India and New Zealand finalise free trade deal, eyeing growth

India and New Zealand announced Monday they have reached a free trade deal, seeking to deepen economic ties and shore up growth at a time of mounting global trade uncertainties.

The move comes as New Delhi accelerates efforts to diversify export destinations as part of a broader strategy to offset the impact of steep U.S. import tariffs.

A formal signing of the agreement between India and New Zealand is expected in the first quarter of next year after legal scrubbing of the negotiated text, India’s chief negotiator Petal Dhillon told reporters.

The India-New Zealand trade agreement, negotiated over nine months, aims to lower tariffs, ease regulatory barriers and expand cooperation across goods, services and investments.

It underscores India’s push to lock in trade partnerships beyond traditional markets as global commerce faces strains from unpredictable tariffs and geopolitical tensions, slowing growth and raising protectionism.

As part of the deal, India would get zero-duty-export access for all its goods to New Zealand while Wellington would get duty concessions and market access for about 70% of New Delhi’s tariff lines, covering 95% of its exports in a phased manner, Indian officials said.

India’s major sectors that will gain from tax free exports include textiles, apparel, engineering goods, leather and footwear, and marine products, while New Zealand’s major gains will be in horticulture, wood exports, coal, and sheep wool and meat, among others.

New Zealand has committed investments worth $20 billion in India over a period of 15 years as part of the agreement, India’s Trade Ministry said.

New Delhi has excluded from the deal dairy imports such as milk, cream, whey, yoghurt, and cheese, along with animal and vegetable products, including goat meat, onions and almonds, citing “domestic sensitivities.”

Bilateral trade between India and New Zealand remains modest compared with New Delhi’s bigger partners, but officials said the deal has strong growth potential. Two-way trade that includes merchandise goods and services stood at $2.4 billion in 2024, which the two sides hope to double in about five years, Trade Secretary Rajesh Agarwal said.

“Given the limited scale of bilateral trade, the agreement is less a trade breakthrough than a framework for deeper cooperation,” trade analyst Ajay Srivastava said.

New Zealand Prime Minister Christopher Luxon said in a post on X Monday that he spoke to his Indian counterpart Narendra Modi on conclusion of the talks. He said New Zealand’s exports to India are forecast to increase by $1.1 billion to $1.3 billion annually over the coming two decades as a result of the agreement.

“Boosting trade means more Kiwi jobs, higher wages and more opportunities for hard working New Zealanders,” he said.

New Zealand Trade Minister Todd McClay said the agreement gives the country access to markets that India has not provided to any other country.

“New Zealand is the first country to secure any access for apples and honey into India in an FTA. We have secured the best access for kiwi fruit into India of any country in the world,” he said.

Indian Trade Minister Piyush Goyal said the agreement demonstrates India was “rapidly expanding” its trade relations with countries that complement the Indian economy rather than competing with it.

India is betting that a wider network of trade agreements will help cushion external shocks and anchor its export ambitions. In recent months, New Delhi has accelerated a push to finalize several free trade agreements.

The country is in advanced talks with the European Union and Chile, among others, and hopes to finalize terms of reference soon to negotiate a pact with Canada.

The stepped-up negotiations come as Indian exporters face pressure from higher US import tariffs of 50%, which went into effect in August. While the two countries have been negotiating a bilateral trade agreement, the tariffs have weighed on sectors such as textiles, auto components, metals and labor-intensive manufacturing.

India signed comprehensive economic cooperation and trade agreements with the United Arab Emirates and Australia in recent years, lifting bilateral trade with both countries. In May, Britain and India announced a hard-wrought FTA that will slash tariffs on products including Scotch whisky and English gin shipped to India, and Indian food and spices sent to the UK.

Last week, India signed a comprehensive economic partnership agreement with Oman.

Associated Press