreement places emphasis on supporting micro, small, and medium enterprises (MSMEs), which form a significant part of India’s economy. Duty-free access and reduced trade barriers are expected to help these businesses integrate into global value chains, particularly in sectors such as textiles, engineering goods, chemicals, food processing, and electronics.

Lower tariffs on inputs such as coking coal, wooden logs, and metal scrap are also expected to reduce production costs for Indian manufacturers, enhancing their global competitiveness. The agreement includes provisions for sharing trade-related information, improving export readiness, and strengthening links between Indian and New Zealand small business ecosystems.

Agriculture and Productivity Cooperation

Agriculture is another key component of the FTA. The two countries have agreed to collaborate on improving productivity and quality in selected sectors, including fruits like apples and kiwifruit, as well as honey production. Plans include establishing centres of excellence, improving planting material, and providing technical support for farmers.

Cooperation will extend to areas such as horticulture, forestry, fisheries, livestock, and apiculture. Measures related to post-harvest management, supply chains, and food safety are also part of the framework. These initiatives are expected to support farmers by improving yields and linking them more effectively to global markets.

Market access for certain New Zealand agricultural products in India will be managed through tariff rate quotas and minimum import price mechanisms, along with seasonal restrictions. These measures are intended to ensure consumer choice while safeguarding domestic agriculture.

Mobility and Education Opportunities

The agreement introduces several provisions related to mobility and education. For the first time, New Zealand has signed an annex on student mobility and post-study work rights with another country. Indian students will be allowed to work up to 20 hours per week during their studies, with extended post-study work visas depending on their level of education.

A new temporary employment entry visa pathway will allow up to 5,000 skilled Indian professionals to work in New Zealand for up to three years. Sectors identified include healthcare, engineering, IT, construction, and education, along with cultural professions such as yoga instructors, chefs, and music teachers.

Additionally, a working holiday visa scheme will enable 1,000 young Indians each year to stay and work in New Zealand for up to 12 months.

Investment and Broader Cooperation

New Zealand has committed to investing USD 20 billion in India over a 15-year period, aimed at strengthening long-term economic cooperation. The agreement includes provisions to encourage investment, innovation, and technology transfer, particularly in renewable energy, digital services, and infrastructure.

Other areas of cooperation include organic products, where both countries will work towards mutual recognition standards, and sectors such as tourism, audio-visual industries, and traditional knowledge systems. The agreement also highlights opportunities in wellness-related services, including AYUSH practices.

A Wider Strategic Context

The India–New Zealand FTA is part of a broader strategy by India to deepen trade ties and expand its global economic footprint. By securing improved access for goods and services, encouraging investment, and facilitating mobility, the agreement reflects an effort to build more integrated and diversified economic partnerships.

The deal is expected to have wide-ranging effects, from boosting exports and creating jobs to strengthening sectoral collaboration. Its impact will likely be felt across different segments of the economy, including industry, agriculture, and services.

As both countries move towards implementing the agreement, attention will focus on how effectively its provisions translate into tangible outcomes for businesses, workers, and consumers. The FTA represents a step towards closer economic engagement, with the potential to reshape trade and cooperation between India and New Zealand in the years ahead.