Prime Minister Narendra Modi’s two-day visit to New Zealand this weekend has pushed the country’s new free trade agreement with India back into the spotlight, and for exporters the timing could hardly be better. Modi arrived for a stay in Auckland running across the 10th and 11th of July, the first visit by an Indian prime minister to New Zealand in nearly four decades, and he was due to meet business leaders alongside the formal talks with Christopher Luxon.
The agreement itself was signed on 27 April this year after months of negotiation, and while it has not yet come into force, the visit is being used by both governments to sell its benefits. New Zealand and India have set a target to roughly double two-way trade from about $2.4 billion to $5 billion within five years of the deal taking effect.
For New Zealand businesses the headline number is coverage. The agreement applies to 95 percent of the country’s current exports to India. According to the Ministry of Foreign Affairs and Trade, 57 percent of those exports will become tariff-free from the day the deal enters into force, rising to 82 percent over time as further cuts phase in. Luxon put the same figure front and centre, posting that “57 per cent of New Zealand’s exports to India would become tariff-free from the first day” and that the deal would create new opportunities by reducing trade barriers.
Some sectors do better than others straight away. Sheep meat and wool tariffs disappear immediately on entry into force. Forestry, one of the larger export lines to India, sees more than 95 percent of exports enter tariff-free from day one, with the small remainder phased out over seven years. Fish and seafood tariffs also phase out over seven years.
Horticulture is where New Zealand negotiators appear to have won the most novel ground. The country secured new quota access for kiwifruit and apples at volumes above recent averages, and the ministry says New Zealand is the first country to gain preferential apple access into India and the first kiwifruit exporter to win tariff-free access inside the quota plus a 50 percent tariff cut outside it. Tariffs on cherries, avocados, blueberries and persimmons are set to fall away gradually.
Wine and honey producers also gain. Wine tariffs will drop by between 66 and 83 percent over ten years, with any future improvements India offers other countries flowing automatically to New Zealand. Manuka honey, the strong-flavoured honey prized for its antibacterial properties, gets a 75 percent tariff cut over five years, making New Zealand the first country to secure preferential honey access in an Indian trade deal.
Beyond goods, India has committed to promoting US$20 billion of private sector investment into New Zealand over fifteen years and will set up a dedicated New Zealand investment desk to help channel it.
The obvious gap is dairy, New Zealand’s single biggest export earner. India kept milk, cream, cheese, butter, yoghurt and whey out of the deal entirely, and its duties on those products, which run as high as 60 percent, stay exactly where they are. Dairy has long been the sticking point in India’s trade talks, reflecting the political weight of the country’s tens of millions of small farmers. New Zealand did claw back a few narrow wins around the edges. Bulk infant formula, some dairy-based food preparations and peptones will see their tariffs, currently around 33 and 22 percent, phased out over seven years. For the big cooperatives shipping commodity milk powder, though, the door to the world’s largest dairy market stays shut for now.
It is worth being clear about what the deal is not. The traffic runs both ways, and arguably harder in India’s favour on paper. New Zealand has agreed to give all Indian exports duty-free access from the day the agreement starts, covering more than 8,000 product lines across textiles, leather, processed food, pharmaceuticals and marine products. New Zealand’s tariffs were already low, so the practical shift for local importers and consumers is smaller than the headline suggests, but it does mean Indian manufacturers get an open run at the New Zealand market immediately while New Zealand’s own gains phase in over years.
The politics are not far from the surface either. The visit lands weeks out from a tight general election, and the deal is one of the government’s clearer economic wins to point to. Bloomberg framed Modi’s trip as showcasing a trade coup for Luxon ahead of the ballot. India’s own farm lobby has pushed back on parts of the agreement, a reminder that ratification on both sides is not a formality and that the deal still has to clear domestic processes before a single tariff actually moves.
For now the message from both capitals is momentum. Whether the export boom the government is promising materialises will depend on how quickly the agreement is ratified, how the quota systems are administered in practice and whether New Zealand firms can build the relationships needed to sell into a market of 1.4 billion people that most have barely touched.
What do you make of the India trade deal, a genuine breakthrough for New Zealand exporters or an uneven bargain? Share your thoughts 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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