India’s decision to conclude negotiations for a free trade agreement with New Zealand signals a clear shift in how New Delhi approaches global trade. Moving away from large, headline-driven mega trade pacts, this agreement reflects a more calibrated strategy — one that balances market access with protection of domestic livelihoods, and trade liberalisation with strategic caution. Though modest in scale, the deal offers important insights into the evolving priorities of India’s trade policy.
A modest base, but a deliberate ambition
Trade relations between and New Zealand currently rest on a relatively low base. According to official data, total trade in goods and services in FY25 stood at just over $2 billion — small by India’s contemporary trade standards. Yet, the shared goal of doubling this trade within five years is significant less for its numerical ambition and more for the pathway chosen to achieve it. The agreement is structured not around sweeping tariff elimination alone, but around targeted sectoral gains and people-centric linkages.
Mobility as the centrepiece of the agreement
The most distinctive feature of the FTA is the inclusion of a mobility clause. Under this provision, 5,000 Indian professionals “at any given time” will be eligible for three-year work visas in sectors where India enjoys comparative strengths — information technology, healthcare, education, and traditional medicine.
This represents a qualitative leap beyond India’s earlier trade agreements. For comparison, the Australia–India Economic Cooperation and Trade Agreement allows for only 1,000 annual “working holiday” visas, typically short-term and concentrated in hospitality or services. The India–New Zealand arrangement, by contrast, directly facilitates skilled, medium-term employment, aligning trade with India’s services-led growth model.
Education and people-to-people linkages
The mobility provisions are reinforced by New Zealand’s decision to allow uncapped entry of Indian students into its higher education institutions, along with a guaranteed minimum of 20 hours of part-time work per week. Taken together, these measures create a deeper people-to-people economic bridge, blurring the traditional divide between trade, education, and migration policy. This reflects a growing recognition that modern trade agreements increasingly revolve around human capital, not just goods.
Tariff exclusions and protection of rural livelihoods
Equally telling is what the agreement excludes. Nearly 30% of India’s tariff lines have been kept outside the ambit of liberalisation. These include dairy products, animal products other than sheep meat, and select vegetable products. The exclusions are significant because dairy alone accounts for roughly one-third of New Zealand’s global exports.
These carve-outs reflect India’s long-standing concerns over rural livelihoods and smallholder vulnerability. The absence of similar safeguards was a key factor behind India’s decision to exit the Regional Comprehensive Economic Partnership negotiations in 2019. In this sense, the FTA underscores India’s insistence that trade openness must not come at the cost of domestic agricultural stability.
Beyond goods: investment and long-term partnership
The agreement also moves beyond a narrow goods-trade framework. New Zealand has committed to investments in India of around $20 billion over the next 15 years. This long-term investment horizon signals a shift towards a more comprehensive economic partnership, encompassing capital flows, services, education, and skill development alongside merchandise trade.
Implementation challenges and the real test ahead
If ratified by New Zealand’s Parliament, the agreement is expected to come into force within seven months. While the immediate gains may appear modest amid global trade uncertainties, the real challenge for India lies in implementation. Addressing non-tariff barriers — such as recognition of Indian educational qualifications, harmonisation of quality standards, and clear rules of origin — will be critical. Equally important will be active outreach to Indian sectors capable of leveraging the agreement, ensuring that negotiated market access translates into actual trade flows.
What to note for Prelims?
- India–New Zealand FTA aims to double bilateral trade in five years.
- Provision for 5,000 Indian professionals on three-year work visas.
- Nearly 30% of India’s tariff lines excluded, including dairy products.
- Investment commitment of about $20 billion over 15 years.
What to note for Mains?
- Analyse how the FTA reflects India’s shift from mega trade pacts to calibrated bilateral agreements.
- Discuss the growing role of mobility and services in India’s trade strategy.
- Examine the significance of tariff exclusions in protecting rural livelihoods.
- Evaluate the importance of addressing non-tariff barriers for realising FTA gains.
