Decoding the India-New Zealand FTA: What New Delhi gains from this pact

India and New Zealand officially entered into a comprehensive Free Trade Agreement (FTA) on Monday (April 27, 2026).

This landmark pact, finalised in New Delhi, represents the culmination of an accelerated negotiation process that spanned approximately nine months.

The ceremony, attended by Trade Minister Piyush Goyal and his New Zealand counterpart Todd McClay, alongside prominent figures from the international business community, marks a strategic pivot for India as it seeks to diversify its export destinations amidst a volatile global climate.

For New Zealand, the agreement serves as a vital conduit to one of the world's fastest-growing consumer bases.

How India-NZ trade has fared so far

The economic relationship between New Delhi and Wellington has been characterised by steady growth followed by a period of stabilisation, according to an analysis by Rubix Data Sciences, shared with Firstpost.

Bilateral merchandise trade successfully breached the USD 1 billion threshold in the 2024/25 fiscal year. Specifically, Indian data indicates that merchandise trade reached approximately USD 1.3 billion during this period, while the combined value of goods and services trade was estimated at nearly USD 2.4 billion in 2024.

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However, the road to this agreement has seen some recent fluctuations. In the 2025/26 fiscal year (specifically the April-February window), total goods trade experienced a slight cooling, settling at USD 1.06 billion.

This follows a peak period and suggests a normalisation of demand. Despite this short-term moderation, the long-term trends remain robust.

India’s exports to New Zealand saw a Compound Annual Growth Rate (CAGR) of 13 per cent between FY2022 and FY2025, climbing from USD 488 million to USD 711 million. Conversely, India's imports from New Zealand grew even faster, with a CAGR of 16 per cent in the same timeframe.

One of the most striking developments in recent years has been the narrowing of India’s trade surplus. From a high of USD 203 million in FY2024, the surplus plummeted to a record low of USD 9.4 million during the April-February period of FY2026.

This shift is attributed to a significant 18.7 per cent decline in Indian exports during that specific window, even as imports remained relatively resilient. The FTA is thus viewed as a stabilising force intended to correct these imbalances and provide a predictable framework for future expansion.

The composition of trade is also evolving. India’s exports are increasingly concentrated in high-value sectors such as pharmaceuticals, passenger vehicles, and refined petroleum products.

On the other side of the ledger, New Zealand’s exports to India are dominated by essential raw materials. Notably, the share of wood logs in New Zealand’s export basket to India rose from 6 per cent to 13 per cent, driven by the sub-continent's booming construction and furniture sectors.

Similarly, ferrous scrap imports rose to 13 per cent to fuel India's steel recycling industry, while coal imports doubled to 8 per cent to support industrial energy demands.

How the India-NZ FTA will be implemented

The architecture of the India-New Zealand FTA is built on a "balanced tariff concession framework," as described by experts.

New Zealand has committed to an ambitious liberalisation schedule, eliminating tariffs across all 8,284 of its tariff lines. This grants Indian exporters immediate, 100 per cent duty-free access to the New Zealand market — a move expected to drastically enhance the competitiveness of Indian manufacturing.

India’s approach, however, has been more calibrated to protect its sensitive domestic sectors. New Delhi has offered tariff liberalisation on 70.03 per cent of its tariff lines, which covers approximately 95 per cent of the total bilateral trade value.

The breakdown of India's commitments is as follows:

How India is safeguarding its interests

India has excluded key agricultural and dairy sectors from liberalisation commitments, ensuring that local farmers are not exposed to sudden competition.

This exclusion of the dairy sector was a point of contention during negotiations. "The benefits of this FTA are widespread," New Zealand Prime Minister Christopher Luxon stated, though he acknowledged the significance of the 1.4 billion consumer market.

While the exclusion was a disappointment for New Zealand's massive dairy industry, the deal does provide specific openings. For instance, the pact allows for immediate duty-free access for dairy and other food ingredients intended for re-export.

It also phases in duty-free access for high-value dairy products and bulk infant formula over a seven-year period.

Agricultural trade is managed through a sophisticated Tariff Rate Quota (TRQ) system. This system ensures quality imports for Indian consumers while maintaining safeguards for local farmers via Minimum Import Prices (MIP).

