India, New Zealand Restart FTA Talks After 10 Year-Gap

India and New Zealand on Sunday have officially relaunched negotiations for a comprehensive Free Trade Agreement, as the former aims to rapidly set global trade partnerships that could help it achieve an ambitious transition to a developed nation by 2047.

The announcement coincides with the visit of New Zealand's Prime Minister, The Right Honourable Christopher Luxon, to India from March 16-20, 2025.

The FTA discussions were inaugurated during a high-level meeting between India's Minister for Commerce and Industry Piyush Goyal, and New Zealand's Minister for Trade and Investment Todd McClay.

The India-New Zealand FTA is expected to enhance supply chain integration, improve market access, and create new economic opportunities for businesses in both countries.

In April 2010, the two countries had first started negotiating the Comprehensive Economic Cooperation Agreement to boost trade in goods, services, and investment. However, after ten rounds of discussions, the talks stalled in February 2015.

In 2010, one major challenge was New Zealand's demand for greater access to India's dairy market, which India resisted to protect its domestic dairy industry that supports millions of farmers, according to Ajay Srivastava, founder of think tank Global Trade Research Initiative.

India was also reluctant to lower tariffs on New Zealand's dairy, meat, and wine exports, while New Zealand pushed for more favorable trade terms. 

"Pressure from the U.S. to open India's dairy and agriculture sectors may also influence negotiations," he added. India-New Zealand trade in FY24 stood at just $1.54 billion.

Another key issue was India's demand for easier movement of its skilled professionals and better access for its IT and services sector. India wanted New Zealand to grant work opportunities similar to those given to Australia and China, but New Zealand did not agree.

Another challenge will be the disparity in tariff structures. New Zealand's average import tariff is only 2.3%, with over half of its tariff lines already duty-free, meaning Indian goods already have substantial access to its market. In contrast, India's average tariff stands at 17.8%, meaning it would have to make significant reductions, making a traditional FTA less attractive for India.

India is already negotiating major trade pacts with the US, the UK, the EU and Oman, among others, in a bid to boost exports via inviting countries and companies to set up domestic manufacturing stations. The country has set an ambitious target to become a fully developed economy by 2047, at about $35 trillion in GDP from the current roughly $4 trillion.