India, New Zealand to resume FTA talks after a decade
After nearly a decade, India and New Zealand on Sunday (March 16) announced the revival of negotiations for a proposed free trade agreement (FTA) aimed at strengthening economic ties.
India and New Zealand began negotiating the Comprehensive Economic Cooperation Agreement (CECA) in April 2010 to boost trade in goods, services, and investment. However, after ten rounds of discussions, the talks stalled in February 2015.
"The two nations are pleased to announce the launch of negotiations for a comprehensive and mutually beneficial India-New Zealand Free Trade Agreement (FTA) negotiations," the commerce ministry said.
The announcement was made after the meeting of Commerce and Industry Minister Piyush Goyal and Todd McClay, New Zealand's Minister for Trade and Investment.
Prime Minister of New Zealand Christopher Luxon is here on a four-day visit from March 16.
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"The India-New Zealand FTA negotiations aim to achieve balanced outcomes that enhance supply chain integration and improve market access," it said.
Goyal hails resumption of talks
"With bilateral trade continuing to grow steadily, surpassing USD 1 billion during April-January 2025, the FTA negotiations aim to unlock new avenues for businesses and consumers, fostering mutual growth and prosperity of our nations," Goyal said in a post on X.
According to think tank Global Trade Research Initiative (GTRI), a major challenge in the renewed talks will be the disparity in tariff structures.
New Zealand's average import tariff is only 2.3 pet cent, with over half of its tariff lines already duty-free, meaning Indian goods already have substantial access to its market.
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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.
"As talks resume, both countries will need to find common ground on these issues to move forward successfully," GTRI Founder Ajay Srivastava said.
Access to dairy market
He said earlier New Zealand was demanding greater access to India's dairy market, which India resisted to protect its domestic dairy industry that supports millions of farmers.
Currently, India's dairy imports from New Zealand are minimal (around USD 0.57 million), and while India may consider limited imports of value-added dairy products, it remains firm against allowing raw dairy imports, he said.
India was also reluctant to lower tariffs on New Zealand's dairy, meat, and wine exports, while New Zealand pushed for more favourable trade terms.
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"Pressure from the US to open India's dairy and agriculture sectors may also influence negotiations," Srivastava said, adding that another key issue was India's demand for easier movement of its skilled professionals and better access for its IT and services sector.
Market access & skilled workforce
India wanted New Zealand to grant work opportunities similar to those given to Australia and China, but New Zealand did not agree, according to GTRI.
It said earlier the FTA talks got complicated as both countries were part of the negotiations around the Regional Comprehensive Economic Partnership (RCEP), which India eventually withdrew from in 2019 due to certain concerns about market access and protecting local industries.
The bilateral trade between the two countries stood at USD 873.4 million (exports USD 538.33 million and imports USD 335 million) in 2023-24 as against USD 1.02 billion in 2022-23.
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Key exports, imports & services exchange
India's key goods exports to New Zealand include clothing, fabrics, and home textiles; medicines and medical supplies; refined petrol; agricultural equipment and machinery such as tractors and irrigation tools; auto; iron and steel; paper products; electronics; shrimps; diamonds; and basmati rice.
The main imports are agricultural goods, minerals, apples, kiwifruit, meat products such as lamb, mutton, milk albumin, lactose syrup, coking coal, logs and sawn timber, wool, and scrap metals.
In FY24, India's services exports to New Zealand stood at USD 214.1 million, while New Zealand's services exports to India totalled USD 456.5 million.
India's exports
India's key services exports include IT and software services, provided by companies such as Infosys and HCL, along with telecommunications services to support New Zealand's digital infrastructure.
India also exports healthcare services, including medical tourism, pharmaceutical research, and telemedicine. Financial services are another important area, with Indian banks and fintech companies offering digital payment solutions.
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Education and tourism
New Zealand's services exports to India are led by education services, with thousands of Indian students pursuing higher education in New Zealand.
Tourism services are also significant, as Indian tourists are drawn to New Zealand's natural landscapes and adventure activities.
New Zealand provides fintech services, offering digital solutions to India's financial sector, and specialised aviation training programmes for pilots and cabin crew.
Additionally, New Zealand firms offer niche IT services such as data analytics and automation solutions.
(With agency inputs)
