Both the countries aim to double bilateral trade to $5 billion over the next five years.
India and New Zealand are set to sign the historic Free Trade Agreement (FTA) on Monday, as announced by the New Zealand Prime Minister Christopher Luxon. The trade negotiations by both the countries was concluded on December 22 last year, with the goal of doubling bilateral trade to $5 billion over the next five years. The key component of the FTA is the tariff-free access for Indian goods in the New Zealand market and attract up to $20 billion in investment over the next 15 years. Further, the FTA will eliminate duty on 100% of Indian Exports.
Currently, New Zealand is India’s second-largest trading partner in Oceania. At $49,380, New Zealand is among the higher-income economies in Oceania. New Zealand maintained tariffs around 10% in around 450 lines of key Indian exports in products including textile/apparel products, leather and headgear, ceramics, carpets, automobiles and auto components. Additionally, the average applied tariff at 2.2% in 2025 will become zero from EIF.
Through Agricultural Productivity Partnership, the FTA collaborates with farmers to boost productivity and integrate them in the global value chains. The FTA boosts MSMEs and Jobs through Zero-duty access for labour-intensive sectors including textiles, apparel, leather, footwear, gems & jewellery, engineering goods and processed foods.
How India will gain from FTA?
As per the government statement on the FTA, India has offered market access in 70.03% of the tariff lines while keeping 29.97 % tariff lines in exclusion. Immediate Elimination (EIF) on 30%, Rest is phased.
The 30% of tariff lines will have immediate duty elimination, covering wood, wool, sheep meat, leather-raw hides etc. 35.60% of tariffs are subject to phased elimination over 3, 5, 7, and 10 years, including petroleum oil, malt extract, vegetable oils, and selected electrical and mechanical machinery, peptones etc, the statement read.
Further, 4.37% of products face tariff reductions, such as wine, pharmaceutical drugs, polymers, aluminium, iron and steel articles etc. 0.06% fall under tariff rate quotas, including honey, apples, kiwi fruit, and albumins including milk albumin.
Certain products are kept in exclusion such as Dairy including milk, cream, whey, yoghurt, cheese etc, animal products — other than sheep meat, vegetable products like onions, chana, peas, corn, almonds etc, sugar, artificial honey, Animal, vegetable or microbial fats and oils, Arms and Ammunition, Gems and Jewellery, Copper and Articles like Cathodes, Cartridges, Rods, Bars, Coils etc, Aluminium and articles thereof Ingots, billets, wire bars among others.
