New Zealand has completed negotiations on a free trade agreement with India, paving the way for tariff reductions on the vast majority of exports from New Zealand.
Trade Minister Todd McClay confirmed the deal today, saying both nations expect to sign the agreement in the first half of next year. Negotiations began in March and wrapped up after nine months.
Prime Minister Christopher Luxon described the agreement as a key step in strengthening ties with India, following his visit earlier this year and multiple ministerial exchanges.
New Zealand First leader Winston Peters announced his party will oppose the agreement, creating a significant disagreement within the coalition Government.
Peters called the deal "neither free nor fair" and described it as "quick", "low quality", and a "bad deal".
He argued it failed to deliver for exporters and made "excessive" concessions on immigration.
"It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy."
He confirmed NZ First will vote against enabling legislation, despite invoking the coalition’s "agree to disagree" clause when Cabinet signed off the deal last week.
Watch Luxon and McClay announce the free trade agreement with India here.
The agreement is set to be signed in the first half of next year. (Source: 1News)
Under the agreement, tariffs will be eliminated or reduced on 95% of New Zealand’s exports to India. Around 57% of exports will be duty-free when the deal takes effect, rising to 82% once fully implemented. The remaining 13% will see significant tariff cuts.
McClay said the deal would put New Zealand on equal, or better footing, with international competitors and would open the door to India’s rapidly expanding middle class.
"This deal is in New Zealand’s best interest and will deliver thousands of jobs and billions of dollars in additional exports," he said.
India’s economy was forecast to grow to around NZ$12 trillion by 2030, with McClay describing the agreement as a major step toward New Zealand’s long-term goal of doubling the value of exports over 10 years.
Key outcomes from the deal for New Zealand include:
- Tariff elimination or reduction on 95% of our exports.
- Duty-free access on almost 57% of New Zealand’s exports from day one, increasing to 82% when fully implemented, with the remaining 13% being subject to sharp tariff cuts.
- Immediate tariff elimination on sheep meat, wool, coal and over 95% of forestry and wood exports.
- Duty-free access on most seafood exports, including mussels and salmon, over seven years.
- Duty-free access on most iron, steel and scrap aluminium, over 10 years or less.
- Duty-free access for most industrial products, over five to 10 years
- 50% tariff cut for large quota of apples – nearly double recent average exports.
- Duty-free access for kiwifruit within a quota almost four times our recent average exports, and tariff halved for exports outside of quota.
- Duty-free access for cherries, avocados, persimmons and blueberries, over 10 years.
- Tariffs on wine reduced from 150% to either 25% or 50% (depending on the value of the wine) over 10 years plus Most Favoured Nations (MFN) commitment.
- Tariffs on mānuka honey cut from 66% to 16.5% over five years.
- MFN status and liberalisation across services exports.
- Duty-free access for dairy and other food ingredients for re-export from day one.
- Duty-free access for bulk infant formula and other high-value dairy preparations over seven years.
- 50% tariff cut for high value milk albumins within a NZ-specific quota equal to current export volumes.
McClay said the deal would deliver a batch of "world-firsts" for New Zealand, including preferential market access to kiwifruit, apples and mānuka honey, products that have historically faced high barriers in the Indian market.
The deal also includes wide-ranging services commitments, building on India’s World Trade Organization obligations, with particular focus on financial services, digital payments and fintech.
To protect iconic Kiwi product names in each other’s markets, the two countries have agreed to establish Geographical Indication rules, similar to those New Zealand has in the European Union.
The deal will include an MFN-clause, or "most favoured nation" clause, to ensure New Zealand benefits from any future liberalisation India offers other trading partners.
In return, New Zealand will allow India up to an average of 1667 three-year skilled work visas per year, targeting 'priority roles' where New Zealand has skill shortages, including healthcare, education, ICT and engineering.
“Sectors will be drawn from the New Zealand skills shortage 'Green List' with all immigration screening and qualification/experience requirements remaining unaltered," McClay said.
An expanded Working Holiday Scheme was also set to provide up to 1000 places annually to ensure tourism and rural work sectors were adequately staffed.
"This is a good deal that delivers for every New Zealander," McClay said.
"Trade grows the economy and creates jobs, this agreement is about future-proofing opportunities for our exporters and helping Kiwi businesses continue to punch above their weight on the world stage."
A free trade agreement was one of Luxon's campaign promises during the last election, with previous attempts to secure an FTA halted over dairy.
Luxon said the deal was a "landmark moment" and reflected a concentrated diplomatic push, noting McClay visited India seven times since the election and the Foreign Minister twice.
Earlier this year, Luxon led what was described as New Zealand’s largest-ever trade mission to India, and the country has hosted India’s President and two ministerial visits.
"This is an incredibly exciting opportunity for New Zealand exporters, with tariffs immediately removed on more than half of New Zealand’s current exports to India from day one," he said.
"The gains are wide-ranging and significant."
Luxon spoke to Indian Prime Minister Narendra Modi today, with both leaders agreeing the agreement will deepen economic ties.
The deal includes chapters on customs processes, biosecurity standards, sustainable development and cultural cooperation, as well as a Treaty of Waitangi clause.
Both countries have agreed to review the agreement one year after it comes into force.
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