India and New Zealand Relaunch Free Trade Talks After a Decade

India and New Zealand have officially restarted negotiations for a comprehensive free trade agreement (FTA) after a hiatus of over a decade. This development marks a significant step in deepening economic ties between the two nations. With both sides aiming to enhance trade and investment opportunities. The announcement was made on the eve of a bilateral meeting between Indian Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon in New Delhi.

Background and Previous Negotiations

• Initial Talks: The first round of FTA negotiations began in April 2010 but stalled after ten rounds due to disagreements over market access and trade priorities.
• Current Context: The renewed talks come as India seeks to strengthen its economic partnerships globally. Particularly in the wake of recent trade tensions with other nations. New Zealand, meanwhile, aims to expand its export market and leverage India’s vast consumer base.

Key Aspects of the New Negotiations

• Comprehensive Agreement: The FTA aims to be comprehensive, covering goods, services, and investment. It seeks to enhance supply chain integration and improve market access for both countries.
• Mutually Beneficial Outcomes: Both nations are committed to achieving balanced outcomes that foster mutual growth and prosperity.
• Early Implementation of Digital Payments: Discussions will also explore the early implementation of cooperation in the digital payments sector as part of the FTA negotiations.

Bilateral Trade Overview

• Current Trade Levels: Bilateral trade between India and New Zealand has grown steadily, surpassing $1 billion during April-January 2025. In the fiscal year 2023-24, India exported merchandise worth $538 million to New Zealand, while importing goods valued at $335 million.
• Trade Balance: India maintains a trade surplus with New Zealand, with a balance of $203 million in its favor during 2023-24. However, the trade gap narrowed significantly in the current financial year due to increased imports from New Zealand.

Challenges Ahead

• Tariff Disparities: One of the major challenges will be addressing the significant disparity in tariff structures. New Zealand has a low average import tariff of 2.3%, with over half of its tariff lines already duty-free. In contrast, India’s average tariff stands at 17.8%, requiring substantial reductions to make a traditional FTA viable.
• Sensitive Sectors: Dairy products are expected to be a contentious issue, as they have historically been a challenge in New Zealand’s trade negotiations.

Broader Implications

• Economic Opportunities: The FTA is seen as a crucial step in unlocking new economic opportunities for businesses and consumers in both countries.
• Strategic Partnership: Beyond trade, the two nations are also enhancing cooperation in defense, security, sports, and environmental matters. New Zealand views India as a vital partner in the Indo-Pacific region, which is crucial for ensuring peace and prosperity.

Conclusion

The relaunch of FTA negotiations between India and New Zealand marks a significant milestone in their economic partnership. As both countries navigate complex global trade dynamics, this agreement could provide a strategic boost to their bilateral relations and economic growth. However, addressing tariff disparities and sensitive sectors will be crucial to the success of these negotiations.