India, New Zealand relaunch FTA talks after 10 years amid US pressure to open agri, dairy sector

Trade experts said a major challenge in negotiations with New Zealand has been the country’s demand for greater access to India’s dairy market, which India has traditionally protected to support millions of farmers. However, US pressure on India to open its agriculture and dairy sectors could influence the negotiations this time around, think tank Global Trade and Research Institute (GTRI) said.

The trade talks were announced as the Prime Minister of New Zealand, Christopher Luxon, began his four-day visit to India on Sunday, during which he is set to meet Prime Minister Narendra Modi. Luxon will be accompanied by a high-level delegation, including ministers, senior officials, and business representatives. “This will be the first visit to India by Prime Minister Rt Hon Luxon in his current capacity,” the Ministry of External Affairs said.

“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,” the Ministry of Commerce and Industry said.

Another key issue during the previous round of talks was India’s demand for easier movement of its skilled professionals and better access for its IT and services sector, GTRI said.

“India wanted New Zealand to grant work opportunities similar to those given to Australia and China, but New Zealand did not agree. The situation was further complicated by negotiations around the Regional Comprehensive Economic Partnership (RCEP), which India eventually withdrew from in 2019 due to similar concerns about market access and protecting local industries,” GTRI said.

A major challenge in the renewed talks will be the disparity in tariff structures. New Zealand’s average import tariff is only 2.3 per cent, with over half of its tariff lines already duty-free, meaning Indian goods already have substantial access to its market. In contrast, India’s average tariff stands at 17.8 per cent, meaning it would have to make significant reductions, making a traditional FTA less attractive for India.

India’s key goods exports to New Zealand include clothing, fabrics, and home textiles, valued at $72.8 million. Medicines and medical supplies followed closely at $67.5 million, while refined petroleum exports totalled $52.2 million. Other notable exports included automobiles and parts.

New Zealand’s goods exports to India primarily consist of agricultural products, minerals, and scrap metals. Key items include apples worth $22.6 million and kiwifruit valued at $6.6 million. Meat products such as lamb, mutton, and beef contributed $1.9 million, while dairy products totalled a modest $0.57 million due to India’s protective policies.