The government’s plan to put its free trade deal with India into law has passed its first test in Parliament, but the vote exposed a deep split inside the governing bloc as New Zealand First leader Winston Peters broke ranks to oppose a deal his own coalition partners are championing.
The India Free Trade Agreement Legislation Amendment Bill passed its first reading on 25 June by 93 votes to 29. National, Labour and ACT all backed it, while New Zealand First, the Greens and Te Pāti Māori voted against. The bill now heads to the Foreign Affairs, Defence and Trade Committee for public submissions, with the government aiming to ratify the agreement later this year.
Trade and Investment Minister Todd McClay says the deal opens a market New Zealand exporters have struggled to crack for decades. “Many New Zealand products are effectively locked out of the India market because of high tariffs and restrictive quotas,” he said. India has a population of 1.4 billion, an economy worth roughly NZ$7 trillion and average growth of about 8.25 percent a year since 2021, and the government sees it as the biggest new opening for exporters since the China deal nearly two decades ago.
When fully in force, the agreement will cut or remove tariffs on 95 percent of New Zealand’s exports to India. From day one, 57 percent of exports become tariff-free, with immediate duty-free access for lamb, wool, coal, leather and most forestry and industrial goods. Seafood lines such as mussels and salmon get phased duty-free access over seven years. The deal also locks in a most-favoured-nation commitment for wine, meaning New Zealand automatically picks up any better access India later grants to other trading partners.
Dairy, the country’s single largest export earner, sits outside the deal. India guards its dairy sector fiercely on behalf of tens of millions of smallholder farmers, and the exclusion was the price of getting any agreement at all. The government has framed that as a realistic trade-off rather than a failure, arguing a deal covering meat, wool, forestry, seafood and horticulture is still worth far more than holding out for an all-or-nothing outcome.
The agreement itself was signed in New Delhi on 27 April by McClay and Indian Commerce and Industry Minister Piyush Goyal. The select committee handed its final report to the House on 22 June, clearing the way for this week’s first reading. What was meant to be a straightforward win for the government instead became a public airing of coalition tensions.
Winston Peters used the debate to accuse the National-led government of quietly making immigration settings tougher in a way aimed squarely at Indian citizens. He said officials had warned that the changes could damage the relationship with New Delhi, and called the approach bad faith. “Immigration policy settings are being made more restrictive in a way which targets India and India alone,” Peters said.
He pointed to a list of measures he said had been approved by Immigration Minister Erica Stanford, including applying labour market tests to Indian applicants but not to citizens of other free trade partners, blocking Indian citizens from applying for temporary work visas from inside New Zealand, treating Indian nationals less favourably on partner and child sponsorship, and refusing to count Indian work experience toward residence in the way experience from other partner countries counts.
That a senior coalition party would attack a flagship government trade bill during its first reading is unusual, and it underlines how fragile the three-way arrangement between National, ACT and New Zealand First has become as the 7 November election draws closer. New Zealand First had earlier pulled its support for the India deal before it was finalised, so its vote against the bill was not a complete surprise, but the personal nature of Peters’ attack on a fellow minister was striking.
McClay gave little ground. He dismissed the criticism by noting that the parties opposing the bill “have consistently failed to support important trade agreements that are in the best interests of NZ,” and returned to the headline figure of “unprecedented access to 1.4 billion people” with 95 percent of exports facing lower or zero tariffs.
Labour’s support gave the bill a comfortable majority and took some of the sting out of the coalition row. Labour MP Vanushi Walters congratulated McClay on getting the deal over the line and acknowledged the groundwork laid by former Labour trade minister Damien O’Connor, who spent years trying to bring India to the table. It is a rare patch of agreement between government and opposition in an election year where almost everything else is contested.
The Greens and Te Pāti Māori opposed the bill on different grounds, raising familiar concerns about investor protections and the effect of trade deals on the ability of future governments to regulate in the public interest. Those arguments will get a fuller hearing once the select committee opens for public submissions.
For exporters watching from the regions, the politics matter less than the timetable. Meat companies, wool growers and forestry firms have spent years paying tariffs that priced them out of one of the world’s fastest-growing economies, and the prospect of duty-free access from day one is a genuine prize. The remaining steps are the select committee process, the passage of the implementing law and formal ratification, all of which the government wants wrapped up before the year is out.
Whether New Zealand First keeps picking at the deal through the campaign, or lets it fade once the immigration fight runs its course, will say a lot about how the coalition holds together in its final months. With the election now less than five months away, every governing party is starting to draw lines that separate it from its partners.
If you want to see where the parties stand on trade, immigration and the issues that matter to you before you vote in November, try our voting tool to compare their positions.
What do you make of the India trade deal, and of Winston Peters breaking from his own government to oppose it? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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