India and New Zealand have concluded negotiations on a comprehensive free trade agreement (FTA), marking a big step between two countries that have long viewed each other as under-leveraged partners.
Announced on Monday (December 22, 2025), the agreement aims to address global commerce priorities increasingly shaped by protectionism and tariffs,
For New Delhi, the pact is part of a broader strategy to widen its trade footprint beyond traditional markets as exporters grapple with rising barriers in the United States and elsewhere.
For Wellington, it represents a long-anticipated breakthrough into the world’s fastest-growing major economy and the most populous country globally, with access to a rapidly expanding middle class expected to drive long-term demand.
Why the deal matters now
In recent months, Indian exporters have faced mounting pressure
following the imposition of steep US import tariffs, which have particularly affected sectors such as textiles, auto components, metals and labour-intensive manufacturing.
Against this backdrop, India has sought to lock in partnerships with economies that offer complementary strengths rather than direct competition.
The agreement with New Zealand aligns with this approach, building on recent trade deals India has signed with the United Arab Emirates, Australia, the United Kingdom and
Oman, while negotiations continue with
the European Union, Chile and Canada.
For New Zealand, the pact delivers access to an economy forecast to be worth almost US$ 7 trillion by 2030 and to host a middle class exceeding 700 million people.
India currently accounts for a relatively small share of New Zealand’s exports, but officials in Wellington see substantial room for growth across food, agriculture, services and technology sectors.
New Zealand Prime Minister Christopher Luxon highlighted this opportunity when he said, “India is the world’s most populous country and is the fastest-growing big economy, and that creates opportunities for jobs for Kiwis, exports and growth.”
NEWS: We’ve concluded a Free Trade Agreement with India. This will open doors for New Zealand farmers, growers, and businesses – boosting exports, creating jobs, and lifting incomes to help all Kiwis get ahead. pic.twitter.com/MZZqYkXs0I
— Christopher Luxon (@chrisluxonmp) December 22, 2025
He described the agreement’s overall impact by stating, “The gains are wide-ranging and significant.”
When the FTA will be signed
The India-New Zealand FTA was negotiated over a nine-month period which commenced
when Luxon visited India from March 16 to 20, earlier this year.
According to officials from both sides, the negotiated text will now undergo legal scrubbing before the agreement is formally signed.
India’s chief negotiator, Petal Dhillon, told reporters that a formal signing is expected in the first quarter of 2026 following completion of this process.
New Zealand officials have similarly indicated that both governments expect the agreement to be signed in the first half of next year.
While the announcement marks the conclusion of negotiations, the deal still requires domestic approval procedures. In New Zealand, parliamentary ratification is not assured.
New Zealand First, a coalition partner of the governing National Party, has stated that it will oppose the agreement.
Party leader Winston Peters criticised the pact, saying it “gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy.”
Despite political hurdles, the agreement fulfils a commitment made by the National Party during the 2022 election campaign to finalise a trade pact with India within its first term in office.
What each side gains on goods
At the heart of the FTA is a sweeping overhaul of tariff arrangements governing bilateral trade. Under the agreement, India will secure zero-duty access for all its exports to New Zealand from the day the pact enters into force.
This immediate tariff elimination is expected to enhance competitiveness for Indian manufacturers and exporters across a wide range of sectors.
In return, New Zealand will receive preferential market access for approximately 70 per cent of India’s tariff lines, ultimately covering about 95 per cent of its current exports to India.
More than half of New Zealand’s export products will become duty-free immediately upon entry into force, with coverage rising to over 80 per cent over time.
New Zealand Trade Minister Todd McClay said the agreement places the country on an equal or better footing compared with other nations trading with India and “will deliver thousands of jobs and billions in additional exports.”
Forestry products, which constitute a major share of New Zealand’s exports to India, will benefit significantly.
More than 95 per cent of forestry exports will enter India tariff-free from day one, with duties on almost all remaining trade phased out over seven years. Immediate tariff elimination will also apply to sheep meat, wool, coal and several other key products.
For fisheries, tariffs on New Zealand’s principal fish and seafood exports will be phased out over a seven-year period, improving competitiveness in the Indian market over time.
Indian exporters also stand to benefit from comprehensive tariff elimination across the New Zealand market. Key sectors expected to gain include textiles, apparel, engineering goods, leather and footwear, marine products and a range of manufactured items.
With tariffs removed from day one, Indian goods entering New Zealand are expected to become more competitive on price, potentially leading to lower costs for consumers.
According to New Zealand officials, this could translate into cheaper electrical goods, machinery, fabrics and textiles, as well as a wider range of imported products.
What breakthrough was achieved in agriculture
One of the most notable outcomes of the agreement is the unprecedented access secured for New Zealand’s horticulture sector. T
he FTA grants valuable new quota-based access for kiwifruit and apples, with volumes starting well above recent average trade levels and expanding further over time.
“In a world-first New Zealand will have duty-free access for a large kiwifruit quota – nearly four times our current exports – with a 50 per cent tariff applying outside quota,” McClay said.
He added, “For the first time in an FTA, India has agreed preferential market access for apples and mānuka honey.”
New Zealand has also become the first country to secure tariff-free access for kiwifruit into India along with a 50 per cent tariff reduction outside the quota.
Tariffs on other horticultural exports, including cherries, avocados, blueberries and persimmons, will be eliminated gradually.
Wine exports will see substantial duty reductions, with tariffs falling by between 66 per cent and 83 per cent over a ten-year period.
Any further tariff improvements India grants to future FTA partners in this category will automatically extend to New Zealand.
