New Zealand and India flags
Credit: iStock Photo
The trade agreement with New Zealand, concluded last week, is yet another strategic landmark for India in the recent past. Because of the collapse of the World Trade Organisation (WTO) negotiations and the tariff war unleashed by US President Donald Trump, countries are increasingly going in for bilateral trade deals.
Bilateralism has emerged as the preferred mode of trade for India, too. It has concluded three trade deals this year —with the UK, Oman, and now with New Zealand. Bilateral agreements are in place with the UAE and Australia, and negotiations are in progress on deals with the US, the European Union (EU), and other countries.
India has an advantage with most countries because of the large size of its economy and its high growth rate. It provides a large and attractive market set to grow bigger in the coming years.
Under the latest agreement, all Indian exports will be accorded duty-free access by New Zealand. An important area of engagement between the two countries is services. India’s interests in areas such as IT services, education, and financial services will be protected, and a new facility for Temporary Employment Entry Visas will facilitate openings for skilled employment.
The agreement will eliminate or reduce tariffs on 95 per cent of New Zealand’s exports to India, with more than half the products being duty-free from the beginning. India has sought to exclude dairy and the agricultural sector because it wants to protect the interests of its farmers. The agreement also deals with non-tariff barriers “through enhanced regulatory cooperation, transparency, and streamlined customs, sanitary and phyto-sanitary measures”.
The two countries have agreed to deepen their investment relationship, with New Zealand agreeing to facilitate investments of 20 billion dollars into India in the next 15 years.
A trade deal, like any international agreement, involves give and take. New Zealand has removed some restrictions on the entry of Indian students, and will offer jobs in skilled occupations with 5,000 three-year visas annually.
There is some opposition to the deal in New Zealand with respect to some key provisions. While Prime Minister Christopher Luxon has welcomed the deal, Foreign Minister Winston Peters, a coalition partner in his government, has opposed it. Peters has said that it has given too much away, especially on immigration and dairy.
Opposition leader Chris Hipkins has reservations about some provisions. In India, there is some worry in apple-growing states over the slashing of duty on imports from New Zealand. No bilateral agreement will satisfy all sections, and the India-New Zealand deal demonstrates that.