India and New Zealand Conclude Landmark FTA: What’s in it for Businesses

India–New Zealand have concluded a comprehensive Free Trade Agreement (FTA) in just nine months, reducing tariffs on 95 percent of New Zealand exports and setting ambitious trade and investment targets. The trade pact strengthens market access, supports investment-led growth, and creates new opportunities across agriculture, services, education, and MSMEs.

India’s Prime Minister Narendra Modi met the Prime Minister of New Zealand, Christopher Luxon, at Hyderabad House, in New Delhi, on March 17, 2025. Image source: PIB

India and New Zealand have successfully concluded negotiations for a comprehensive Free Trade Agreement (FTA), marking a significant milestone in bilateral economic relations. Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon jointly announced the conclusion of the agreement on December 22, 2025, following a telephone conversation between the two leaders.

The India–New Zealand FTA was negotiated and finalized in a record nine months, reflecting what government sources described as “shared ambition and strong political will” to deepen economic engagement between the two countries. Formal negotiations were launched on March 16, 2025, during Prime Minister Luxon’s visit to New Delhi, when he met Prime Minister Modi. The process was led by India’s Union Commerce Minister Piyush Goyal and New Zealand’s Minister for Trade and Investment Todd McClay, and concluded after five formal negotiation rounds supported by multiple in-person and virtual intersessions.

Seventh FTA in India’s recent trade expansion drive

The agreement is India’s seventh major free trade pact concluded in recent years, following agreements with the United Arab Emirates, Australia, Mauritius, the European Free Trade Association (EFTA) countries, the United Kingdom, and Oman. The rapid conclusion of the New Zealand FTA demonstrates India’s continued push to recalibrate its trade architecture through targeted, high-quality bilateral agreements aligned with domestic manufacturing, services, and export competitiveness goals.

Government sources stated that the FTA is expected to significantly deepen bilateral economic engagement, improve market access, promote investment flows, and strengthen strategic cooperation. It is also positioned to create new opportunities for a broad range of stakeholders, including innovators, entrepreneurs, farmers, MSMEs, students, and young professionals in both countries.

Bilateral merchandise trade between India and New Zealand reached US$1.3 billion in FY 2024–25, reflecting growth in goods exchanges, while total trade including services stood at approximately US$2.4 billion — with services such as travel, IT, and business services contributing significantly.

India-New Zealand FTA: Key trade and market access features

• Zero-duty access on 100 percent of India’s export tariff lines into New Zealand, bolstering competitiveness for labor-intensive sectors.
• India has extended tariff liberalization on 70 percent of tariff lines covering 95 percent of bilateral trade with New Zealand.
• New Zealand has offered its most ambitious services market access in any FTA to date — covering 118 service sectors, including IT and computer services, professional and financial services, tourism, construction, and telecommunications.
• Market access remains safeguarded for sensitive products; several sectors including dairy, coffee, onions, sugar, spices, edible oils, and rubber are excluded to protect domestic producers in India.

Tariff liberalization and trade growth expectations

A central feature of the agreement is the substantial liberalization of tariffs. According to Prime Minister Luxon, the FTA reduces or eliminates tariffs on approximately 95 percent of New Zealand’s exports to India. He noted that the agreement is forecast to increase New Zealand’s exports to India by between US$1.1 billion and US$1.3 billion annually over the next two decades.

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In a statement posted on social media, Luxon emphasized the domestic economic impact for New Zealand, stating that boosting trade would translate into more jobs, higher wages, and expanded opportunities for New Zealand businesses. He also highlighted India’s scale and growth trajectory, noting that the agreement provides New Zealand exporters improved access to a market of over 1.4 billion consumers.

Both governments expressed confidence that the FTA could help double bilateral trade within the next five years. In addition, New Zealand investment into India is projected to reach US$20 billion over the next 15 years, signaling growing confidence in India as a long-term investment destination.

Focus on agriculture, MSMEs, skills, and innovation

Beyond tariff reductions, the FTA establishes a framework for a high-quality economic partnership that goes beyond goods trade. According to official statements, the agreement is designed to promote employment, facilitate skill mobility, and support trade- and investment-led growth across multiple sectors.

Union Commerce Minister Piyush Goyal described the agreement as “building trade around people,” highlighting its emphasis on farmers, entrepreneurs, women, students, and innovators. He noted that the FTA aims to boost agricultural productivity and farmer incomes through modernization and innovation, while also strengthening MSME participation in cross-border trade.

