New Zealand’s Labour backs India FTA, paving way for parliamentary approval

New Zealand’s opposition Labour Party has thrown its weight behind the proposed free trade agreement (FTA) with India, improving the deal’s prospects of clearing Parliament despite resistance from a key coalition partner in the government.

Labour leader Chris Hipkins said on Thursday that while the agreement did not fully reflect what his party would have negotiated, it would support the pact in recognition of New Zealand’s broader strategic and economic relationship with India.

While Prime Minister Christopher Luxon’s National Party and coalition partner ACT
support the agreement, the third partner, New Zealand First, has opposed it — making Labour’s backing essential for ratification. Trade agreements in New Zealand have historically enjoyed bipartisan support, but the India deal has exposed divisions.

The FTA, concluded in December and set to be formally signed in New Delhi on April 27, is one of Wellington’s most ambitious trade pacts in recent years. It will eliminate or reduce tariffs on 95 per cent of New Zealand’s exports to India, with more than half becoming duty-free immediately. In return, all Indian goods will gain duty-free access to New Zealand.

New Zealand has also committed to invest $20 billion in India over the next 15 years.

Prime Minister Luxon has framed the agreement as a “generational opportunity” to deepen ties with one of the world’s fastest-growing major economies, arguing it will diversify export markets and reduce dependence on traditional partners such as China. Government projections suggest bilateral trade could more than triple over the next five years.

However, the deal has triggered a heated political debate domestically, particularly around its perceived immigration implications.

The controversy intensified this week after New Zealand First deputy leader and cabinet minister Shane Jones sparked outrage with his “
butter chicken tsunami” remark, warning against what he described as potential immigration flows linked to the FTA.

The comment drew sharp criticism across the political spectrum, with Hipkins calling it “racist at the least,” while Luxon described it as “alarmist” and unhelpful to the debate.

The remarks also drew condemnation from the Human Rights Commission.

Despite the backlash, Jones has defended his rhetoric as deliberate “hyperbole” aimed at drawing attention to concerns over infrastructure and migration. New Zealand First has maintained its opposition to the deal, citing fears that trade provisions could open the door to increased immigration.

Business groups and exporters, however, have urged lawmakers to set aside political differences and support the agreement, arguing that improved access to India’s vast market is critical for long-term growth.