India and New Zealand seal FTA, scrap tariffs on exports, lock in $20 billion investment plan

In a major expansion of its trade architecture, India and New Zealand on Monday signed a comprehensive Free Trade Agreement (FTA) that eliminates tariffs on all Indian exports entering New Zealand, secures a $20 billion investment commitment, and opens new mobility pathways for skilled professionals.

The agreement, signed in New Delhi in the presence of Commerce and Industry Minister Piyush Goyal and New Zealand Trade Minister Todd McClay, comes after negotiations launched in March 2025 and concluded in December last year.

Describing the pact as a reflection of “shared trust” and stable economic partnership, Goyal said the agreement would strengthen resilient supply chains and deepen long-term cooperation between the two countries.

“This FTA reflects the shared trust between the two nations, the confidence of policy stability, business environment stability and all of this leading to a resilient supply chain,” Goyal said at the signing ceremony.

Zero-duty access for Indian exports

Under the agreement, New Zealand has committed to provide zero-duty access on 100 per cent of tariff lines, covering all 8,284 export categories from India, spanning textiles, apparel, pharmaceuticals, machinery, leather goods and auto components.

In return, India has agreed to eliminate tariffs on around 70.03 per cent of tariff lines, accounting for nearly 95 per cent of New Zealand exports by value, with phased reductions across select categories.

A key sensitivity for India — its dairy sector — has been excluded from the agreement, alongside other protected segments such as edible oils, sugar, spices, onions and select agricultural commodities.

$20 billion investment commitment

The pact also includes a commitment by New Zealand to facilitate around $20 billion in investment into India over the next 15 years, targeting sectors including clean energy, food processing, agritech and manufacturing.

Officials said the agreement is designed not only to boost trade but also to deepen supply chain integration and long-term capital flows.

The agreement represents a major strategic and economic gain for India, particularly for exporters, said Agneshwar Sen, Trade Policy Leader at EY India.

“Indian goods in textiles, apparel, leather, pharmaceuticals, machinery, and auto components enter New Zealand duty-free, erasing an average applied tariff of 2.2 per cent. It may be noted that the average includes a 10 per cent tariff on some of our labour intensive exports like clothing and leather products, which also now get the tariff free treatment,” he said.

Sen added that India has secured strong protection for sensitive domestic sectors.

“Crucially, India has secured this without compromising its most sensitive sectors. Dairy, edible oils, sugar, spices, onions, and key agricultural commodities are explicitly excluded from India’s concession list, protecting domestic farmers and industry,” he said.

Services and mobility gains

Beyond goods, the agreement includes provisions for mobility pathways for Indian professionals in IT, healthcare, engineering and education.

It also introduces a fast-track mechanism enabling Indian food processors to import New Zealand inputs duty-free for processing and re-export, a move aimed at supporting India’s ambition to emerge as a global food processing hub.

India’s key exports to New Zealand currently include pharmaceuticals, textiles, engineering goods and petroleum products, while imports from New Zealand are dominated by wood, wool, iron and steel, and agricultural commodities.

High-tariff categories such as wine are expected to see phased duty reductions, improving market access for New Zealand exporters.

Total bilateral trade in goods and services stood at around $2.4 billion in FY25, but officials on both sides expect the agreement to significantly accelerate trade and investment flows over the coming years.

The agreement follows months of
political debate in New Zealand, where support from the opposition has been crucial in securing parliamentary backing.

The New Zealand Labour Party has supported the pact despite reservations, while coalition partner New Zealand First
opposed it over immigration concerns. Labour leader Chris Hipkins said the deal did not fully reflect the party’s ideal terms but backed it for broader strategic reasons.

The pact has also drawn domestic controversy, including remarks from New Zealand First deputy leader Shane Jones that sparked criticism over immigration-linked rhetoric during the debate.