India seals free-trade pact with New Zealand, third agreement this year

New Delhi, Dec 22 (PTI) India and New Zealand on Monday said they have concluded talks on a free trade deal that will give India tariff-free access to the island nation's markets, bring in USD 20 billion of investment over the next 15 years and help double bilateral trade in the next five years.

The third free-trade agreement this year, following a similar pact with the UK in July and another with Oman earlier this month, will give India more temporary employment visas, easier access for pharmaceuticals and medical devices.

While the agreement will eliminate or reduce tariffs on 95 per cent of New Zealand's exports of items ranging from wool, coal, wood, wine, to avocados and blueberries to India, New Delhi made no concessions on allowing imports of dairy, onions, sugar, spices, edible oils and rubber to protect farmers and domestic industry.

New Zealand, which committed to investing USD 20 billion in India over the next 15 years in manufacturing, infrastructure, services, innovation and job creation, will also get quota-based tariff cuts for kiwifruit and apple exports.

The deal is expected to be signed in the first half of 2026 and aims to double bilateral trade to USD 5 billion in five years.

Prime Minister Narendra Modi held a telephone conversation with his New Zealand counterpart Christopher Luxon before the two leaders jointly announced the successful conclusion of the "historic, ambitious and mutually beneficial India-New Zealand Free Trade Agreement (FTA)," according to an official statement.

"The FTA would significantly deepen bilateral economic engagement, enhance market access, promote investment flows, strengthen strategic cooperation between the two countries, and also open up new opportunities for innovators, entrepreneurs, farmers, MSMEs, students and youths of both countries across various sectors," the MEA said.

The agreement is likely to be signed and implemented in about 7-8 months. The pact would help Indian exporters, reeling under the impact of 50 per cent tariffs imposed by the Trump administration on Indian goods, diversify shipments in the Oceania region. India has already implemented a trade pact with Australia.

"The gains are wide-ranging and significant," said New Zealand Prime Minister Christopher Luxon in a statement. "India is the world's most populous country and is the fastest-growing big economy, and that creates opportunities for jobs for Kiwis, exports and growth." Under the pact, New Zealand will get duty-free access to goods such as sheep meat, wool, coal and over 95 per cent of forestry and wood articles. Under the pact, Wellington will get duty concessions on a number of other items such as kiwi fruit, wine, some seafood, cherries, avocados, persimmons, bulk infant formula, Manuka honey and milk albumins.

To protect the interests of domestic farmers and MSMEs, India will not give any duty concessions in the politically sensitive dairy sector, like milk, cream, whey, yoghurt, and cheese.

The other products which will not be covered under the pact include vegetable products (onions, chana, peas, corn, almonds), sugar, artificial honey, animal, vegetable or microbial fats and oils, arms and ammunition, gems and jewellery, copper and its products, and aluminium and articles.

As regards the services sector, New Zealand will give a temporary employment entry visa pathway for Indian professionals in skilled occupations with a quota of 5,000 visas annually and a stay of up to three years.

This pathway covers Indian professions such as AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, as well as high-demand sectors including IT, engineering, healthcare, education, and construction, strengthening workforce mobility and services trade.

With negotiations initiated during Luxon's visit to India in March 2025, the two leaders agreed that the conclusion of the FTA in a record 9 months reflects their shared ambition and political will to further deepen ties between the countries.

The FTA would significantly deepen bilateral economic engagement, enhance market access, promote investment flows, strengthen strategic cooperation between the two countries, and also open up new opportunities for innovators, entrepreneurs, farmers, MSMEs, students and youth of both countries across various sectors.

Commerce and Industry Minister Piyush Goyal said that the investment will give a boost to domestic manufacturing and generate jobs.

Further under the pact, New Zealand will set up a dedicated Agri-Technology Action Plan on kiwifruit, apples and honey with a view to helping Indian farmers enhance productivity and quality.

The cooperation includes the establishment of Centres of Excellence, improved planting material, capacity building for growers and technical support for orchard management, post-harvest practices, supply chain performance, and food safety.

Commitment has been extended by New Zealand on Geographical Indications (GIs), including amendment of its law to facilitate the registration of India's wines and spirits.

"Cooperation has been agreed in AYUSH, culture, fisheries, audio visual tourism, forestry, horticulture and traditional knowledge systems," the commerce ministry said.

Apart from tariff liberalisation, the pact includes provisions to address non-tariff barriers through enhanced regulatory cooperation, and streamlined customs, sanitary and phyto-sanitary measures and technical barriers to trade disciplines.

The Pharma and Medical Devices sector will get a boost through faster regulatory access in New Zealand by enabling acceptance of GMP (Good Manufacturing Practice) and GCP (Good Clinical Practice) inspection reports from comparable regulators, including approvals by the US FDA, EU's EMA, UK's MHRA.

"This will reduce duplicative inspections, lower compliance costs, and expedite product approvals, thereby facilitating the growth of India's pharmaceutical and medical devices exports to New Zealand," the ministry said.

Goyal said that this is the seventh agreement finalised by the NDA government. It includes the UAE, Australia, the UK, EFTA bloc, Oman and Mauritius.

He said that the India-New Zealand pact is the first pact in which all the main officials from the Indian side involved in the negotiations were women. India's chief negotiator is Joint Secretary in the Ministry, Petal Dhillon.

He also said that India has so far finalised FTAs with three members of the Five Eyes (FVEY) alliance - Australia, the UK and New Zealand. The five intelligence-sharing network countries are Australia, Canada, New Zealand, the UK, and the US.

India is in the advanced stage of negotiations for a bilateral trade agreement with the US and in the process of resuming talks for a trade agreement with Canada.

"The current bilateral trade with New Zealand is small but the upside potential is huge," Goyal told reporters here.

Bilateral merchandise trade stood at USD 1.3 billion in 2024-25, while total trade in goods and services reached about USD 2.4 billion in 2024, with services trade alone reaching USD 1.24 billion, led by travel, IT, and business services.

Commerce Secretary Rajesh Agrawal said that although only five formal rounds were held for the pact, both sides remained in continuous touch to close the negotiations. PTI RR CS MR MR