India & New Zealand Begin FTA Negotiations For Improved Market Access

New Delhi, Mar 17 (KNN) India and New Zealand have officially announced the commencement of negotiations for a Free Trade Agreement (FTA), marking a significant step toward enhancing economic cooperation amid global trade tensions. 

The decision was formalised during New Zealand Prime Minister Christopher Luxon's visit to India from March 16-20, according to a statement released by the commerce ministry on Sunday.

Commerce and Industry Minister Piyush Goyal and New Zealand's Trade and Investment Minister Todd McClay led the discussions, which represent India's strategic effort to diversify its trade partnerships and reduce dependency on traditional markets. 

"The India-New Zealand FTA negotiations aim to achieve balanced outcomes by enhancing supply chain integration and improving market access. 

This milestone reflects a shared commitment to strengthening economic ties, fostering resilience, and promoting mutual prosperity," the ministry stated. 

Minister Goyal added that with bilateral trade surpassing USD 1 billion during April-January 2025, the negotiations seek to unlock new opportunities for businesses and consumers in both nations.

The trade relationship between the two countries currently centers on specific sectors, with New Zealand exporting dairy products, wool, and fruits to India, while India exports pharmaceuticals, textiles, and information technology services to New Zealand. 

Previous negotiations, which began in April 2010, stalled in February 2015 after ten rounds due to disagreements over market access and trade priorities.

According to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), key challenges in the negotiations include New Zealand's push for dairy access, which India has resisted to protect its farmers. 

Currently, India's dairy imports from New Zealand are minimal at approximately USD 0.57 million. 

While India may consider limited imports of value-added dairy products, it remains opposed to allowing raw dairy imports.

Another point of contention has been India's opposition to lowering tariffs on dairy, meat, and wine products, while New Zealand has not accommodated India's request for improved access for its professionals. 

India has sought easier movement for skilled workers and better terms for its IT and services sector, but progress on these fronts has been limited.

The significant disparity in tariff structures presents an additional challenge, with India's tariffs averaging 17.8 percent compared to New Zealand's 2.3 percent. 

Finding common ground on these issues will be crucial as negotiations resume, particularly as pressure from the United States to open India's dairy and agriculture sectors may influence the talks.

Trade statistics highlight the untapped potential in the economic relationship. India-New Zealand trade in FY 2024 amounted to just USD 1.54 billion, with India's goods exports at USD 538.3 million and New Zealand's exports at USD 335.1 million. 

In FY25, up to December, exports stood at USD 496 million and imports at USD 463 million, bringing total trade to USD 959 million, according to commerce ministry data.

The renewed push for an FTA comes as India recalibrates its trade strategies to boost exports and diversify supply chains. 

In recent years, India has signed FTAs with several countries, including Japan, South Korea, Australia, and the European Free Trade Association. 

New Delhi is also currently negotiating agreements with Oman, ASEAN, and the European Union, among others.

(KNN Bureau)