Talks Resume After a Decade-Long Pause
After nearly a decade of stalled negotiations, India and New Zealand have officially resumed discussions on a Free Trade Agreement (FTA), marking a significant step forward in strengthening economic ties between the two nations. The announcement was made yesterday following a meeting between India’s Commerce and Industry Minister, Piyush Goyal, and New Zealand’s Trade and Investment Minister, Todd McClay, in New Delhi.
“This announcement is a major breakthrough in the economic relationship between India and New Zealand,” Prime Minister Luxon said in a statement.
The two nations originally launched talks for a Comprehensive Economic Cooperation Agreement (CECA) in April 2010. However, negotiations stalled in 2015 after nine rounds due to differences over market access, tariff structures, and trade priorities. The renewed discussions signal fresh momentum in bilateral trade efforts, with both governments aiming to establish a “comprehensive and mutually beneficial” agreement that enhances supply chain integration and market access.
Economic and Strategic Significance
Bilateral trade between India and New Zealand has been steadily growing, surpassing $1 billion in the April 2024–January 2025 period. According to official figures, New Zealand exported $0.84 billion worth of goods and services to India during this period, while India’s exports to New Zealand totalled $0.91 billion, bringing the total trade value to $1.75 billion.
New Zealand sees India as a key market in its strategy to double exports over the next decade. As the world’s fifth-largest economy, with a population of 1.4 billion, India presents significant opportunities for New Zealand’s agricultural, technology, and education sectors. Luxon highlighted that the FTA aligns with his government’s broader goal of strengthening economic ties with India, pointing to a major increase in political engagement, including multiple visits by senior officials over the past year.
For India, the trade deal is an opportunity to diversify its trading partnerships and strengthen regional supply chains. With a focus on pharmaceuticals, textiles, and machinery, India aims to expand its exports while negotiating favourable terms for its agricultural and industrial sectors.
Key Challenges in Negotiations
Despite the optimism surrounding the renewed talks, several hurdles remain. One of the most contentious issues is tariff disparities. New Zealand’s average import tariff stands at just 2.3%, while India’s is significantly higher at 17.8%, creating challenges for New Zealand exporters seeking broader market access.
Agriculture and dairy trade are also likely to be major sticking points. New Zealand, a global leader in dairy exports, will push for lower tariffs on products like milk, cheese, and butter. However, India’s government has historically maintained a protective stance on its domestic agricultural sector, seeking to safeguard the interests of local farmers. Other sensitive products include apples, kiwifruit, and wine, which face significant import duties in India.
Regulatory and compliance issues, such as food safety standards, labelling requirements, and intellectual property rights, could further complicate negotiations. E-commerce and digital trade policies are also expected to be key discussion points, as both nations look to modernise trade frameworks.
Broader Implications and Next Steps
Beyond trade, the FTA discussions could help strengthen diplomatic and cultural ties between the two nations. The Indian diaspora in New Zealand, which plays a crucial role in business and political engagement, will be a key facilitator in expanding bilateral relations. Areas like education, technology cooperation, and climate initiatives may also see greater collaboration as talks progress.
Negotiations for the FTA are set to formally begin next month, with both governments indicating a willingness to work toward a balanced agreement.