The agreement is expected to foster collaboration in areas such as agri-technology, value-added food processing, innovation ecosystems, and services, while enhancing opportunities for Indian businesses to integrate into regional and global value chains through New Zealand.

Agricultural productivity cooperation and innovation partnerships

• Mechanisms to establish Centers of Excellence for crops such as apples, kiwifruit, and honey — linking productivity enhancement with sustainable income growth for farmers.
• Quota-linked and minimum import price arrangements for specific goods to balance knowledge transfer with protection of domestic producers.

Mobility, skills, and people-to-people exchange

• Post-study work visas of up to three years for STEM bachelor’s and master’s students and up to four years for doctoral scholars.
• Temporary Employment Entry visas for up to 5,000 professionals at any given time, spanning sectors such as IT, engineering, healthcare, education, and construction.
• 1,000 “Work and Holiday” visas annually to strengthen cultural and workforce ties.

Investment commitments and economic links

New Zealand has committed to facilitate US$20 billion in investment into India over the next 15 years, supporting areas including:

• Manufacturing and industrial infrastructure
• Services and innovation sectors
• Employment generation aligned with Make in India goals

The India-New Zealand FTA also features cooperation on pharmaceutical and medical devices, enabling mutual recognition of major regulatory inspections, which is expected to reduce compliance barriers and speed up product approvals.

Further enhancements include commitments on Geographical Indications (GIs), with New Zealand amending relevant laws to facilitate broader product registration rights.

Non-tariff facilitation and regulatory cooperation

The India-New Zealand FTA goes beyond tariff cuts to include disciplines on:

• Sanitary and Phytosanitary (SPS) measures
• Technical Barriers to Trade (TBT)
• Customs and regulatory transparency and streamlining

These provisions aim to translate tariff cuts into tangible market access gains for businesses on both sides.

What the India-New Zealand FTA means for investors

The India–New Zealand Free Trade Agreement creates a high-certainty, opportunity-led framework for investors across manufacturing, services, talent, and agri-technology—while preserving safeguards for sensitive sectors. In the table below, we list key commercial and investment opportunities across multiple goods and services sectors.

Source: Based on PIB – Ministry of Commerce & Industry Press Release, December 22, 2025

Business opportunity in a snapshot: For foreign and New Zealand investors into India

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The India–New Zealand FTA strengthens India’s appeal as a long-term market and production base by combining tariff liberalization with broader cooperation on skills, innovation, and MSME participation.

Key implications include:

• Improved market access for New Zealand exporters and service providers into India, particularly in agriculture-linked value chains, education services, and professional services.
• Greater investment certainty through a rules-based trade framework, supporting New Zealand firms considering manufacturing partnerships, sourcing, or India-facing regional hubs.
• Opportunities in agri-tech and food processing, where India’s scale meets New Zealand’s expertise in productivity, quality standards, and supply-chain management.
• Long-horizon investment visibility, reinforced by the stated target of US$20 billion in New Zealand investment into India over 15 years.

For investors, the FTA complements India’s existing FTAs with Australia, the UAE, and the UK, reinforcing India’s role as a central node in Indo-Pacific trade and services networks.

Business opportunity in a snapshot: For Indian investors and exporters to New Zealand

For Indian companies, the agreement opens a high-income, stable, and regulation-driven market that can serve as both a destination and a platform.

Key implications include:

• Expanded export opportunities for Indian agri-products, processed foods, textiles, pharmaceuticals, engineering goods, and services.
• Services-led entry pathways, particularly for Indian IT, professional services, education providers, and digitally enabled businesses.
• Gateway potential for Indian firms using New Zealand as a base for wider engagement in the Pacific and OECD markets.
• Talent and skill mobility benefits, supporting Indian professionals, students, and start-ups seeking global exposure and collaboration.

Overall, the FTA lowers entry friction for Indian firms looking to diversify export markets beyond traditional partners.

Conclusion

The India–New Zealand FTA arrives at a time when both countries are seeking to diversify trade partnerships and strengthen economic resilience amid shifting global trade dynamics. For India, the agreement reinforces its broader strategy of selectively engaging with like-minded economies to secure market access while supporting domestic growth priorities. For New Zealand, it represents a significant deepening of engagement with one of the world’s fastest-growing major economies.

As implementation details and sector-specific commitments emerge, businesses on both sides are expected to closely assess the agreement’s provisions to identify new export, investment, and collaboration opportunities. With ambitious trade and investment targets set by both governments, the FTA positions India–New Zealand economic relations for sustained expansion over the coming decade.

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