Source: The post “India-New Zealand Free Trade Agreement’ has been created, based on “What is the India-New Zealand Free Trade Agreement? | Explained” published in “The Hindu” on 30th December 2025.
UPSC Syllabus: GS Paper-2- International Relations- Bilateral and Multilateral Agreements
Context: The India-New Zealand Free Trade Agreement was concluded in December 2025, after being announced in March 2025. The FTA was completed in a record nine months, making it one of India’s fastest negotiated trade deals. Currently, bilateral trade between India and New Zealand stands at $1.3 billion, and the agreement aims to double this figure in five years.
Key Provisions:
- Market Access for India: India will receive zero-duty access for all exports to New Zealand.
- Sectoral Benefits: Labour-intensive sectors such as textiles, leather and footwear, gems and jewellery, engineering goods, and processed foods will gain from enhanced market access.
- MSME and Employment Support: The agreement will promote MSME growth and create employment opportunities in India.
- Services and Skill Mobility: New Zealand will allow trade in Ayurveda, yoga, and traditional medicine services and facilitate skilled Indian workers, students, and professionals to live and work there, including extended post-study work visas and work permits of up to 20 hours per week while studying.
- FDI Commitment: New Zealand has committed to investing $20 billion in India by 2030, targeting 118 sectors, with clawback mechanisms if the investment targets are not met.
Tariff Concessions:
- India will relax tariffs on 95% of imports from New Zealand, with 57% of these products becoming duty-free from day one.
- India has kept sensitive sectors outside the agreement, including dairy, milk, cheese, butter, yogurt, onions, sugar, edible oils, spices, and rubber, to protect domestic farmers and industries.
- New Zealand will assist in improving the productivity and quality of Indian fruit growers, especially for exotic fruits like kiwifruit and apples, through technical support, capacity building, and supply chain improvements.
Strategic Importance:
- The FTA enhances India’s global economic footprint and provides integration into global value chains.
- It serves as a gateway to high-income markets in Oceania and the Pacific Islands, with New Zealand’s per capita income at $49,380.
- The agreement strengthens soft power diplomacy, with the Indian diaspora constituting 5% of New Zealand’s population.
- India’s FTAs aim to diversify trade partners beyond traditional markets like the U.S., EU, and China and align with Make in India, services, digital trade, and investment policies.
Criticisms and Challenges:
- In New Zealand, the FTA has faced criticism for excluding dairy and agriculture, which are the country’s largest industries. The Foreign Minister has stated that the deal is “neither free nor fair”, and opposition is expected in Parliament in 2026.
- In India, FTAs are sometimes criticized for widening trade deficits and creating asymmetric gains, as imports often grow faster than exports. The success of this agreement will depend on the effective implementation of safeguards and promotion of sensitive sectors.
Way Forward:
- India needs to invest in domestic competitiveness, quality standards, research and development, rules of origin, and anti-dumping measures.
- Strengthening MSMEs and sensitive sectors is essential to benefit fully from the FTA.
- The agreement sets a framework for long-term economic cooperation, investment, and strategic partnership beyond mere tariff reductions.
Conclusion: The India-New Zealand FTA represents a historic milestone in India’s trade diplomacy, balancing market access, investment, and skill mobility while protecting sensitive sectors. Its successful implementation will enhance India’s global economic presence, support labour-intensive sectors, and strengthen strategic partnerships, providing a blueprint for future trade agreements.
Question: Examine the key features, benefits, and challenges of the India-New Zealand Free Trade Agreement (2025).
Source – The Hindu