Key highlights include:

To ensure these agricultural exchanges remain mutually beneficial, the deal establishes a Joint Agriculture Productivity Council (JAPC).

This council will oversee "Agriculture Productivity Action Plans," focusing on collaborative research, orchard management, and post-harvest practices to help integrate Indian farmers into global value chains.

How Indians will get more access to New Zealand

While the reduction of tariffs on fruit and scrap metal captures headlines, the FTA’s provisions for services and labour mobility are equally significant.

New Zealand has offered market access across 118 service sectors, ranging from professional and computer-related services to construction, tourism, and telecommunications.

One of the most innovative aspects of the deal is the recognition of traditional Indian expertise. The agreement provides a quota of 1,667 Temporary Employment Entry (TEE) visas annually for professionals in fields where New Zealand faces shortages, such as engineering and ICT.

Crucially, this quota includes "iconic Indian professions" such as AYUSH (traditional medicine) practitioners, yoga instructors, Indian specialty chefs, and music teachers. These visas are valid for three years, with a total cap of 5,000 active visas at any given time.

Education and youth mobility also receive a boost. The FTA introduces a Working Holiday Scheme for 1,000 young Indians (aged 18-30) and formalises the right for Indian students in New Zealand to work up to 20 hours per week.

The pact also secures post-study work rights for Indian graduates, offering two-year visas for those with Bachelor’s degrees and up to four years for PhD holders.

Industry leaders have been quick to highlight the strategic nature of these provisions. In a note to Firstpost, Anurag Sehgal, principal at Price Waterhouse & Co LLP, stated, "The India-New Zealand Free Trade Agreement is a decisive step in India’s Indo-Pacific strategy as it balances market access but also protects sensitive sectors."

New Zealand has also committed to amending its domestic Geographical Indications (GI) laws within 18 months of the agreement taking effect. Currently, New Zealand’s GI registry only accommodates wines and spirits for Indians.

The amendment will expand this to "other goods," allowing for the formal protection of iconic Indian GIs in the New Zealand market, ensuring that the heritage and quality of unique Indian products are legally recognised.

"New Zealand has also committed to invest $20 billion," Piyush Goyal announced during the signing.

Gautam Khattar, also a principal at Price Waterhouse & Co LLP, told Firstpost, "New Zealand’s grant of 100 per cent duty‑free access will strengthen India’s competitiveness across key manufacturing and labour‑intensive sectors in textiles, leather, footwear, engineering goods, plastics and processed foods."

How the ripple effect will boost local hubs

The economic impact of the FTA is expected to be felt deeply at the regional level in India. A prime example is the industrial city of Agra in Uttar Pradesh.

Long celebrated as the "City of the Taj," Agra is now positioning itself as the "Shoe Capital of the World." The city currently accounts for more than 75 per cent of India’s leather footwear exports and houses a cluster of over 5,000 MSME units.

With the new FTA providing duty-free access to New Zealand, experts project that exports from Uttar Pradesh could increase by three to five times.

This growth is expected to provide direct and indirect employment to approximately 400,000 to 500,000 people, helping to curb migration by providing high-quality opportunities for local artisans and youth, an analysis shared with Firstpost claims.

What next

The India-New Zealand FTA is more than just a list of tariff reductions; it is a "next-generation trade framework" designed to withstand global economic shocks.

As India navigates international tensions — including West Asian conflicts and shifts in US trade policy — partnerships like the one with New Zealand provide a much-needed buffer.

However, the ultimate success of the pact will depend on how the private sector adapts. As Anurag Sehgal of PwC observed, "It’s real value however depends on corporate initiative. To convert this agreement into a sustainable commercial advantage, firms may now look at examining and, if required, recalibrating manufacturing footprints, as building the resilient bilateral supply chains would be central to maximise the benefits of the next-generation trade framework being calibrated by India through its new FTAs."

While the deal still requires approval from the New Zealand Parliament, it is widely expected to pass with bipartisan support, following an endorsement from the opposition Labour Party.

Todd McClay also pointed out that the agreement is central to New Zealand’s ambitious domestic economic targets.

"This deal will deliver thousands of jobs and billions of dollars in additional exports," McClay said, noting that it supports the national goal of doubling New Zealand’s exports within the next decade.

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With inputs from agencies