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

By | March 17, 2025

India and New Zealand Resume FTA Talks After a Decade

India and New Zealand have restarted negotiations for a Free Trade Agreement (FTA) after a 10-year hiatus. The announcement came after a meeting between New Zealand’s Trade Minister Todd McClay and India’s Commerce Minister Piyush Goyal in New Delhi.

India’s Expanding Trade Agenda

This development aligns with India’s broader trade strategy. The country is currently working on agreements with the United States and the European Union, while discussions for a comprehensive deal with Australia are also underway. At the same time, India is renegotiating its trade pact with ASEAN, reflecting its focus on strengthening global trade ties.

Key Hurdles in the India-New Zealand FTA

One of the biggest roadblocks in these negotiations is New Zealand’s demand for greater access to India’s dairy market. India has traditionally safeguarded this sector to protect millions of small farmers, making this a contentious issue.

At the same time, the United States is pressuring India to open its agriculture and dairy sectors, which could influence India’s stance in these negotiations. According to the Global Trade and Research Institute (GTRI), these external factors could complicate discussions.

New Zealand PM’s Visit to India

The FTA talks coincide with New Zealand Prime Minister Christopher Luxon’s four-day visit to India. He is set to meet Prime Minister Narendra Modi and will be accompanied by a high-level delegation, including ministers, business leaders, and senior officials.

India’s Key Priorities in the FTA

India is seeking:

  • Easier movement of skilled professionals
  • Better market access for its IT and services sector

In previous negotiations, India requested work opportunities similar to those granted to Australia and China, but New Zealand did not agree.

India’s concerns over market access also led to its withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019. These unresolved issues remain central to the renewed FTA discussions.

Tariff Disparities in India-New Zealand Trade

Another challenge in the FTA is the gap in tariff structures between the two nations:

  • New Zealand’s average import tariff: 2.3% (More than half of its tariff lines are duty-free)
  • India’s average import tariff: 17.8% (Significant tariff cuts would be required for an FTA)

This disparity means a traditional FTA may not offer India substantial benefits, adding complexity to the negotiations.

India-New Zealand Trade Snapshot

India’s Top Exports to New Zealand:

  • Clothing, fabrics, and home textiles – $72.8 million
  • Medicines and medical supplies – $67.5 million
  • Refined petroleum – $52.2 million
  • Automobiles and spare parts

New Zealand’s Top Exports to India:

  • Apples – $22.6 million
  • Kiwifruit – $6.6 million
  • Meat products (lamb, mutton, beef) – $1.9 million
  • Dairy products – $0.57 million (due to India’s protectionist policies)

What’s Next?

The India-New Zealand FTA discussions aim to strengthen trade ties, improve market access, and boost supply chain integration. However, major hurdles—such as tariff differences, dairy market concerns, and labor mobility—will need to be addressed before both countries can reach an agreement.

As talks progress, it remains to be seen how both nations navigate these challenges to build a mutually beneficial trade partnership.