India and New Zealand signed a landmark Free Trade Agreement (FTA) on Monday, described as a 'once-in-a-generation' trade pact. The agreement grants Indian exporters duty-free access to all exports to New Zealand, marking a significant milestone in bilateral economic relations.
Implementation and Signing
The implementation of the trade deal depends on approval from the New Zealand Parliament and the Indian Cabinet. The FTA was signed by Commerce and Industry Minister Piyush Goyal and New Zealand's Trade and Investment Minister Todd McClay in Delhi. The pact is expected to double bilateral trade between the two countries to $5 billion within five years.
Prime Minister Narendra Modi posted on X (formerly Twitter) about the deal, stating, "This agreement will greatly benefit our farmers, youth, women, MSMEs, artisans, startups, students, and innovators. It will open new avenues for growth, create opportunities, and deepen our synergy across sectors. The investment commitment of $20 billion by New Zealand will further strengthen our cooperation in agriculture, manufacturing, innovation, and technology, paving the way for a more prosperous and dynamic future for both countries."
Fastest FTA with a Developed Country
New Zealand has called the trade deal a 'once-in-a-generation agreement,' providing access to an economy poised to become the third largest in the coming years. Notably, this FTA is one of the fastest concluded by India with a developed country. Through five formal rounds of negotiations and several intersessions, both sides concluded the agreement on December 22, 2025, just nine months after its launch, according to a government release.
India is on a trade deal signing spree, as highlighted by Piyush Goyal during the signing. He noted that this is India's ninth trade agreement in the last few years.
India-New Zealand Trade in Numbers
As of 2024, bilateral trade between India and New Zealand stands at around $2.4 billion, including both goods and services. Services trade, led by IT, travel, and business services, accounts for $1.24 billion. Merchandise trade in 2024-25 was approximately $1.3 billion, comprising $711.11 million in exports and $587.13 million in imports. This figure is expected to double after the FTA comes into effect.
Currently, India exports petroleum products, pharmaceuticals, aviation fuel, readymade garments, and machinery to New Zealand, while importing scrap metals, coal, iron and steel, select dairy products, and wood.
India-New Zealand FTA: Salient Points
Layered Tariff System
The agreement introduces a tiered tariff system for industrial and manufactured goods. New Zealand provides 100% duty-free access to all Indian exports, covering sectors like textiles, leather, engineering goods, and manufacturing. In return, India opens up around 70% of its tariff lines, accounting for 95% of trade value, but in stages. Some goods see immediate duty removal, while others follow phased reductions over 3, 5, 7, or 10 years, with a small category receiving partial tariff cuts. The structure also includes concessional access for inputs such as wooden logs, coking coal, and metal scrap.
Sectors at Play
The agreement lays out a detailed services framework, with New Zealand committing market access across around 118 sectors, including IT, finance, education, telecom, tourism, and professional services. A key feature is the Most-Favoured Nation (MFN) clause across about 139 sub-sectors, ensuring that if New Zealand offers better terms to another country in the future, the same conditions can be extended to India.
Protection for Sensitive Sectors
India has kept around 30% of sensitive products completely excluded from the agreement, including dairy (milk, cream, whey, yogurt, cheese), animal products (other than sheep meat), agricultural goods (onions, chana, peas, corn, almonds), sugar, artificial honey, animal and vegetable fats and oils, arms and ammunition, gems and jewellery, copper and aluminium articles.
Quota for Kiwis
Edible and agricultural trade is placed under a tightly controlled system. Major food imports such as apples, kiwifruit, Manuka honey, and milk albumin are allowed only through Tariff Rate Quotas (TRQs), with fixed quantities entering at lower duties and anything beyond facing higher tariffs. These quotas are further regulated through Minimum Import Prices (MIP), seasonal windows, and phased duty reductions.
Spirits
Under the deal, India will get duty-free access for its wine and spirits exports to New Zealand. Wines from New Zealand will face a reduced tariff that will be gradually lowered over the next 10 years.
Mobility
The agreement introduces a Temporary Employment Entry pathway, allowing up to 5,000 Indian professionals at a time to work in New Zealand for up to three years across specified occupations. There is also a student mobility system that removes caps on Indian students, allows part-time work during studies, and defines post-study work durations. Additionally, a Working Holiday Visa scheme enables 1,000 young Indians each year to travel and work for up to 12 months.
Investment
The agreement includes a long-term investment framework with a commitment to facilitate $20 billion into India over 15 years. It outlines mechanisms for promoting bilateral investment, including cooperation in technology, research, and skill development. A 'rebalancing clause' provides a formal mechanism to review and address any shortfall in investment commitments.
Regulations
In pharmaceuticals and medical devices, there are faster approval pathways and recognition of inspections from trusted regulators like the US, EU, UK, and Canada. On intellectual property, New Zealand has committed to updating its laws within 18 months to give European-level protection to India's Geographical Indications (GIs). Trade processes will become more efficient with advance rulings, digital paperwork, and customs clearance within 48 hours (24 hours for perishables). A strict Rules of Origin framework ensures only genuine goods benefit.
How It Benefits India - Experts Explain
All Indian exports to New Zealand will now face zero duty, particularly benefiting labour-intensive sectors like leather, engineering goods, footwear, plastics, and textiles. India has adopted a calibrated approach with immediate elimination on 30% of tariff lines, phased reductions on 35.6%, and exclusions for sensitive sectors.
PwC notes that tariff-rate quotas with minimum import prices safeguard domestic farmers, while explicit recognition of AYUSH and related wellness services expands opportunities for Indian practitioners in New Zealand. Commitments of $20 billion in investments over 15 years will help sectors such as education, tourism, construction, financial services, IT, and professional services.
Agneshwar Sen, Trade Policy leader at EY India, explains, "New Zealand's offer to eliminate duties on 100% of its tariff lines on entry into force means Indian goods in textiles, apparel, leather, pharmaceuticals, machinery, and auto components enter duty-free, erasing an average applied tariff of 2.2%. India has secured this without compromising its most sensitive sectors. Dairy, edible oils, sugar, spices, onions, and key agricultural commodities are explicitly excluded. India's concessions are targeted: eliminating tariffs on sheep meat, wool, coal, and forestry products that support Indian manufacturing."
Gulzar Didwania, Partner at Deloitte India, states, "The investment commitment of around $20 billion creates opportunities in agri technology, food processing, logistics, and services through a structured investment facilitation framework. It reflects a shift toward productivity, capability building, and long-term cooperation."
Anurag Sehgal, Principal at Price Waterhouse & Co LLP, says, "The real value of the FTA depends on corporate initiative. Firms may look at examining and recalibrating manufacturing footprints to build resilient bilateral supply chains."
Amarpal Chadha, Tax Partner at EY India, highlights the mobility aspect: "The inclusion of high-demand sectors like IT, engineering, healthcare, alongside AYUSH practitioners and yoga instructors, reflects a deliberate focus on services-led growth. The Working Holiday Visa quota of 1,000 young Indians further strengthens global exposure and people-to-people linkages."
