New Zealand’s free trade agreement with India is being sold by the Government as a major opening into one of the world’s largest markets. The Government is right about the size of the opportunity. India has 1.4 billion people, and New Zealand exporters have wanted better access to that market for years.
But the deal now heading toward signature in New Delhi is not just about tariffs. It also reaches into immigration, student work rights, private sector investment, services, traditional knowledge, and long-term strategic ties between New Zealand and India.
Trade and Investment Minister Todd McClay has confirmed that legal verification of the New Zealand–India Free Trade Agreement has been completed, with the agreement set to be signed in New Delhi on 27 April. The Government says the agreement will then go through the normal parliamentary treaty examination process, with the full text and National Interest Analysis to be tabled in Parliament after signing.
On paper, the goods trade benefits are real. MFAT says the agreement will remove or reduce tariffs on 95 percent of New Zealand’s current exports to India. More than half of those exports will become duty-free from the first day the agreement enters into force, rising to more than 80 percent over time. The average tariff on current New Zealand exports to India is expected to fall to about 3 percent.
The immediate winners include forestry, sheep meat, wool, coal and many industrial products. Seafood tariffs will be phased out over seven years. Kiwifruit and apples will receive new quota access. Mānuka honey and wine will receive tariff reductions. Some processed dairy-related products, including bulk infant formula and dairy-based preparations, will also receive phased tariff removal.
But that list also shows the weakness. The gains for agriculture are not spread evenly. Sheep meat, wool, fruit, honey and some processed dairy-related products receive better access, but New Zealand’s major dairy exports remain largely unresolved.
New Zealand First has focused on that omission. In a campaign email sent to supporters, Winston Peters said India was not meaningfully reducing tariff barriers on New Zealand’s most important exports, including dairy. He said farmers were being asked to accept a deal that gives them little, while New Zealand gives away access in other areas.
Fonterra has also acknowledged the weakness. The dairy co-operative said the negotiations did not secure significant new core dairy access opportunities for New Zealand into India’s dairy market.
MFAT says the agreement includes a fast-track mechanism for New Zealand products supplied duty-free to India for further manufacturing and export, including dairy ingredients. India has also agreed to consult New Zealand if it gives dairy access to comparable countries in the future. That is useful, but it is not the same as opening India’s domestic market to New Zealand’s core dairy exports.
The agreement also gives India duty-free access for goods entering New Zealand from the day the agreement starts. MFAT says this could lower prices for Indian goods bought by New Zealanders.
The investment side is another point of debate. New Zealand has agreed to promote private sector investment into India with the aim of increasing it by US$20 billion over 15 years. MFAT says this applies only to private sector investment and is not subject to investor-state dispute settlement, although there is a remedial process available to India.
The immigration provisions are also politically sensitive. New Zealand has agreed to provide the equivalent of 1,667 three-year temporary employment entry visas per year for India, capped at 5,000 at any one time. Most are for skilled occupations on Immigration New Zealand’s Green List, while 200 per year are for Indian occupations including yoga, music, chefs and ayurvedic practitioners. India also receives up to 1,000 working holiday places per year, along with student work and post-study work settings written into the agreement.
MFAT says New Zealand retains policy exceptions and safeguards to regulate in the future. That may be true legally. But politically, the question remains whether immigration settings should be tied into a trade agreement at all.
Labour has now said it will support the agreement, despite warning businesses to go into India with their “eyes wide open”. Labour said the deal cuts tariffs and increases market access, but also raised concerns about the investment target and implementation risks.
That means the agreement is likely to move forward.
But the debate around the deal will not end with its signing. The agreement gives some exporters better access to India, while leaving major dairy access unresolved and placing immigration and investment commitments inside a trade deal. That is where the political argument now sits.
