After several rounds of negotiation, India and New Zealand concluded the Free Trade Agreement in December 2025. This was one of the fastest concluded FTAs in Indian trade history. This FTA allows zero free duty access on 100 per cent of Indian exports while, in return, India opens up around 70 per cent of tariff lines, covering nearly 95 per cent of bilateral trade value in a phased manner. India’s merchandise exports to New Zealand are quite minimal at US$ 1.3 billion in 2024-2025. Despite the low trade, this FTA could act as a symbol of India’s interest in establishing trade relations at a juncture when India-US trade talks are at a gridlock.
Indian exports previously faced tariffs of up to 10 per cent on labour-intensive and value-added goods such as textiles, apparel, engineering products, and select agricultural commodities. FTA eliminates these tariffs in many sectors including pharmaceuticals, processed foods, and rice. In return India extends duty concessions on apples, sheep meat, wool, coal, fish and seafood exports in a phased out manner. There is also a commitment by New Zealand to invest US$ 20 billion in India over 15 years. The FTA will also have mobility provisions for skilled professionals and post-study work opportunities for Indian students which will help in positioning India as a key supplier of skilled workforce to New Zealand. This will create a pathway up to 1667 skilled workers for three-year work visas from India to New Zealand.
On dairy, it allows a fast track mechanism to facilitate the supply of New Zealand products duty free to India for further manufacturing and export. Also, tariffs on bulk infant formula and other dairy-based preparations, and peptones (a dairy-based product) will be phased out phased out over seven years. Along with that India also offers to extend a similar agreement if India offers dairy access to comparable countries in the future. This FTA provides a template for placing agriculture within the trade deals.
While the deal is expected to be signed in the first quarter of 2026, the deal is being criticised by many political leaders in Wellington. The major criticism is on India’s limited opening up of its dairy products to world’s largest dairy exporter. While the deal falls short in extending market access to dairy and agricultural products, this template offers an opportunity for India to offer an alternative to its trading partners when it comes to sensitive sectors like agriculture and dairy. While the trade between both countries is minimal, this is a symbolic framework for India to expand its export market options and engage in various fast paced trade deals at the juncture where rules based trading system is eroding.