Venkat Raman, March 16, 2025
The Indian and New Zealand governments have announced the launch of negotiations for a Comprehensive Free Trade Agreement, as Christopher Luxon landed at the Palam Airforce Station Terminal this afternoon (March 16, 2025).
It is understood that negotiations will commence next month. We await details.
This in itself augurs well with his first State visit to India as the Prime Minister of New Zealand.
Trade and Investment Minister Todd McClay, who arrived in the Indian Capital ahead of Mr Luxon, held a meeting with India’s Commerce and Industry Minister Piyush Goyal, with whom he has struck a close working relationship since he became a Minister of the Crown in November 2023.
Mr McClay has since then met Mr Goyal several times in India and at overseas Summits.
Deepening Economic Cooperation
Mr Goyal said that the launch of negotiations on the eve of the bilateral meeting between Mr Luxon and India’s Prime Minister Narendra Modi (to be held on March 17), was “in the spirit of deepening our economic cooperation.”
“This lays the foundation of a momentous partnership towards strengthening the economic and trade ties between the two countries. The India-New Zealand FTA negotiations aim to achieve balanced outcomes that enhance supply chain integration and improve market access. This milestone reflects a shared vision for a stronger economic partnership, fostering resilience and prosperity,” he said.
Mr Luxon described the announcement as a ‘major breakthrough.”
“When we came into Government 16 months ago, we made it clear that closer economic ties with India were a key priority. Currently the fifth-largest economy in the world, with a population of 1.4 billion people, India holds significant potential for New Zealand and will play a pivotal role in doubling New Zealand’s exports by value over the next ten years,” he said in New Delhi.
Lifting Political Engagement
Mr Luxon said that the announcement signalled a major lift in political engagement with India.
“Todd McCay has visited five times and had eight meetings with his Indian counterpart. Foreign Affairs Minister Winston Peters has also visited, and I had a highly productive meeting with Prime Minister Narendra Modi last year. A Comprehensive Free Trade Agreement is only one part of the Government’s commitment to stepping up all facets of the New Zealand-India relationship,” he said.
Mr McClay said that alongside trade agreement negotiations, New Zealand will continue to invest in stronger, deeper, more sustainable connections with India across all pillars of the relationship.
“This includes our political, defence and security, sporting, environmental, and people-to-people connections. One in four Kiwi jobs rely on trade and last year our export revenue added $100 billion to the economy. Strong agreements and relationships like this ensure every New Zealander has good job opportunities, higher wages and access to world-class public services,” he said.
NZ-India FTA: A Background
The concept of a Free Trade Agreement between New Zealand and India was first proposed in 2008 by the Labour government but formal negotiations commenced in April 2010 under the National government led by John Key as the Prime Minister.
The talks aimed to boost trade in goods, services, and investment between the two countries.
An FTA with India was deemed a means to strengthen economic ties and provide mutual benefits, given India’s rapidly growing economy and New Zealand’s expertise in sectors such as agriculture and dairy. The negotiations made some progress under Mr Key, with multiple rounds of discussions.
However, despite the initial enthusiasm, the talks encountered significant challenges. One of the main obstacles was India’s protectionist stance, particularly in the dairy sector, which is crucial for New Zealand. By 2015, after nine rounds of negotiations, the talks stalled without reaching a consensus.
Stalled Negotiations
When Jacinda Ardern became Prime Minister in 2017, the focus shifted to other pressing domestic and international issues. The FTA negotiations with India did not see significant movement during her tenure. The complexities of aligning regulatory frameworks, addressing protectionist policies, and ensuring mutual benefits proved to be substantial hurdles. Additionally, the global economic landscape and shifting priorities further contributed to the stagnation of the discussions.
At a joint press conference held in Auckland on October 6, 2022 during the visit of India’s External Affairs Minister Dr Jaishankar Subrahmanyam, in response to this reporter’s question, then Foreign Minister Nanaia Mahuta declared, “A Free Trade Agreement with India is not a priority to this government.”
Resumption of Talks
Under the leadership of Mr Luxon, New Zealand and India announced the resumption of FTA negotiations. This renewed effort aims to achieve balanced outcomes that enhance supply chain integration and improve market access for both countries. The announcement was made during a visit by Prime Minister Luxon to India, highlighting the importance of this agreement in strengthening the economic partnership between the two nations.
The New Zealand-India FTA negotiations have had a long and challenging history, with initial progress under Mr Key, a period of stagnation under Ms Ardern, and a renewed push under Christopher Luxon. While the potential benefits of the agreement are significant, the New Zealand government must carefully navigate the challenges to ensure a successful and mutually beneficial outcome.
