India, New Zealand sign FTA; aim to double bilateral trade in five years

New Delhi: India and New Zealand on Monday signed a free trade agreement (FTA) that seeks to eliminate tariffs on nearly all goods, except sensitive sectors like dairy and agriculture, boost investment flows and make movement of professionals easier.

As part of the deal, New Zealand has committed to invest $20 billion in India over the next 15 years. The two countries have agreed to double bilateral trade in the next five years.

Wellington has agreed to eliminate duty on all imports from India. New Zealand's average import tariff currently stands at 2.3 per cent. The elimination of tariffs will provide Indian exporters a competitive advantage in the South Pacific nation.

On the other hand India has agreed to eliminate tariffs on 95 per cent of goods imports from New Zealand. Fruits like kiwis, cherries, avocados, persimmons, and blueberries imported from New Zealand to India are likely to become cheaper.

India has agreed to eliminate tariffs on products like sheep meat, wool, wood and leather-raw hides with immediate effect. Tariffs on petroleum oil, malt extract, vegetable oils, selected electrical and mechanical machinery and peptones will be eliminated in a phased manner.

Commerce and Industry Minister Piyush Goyal and New Zealand Trade Minister Todd McClay signed the deal in New Delhi.

"This agreement will greatly benefit our farmers, youth, women, MSMEs, artisans, startups, students and innovators. It will open new avenues for growth, create opportunities and deepen our synergy across sectors," Prime Minister Narendra Modi said in a post on X.

"The investment commitment of $20 billion by New Zealand will further strengthen our cooperation in agriculture, manufacturing, innovation and technology, paving the way for a more prosperous and dynamic future for both countries," Modi said.

The Ministry of Commerce and Industry claimed that India has protected its key interests in dairy and agriculture and managed to secure huge win for labour-intensive sectors like textiles and leather.

India and New Zealand started negotiations for a trade pact in 2010. The talks were put on hold in 2015 after nine rounds of discussions. It was revived in March 2025 and the conclusion of the negotiation was announced in December.

New Zealand Prime Minister Christopher Luxon described India-New Zealand FTA as a "once-in-a-generation” pact that opens new pathways for trade in goods and services, investment flows, and labour mobility between the two countries.

"This landmark deal means more jobs, higher incomes and more exports by opening the door to 1.4 billion Indian consumers,” Luxon said in a post on X.

As part of the deal, New Zealand has agreed to provide a temporary employment entry visa for 5,000 Indian professionals across fields such as IT, engineering, healthcare, education and construction, along with dedicated categories for AYUSH practitioners, yoga instructors, chefs and music teachers. It has also agreed to provide an additional 1,000 work-and-holiday visas.

Sectors such as transport and automotive, pharmaceuticals, plastics and rubber, electrical and electronic equipment, and mechanical machinery are poised to scale up exports, said CII Director General Chandrajit Banerjee.

"The agreement is expected to significantly enhance market access for Indian agri-food products, including processed foods, beverages, spices, and marine products, by reducing tariffs and facilitating overcoming of non-tariff barriers," said Mohit Singla, Chairman, Trade Promotion Council of India.

The pact is aimed at doubling bilateral trade to $5 billion over the next five years. India-New Zealand goods trade stood at $1.3 billion in 2024-25. Trade balance is in favour of New Delhi with India's exports at $711.1 billion and imports at $587.13 billion in FY25.

Services trade between the two countries stood at $634 million in 2024. Major sectors include travel, IT, and business services.