Mānuka honey, another high-value export, will benefit from a 75 per cent tariff reduction over five years, making New Zealand the first country to receive preferential access for honey under an Indian free trade agreement.
At the same time, India has maintained clear red lines around agricultural products deemed sensitive domestically.
Dairy imports such as milk, cream, whey, yoghurt and cheese are excluded from tariff liberalisation, along with selected animal and vegetable products including goat meat, onions and almonds.
Indian officials have said these exclusions reflect domestic sensitivities and the need to protect local producers.
How dairy access is not completely out of the question
Although consumer dairy products remain outside the scope of tariff elimination, the agreement introduces mechanisms aimed at facilitating greater collaboration in dairy-based supply chains.
The FTA includes provisions for duty-free access for dairy ingredients and other food inputs that are destined for further manufacturing and re-export.
“New Zealand exporters will enjoy duty-free access for dairy and other food ingredients for re-export through the FTA, opening the door to greater collaboration and processing,” McClay said, adding that this would offer access to India’s growing network of FTA partners through a dedicated fast-track mechanism.
Tariffs on bulk infant formula and other dairy-based preparations will be phased out over seven years, while duties on peptones — a dairy-derived product — will also be eliminated over the same period.
For albumins, a milk protein product, tariffs will be halved within a quota that reflects recent average trade volumes.
The agreement also includes a safeguard clause designed to “future-proof” New Zealand’s dairy interests.
India has committed that if it offers better dairy access to comparable countries in the future, it will consult with New Zealand on extending similar treatment. This commitment is reinforced by a provision requiring a formal review of the FTA one year after it enters into force.
How services and fintech have been included
The FTA expands services coverage well beyond India’s commitments under the World Trade Organisation, with particular attention to financial services, e-payments and fintech.
McClay noted that “the FTA has broad services coverage and builds significantly on India’s WTO commitments,” while also including a most-favoured-nation clause designed to ensure that New Zealand’s access keeps pace with any future liberalisation India offers other partners.
To protect distinctive product identities, both sides have agreed to establish geographical indication rules comparable to those New Zealand has with the European Union. These provisions aim to safeguard specialist and iconic product names in each other’s markets.
The agreement also includes chapters addressing customs facilitation and clearance, technical barriers to trade, sanitary and phytosanitary standards, economic cooperation, trade and sustainable development, and culture, trade and traditional knowledge.
A Treaty of Waitangi clause ensures New Zealand retains the ability to meet its domestic obligations.
What about labour mobility and visas
New Zealand has committed to creating a pathway for an average of up to 1,667 skilled workers from India each year through non-renewable, three-year work visas. These visas will target sectors facing persistent skills shortages, including healthcare, education, information and communications technology, and engineering.
“To better provide the skills to grow the New Zealand economy the Agreement establishes a process for up to an average of 1,667 skilled 3-year work visas per year,” McClay said, adding that these would focus on priority occupations drawn from the country’s skills shortage “Green List.”
He stated that all existing immigration screening and qualification requirements would remain in place and that New Zealand retains the ability to amend the Green List as economic needs evolve.
In addition, the working holiday scheme between the two countries will be expanded to offer up to 1,000 places annually, aligning New Zealand’s arrangements with those Australia offers under its own trade agreement with India.
This move is intended to support tourism and rural sectors that rely on seasonal labour.
How India-New Zealand are planning long-term
As part of the agreement, New Zealand has committed investments worth $20 billion in India over a 15-year period, according to India’s Trade Ministry.
While specific sectoral allocations have not been detailed publicly, officials view the investment pledge as a foundation for deeper industrial collaboration.
The FTA also establishes a framework for ongoing dialogue and review.
Both sides have agreed to conduct a formal review of the agreement one year after it enters into force, providing a mechanism to pursue further improvements and address emerging issues.
McClay described the pact as “a good deal that delivers for every New Zealander,” adding, “Trade grows the economy and creates jobs – the NZ India Free Trade Agreement is about future-proofing opportunities for our exporters and allowing Kiwi companies to continue to punch above their weight on the world stage.”
How India-New Zealand trade stands
Despite strong political momentum, bilateral trade between India and New Zealand remains relatively small compared with each country’s trade with larger partners.
Two-way trade in goods and services totalled about US$ 2.4 billion in 2024, while New Zealand data for the year ending June 2025 places annual trade at US$ 2.13 billion.
In that period, New Zealand exported US$ 1.03 billion worth of goods and services to India, making India its 21st largest goods export market and fifth largest services export destination.
Key exports included travel services, industrial products, forestry and forestry products, horticulture, dairy-based products and wool.
India currently ranks as New Zealand’s 12th largest export market overall, accounting for roughly 1.5 per cent of exports.
Officials on both sides have said the agreement has the potential to significantly expand these figures over time. Commerce Secretary Rajesh Agarwal said the two countries hope to double bilateral trade within five years.
Ultimately, the India-New Zealand free trade agreement reflects
a shared effort to adapt to a more fragmented global trading system.
As Luxon noted after speaking with Prime Minister Narendra Modi on the conclusion of talks, “Boosting trade means more Kiwi jobs, higher wages and more opportunities for hard working New Zealanders.”
I’ve just spoken with India’s Prime Minister Narendra Modi following the conclusion of the NZ-India Free Trade Agreement.
The FTA reduces or removes tariffs on 95% of our exports to India. It’s forecast that NZ exports to India could increase $1.1B to $1.3B per year over the… pic.twitter.com/FEat7BQWOI
— Christopher Luxon (@chrisluxonmp) December 22, 2025
Whether the agreement realises its full potential will depend on domestic political support and the pace at which businesses on both sides seize the new opportunities it creates.
With inputs from agencies
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