India New Zealand FTA to provide opportunities for Indian payment service providers

New Delhi, Dec 23 (PTI) The proposed India-New Zealand FTA provides opportunities for Indian payment service providers to leverage India's technological expertise in digital payment systems such as UPI and NPCI as well as help expand banking operations.

The free trade agreement (FTA) between India and New Zealand is likely to be signed and implemented next year.

This FTA will provide the necessary institutional and regulatory framework to accelerate bilateral collaboration, facilitate market access and catalyse deeper integration of the two economies' financial systems, a finance ministry statement said on Tuesday.

Both countries have committed to collaborating on developing domestic payments interoperability and supporting real-time cross-border remittances and merchant payments through integrated Fast Payment Systems (FPS), it said.

This provision directly strengthens India's digital payments ecosystem and fintech sector, enhances remittance flows from the Indian diaspora, creates market opportunities for Indian payment service providers and leverages India's technological expertise in digital payment systems such as UPI and NPCI, it said.

The agreement includes specific provisions for learning from each other's Regulatory Sandbox and Digital Sandbox frameworks for cross-border applications, it said.

These provisions position India as a fintech hub within the bilateral partnership. Further, it facilitates knowledge exchange and regulatory learning with a developed economy and creates collaboration opportunities for Indian fintech companies while supporting India's regulatory sandbox initiatives, it said.

It further said that the schedules of specific commitments reflect progressive collaboration among both sides, with comprehensive commitments on Market Access and National Treatment in key Banking and Insurance Sectors and Subsectors.

India's sectoral offers represent a forward-looking liberalization approach, featuring enhanced Foreign Direct Investment (FDI) limits in banking and insurance, alongside a liberalized bank branch licensing framework allowing up to 15 bank branches to be established over a four-year period, it said.

This is a significant expansion from the previously offered GATS limits of 12 branches, it said, adding, these offers will enable Indian financial service suppliers to expand operations into New Zealand, strengthening India's position in financial services exports and cultivating progressive sectoral growth.

They also position New Zealand’s financial institutions competitively in India's dynamic and rapidly expanding financial services market, while simultaneously reflecting India's commitment to progressive market liberalisation in consonance with its broader strategic objectives, it said.

Currently, two Indian banks—Bank of Baroda and Bank of India—maintain subsidiary operations in New Zealand with a total of four branches, while New Zealand has no banking or insurance presence in India, and no Indian insurance companies have established operations in New Zealand.

This FTA, by establishing clear market access commitments, regulatory transparency and bilateral cooperation frameworks, will facilitate increased bilateral investment, institutional presence and services delivery, it said.

The agreement will serve as an important catalyst for broadening India's financial services presence in New Zealand and welcoming New Zealand financial institutions to India's growing and dynamic financial services markets, it added. PTI DP DP MR