Ficci president: The India–New Zealand FTA is about a lot more than expanding bilateral trade

Much like their encounters on the pitch, India-New Zealand trade has traditionally resembled a Test match: steady and patient but often lacking in tempo, and has only picked up pace in recent years.

The signing of the India-New Zealand Free Trade Agreement (FTA) on 27 April within a year of the relaunch of FTA negotiations has injected the energy of a T20 game into a long-format relationship—promising faster growth in trade, sharper exchanges in investment and a more collaborative partnership.

Bilateral trade between India and New Zealand was modest at about $1.3 billion in 2024-25, but has huge potential. India enjoys a trade surplus with New Zealand, exporting pharmaceuticals, textiles, machinery and refined petroleum products, while importing wool, dairy, fruits and wood.

The opportunity to expand, however, is far wider.

New Zealand’s total import market was placed at around $47.5 billion in 2025, with India’s share at just about 2%, much lower than major partners such as China, Australia, the US, South Korea and Japan, which together account for over half of its import basket. Most of them (barring US) already have FTAs with New Zealand, giving them preferential market access and a structural advantage.

This gap underscores not just the scale of headroom available but also the cost disadvantage that India faced before the FTA. For Indian industry, the pact presents a multi-layered opportunity.

Market access gains: New Zealand has offered full duty-free access across tariff lines. This removes earlier tariff disadvantages that India faced, including 10% peak tariffs on exports such as apparel.

Even though New Zealand imports about $1.2 billion worth of garments, India’s share is just around 4%, largely on account of higher tariffs than those faced by China, Bangladesh, Vietnam and others.

With duties now removed, India is better placed to expand its presence in this market. Likewise, India stands to gain market access for other labour-intensive sectors like leather and footwear, made-ups and carpets.

Even in sectors like pharmaceuticals, where duties were already zero, Indian exports are modest at about $81 million, with a market share of about 5.5%. The issue is primarily regulatory and the FTA addresses this through provisions that make approval processes smoother and reduce duplication in compliance.

The FTA also aims to streamline customs processes and reduce transaction costs, thus improving trade facilitation.

In agriculture, the FTA takes a balanced approach—opening up opportunities for India while protecting domestic interests by keeping nearly 30% of sensitive tariff lines in the exclusion list. The aim is to secure the livelihoods of Indian farmers even as trade expands.

Services trade could become the cornerstone: Beyond goods, the FTA also opens up opportunities in services, an area where India is already competitive. New Zealand has made a wide-ranging services commitment, covering 118 sectors and offering most-favoured nation (MFN) treatment in 139.

The agreement also offers concessions on mobility. New Zealand has created a clear pathway for Indian students through a mobility and post-study work visa framework. In addition, a quota of 5,000 temporary work visas will allow skilled Indian professionals—from IT, healthcare and engineering to fields like yoga and hospitality—to work in New Zealand for up to three years.

The scale of opportunity in services is thus significant. New Zealand’s services imports stand at over $24 billion, but India’s share is just about 3%, indicating large potential.

Currently, India’s exports to New Zealand are concentrated in travel, IT and business services, but even here the scope for growth is vast—India has only about 5% market share in New Zealand’s IT and travel services imports, and an even smaller presence in areas like consulting, financial services and insurance.

The FTA’s provisions on mobility and regulatory cooperation can help Indian firms expand in these high-value segments.

Catalyse investment flows: The FTA also opens the door for higher investment flows, with New Zealand committing about $20 billion over the next 15 years; this will support infrastructure, manufacturing and jobs in India.

This is significant, given New Zealand’s strong investment capacity as a high-income economy with hundred billions of dollars invested abroad. With a significant fraction of its GDP (about $270 billion in 2025) invested overseas each year, New Zealand brings both capital and expertise, making it a valuable long-term investment partner for India.

For Indian firms, the India-New Zealand FTA can serve as a gateway to other Asia-Pacific markets and a platform to adapt to high-standard trade practices around quality, sustainability and regulation. The importance of this FTA lies in the quality of opportunity it offers—access to a high-income market, exposure to global standards and a springboard for expanding India’s economic footprint in the Asia-Pacific region.

The author is president, Ficci.