How the India-New Zealand FTA Will Transform Bilateral Trade, Commerce, and Investments

India and New Zealand signed a Free Trade Agreement (FTA) on April 27, 2026, providing Indian exporters with full market access to New Zealand. Under the agreement, tariffs on approximately 95 percent of goods imported from New Zealand into India will be substantially reduced or eliminated.

Negotiated over a relatively short period of nine months, the “once in a generation agreement” reflects an accelerated timeline for a comprehensive trade deal.

In New Zealand, the FTA will undergo review by the Parliament’s Foreign Affairs, Defense, and Trade Committee (FADTC). This process includes a national interest assessment and public consultation, following which the committee will present its report to Parliament for ratification. The overall review and approval process is expected to take a minimum of six months.

The agreement builds on the successful conclusion of negotiations on December 22, 2025, laying the foundation for enhanced bilateral trade and economic cooperation between the two countries.

Market access and tariff liberalization

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A key feature of the agreement is the provision of 100 percent duty-free access for Indian exports to New Zealand from the date of entry into force. This is expected to significantly enhance the competitiveness of Indian products, particularly in labor-intensive sectors, such as textiles, apparel, leather, footwear, engineering goods, and processed foods.

In parallel, India is offering tariff liberalization on approximately 70 percent of tariff lines, covering 95 percent of bilateral trade value, while maintaining protections for sensitive sectors, such as dairy, select agricultural products, and certain industrial goods.

India-New Zealand goods trade and FTA potential

Bilateral trade overview

Merchandise trade between India and New Zealand has demonstrated steady growth in recent years, reflecting strengthening economic ties. Total bilateral trade in goods and services reached approximately US$2.4 billion in 2024, with merchandise trade alone rising to US$1.29 billion in FY 2024-25, marking a significant 49 percent year-on-year increase.

The FTA is expected to further accelerate this momentum by enabling tariff elimination, improving market access, facilitating services trade, and supporting investment flows. Collectively, these measures are likely to enhance export competitiveness, generate employment, and deepen long-term economic engagement between the two countries.

India-New Zealand merchandise trade trends

*Please note that trade data for FY 2025-26 is provisional and available between April 2025 and January 2026. The figures are expected to be updated in the coming weeks.

While trade moderated slightly in FY 2025–26 (April–February), volumes remain above earlier levels, suggesting sustained engagement.

India’s export basket to New Zealand is diversified, spanning pharmaceuticals, textiles, automobiles, and engineering goods.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

India’s imports from New Zealand are largely resource-based and intermediate goods, supporting domestic manufacturing and consumption.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI.

Sectoral and regional export implications under India-New Zealand FTA

Zero-duty market access is expected to enhance India’s export competitiveness across key sectors. Labor-intensive industries such as textiles and apparel are likely to see increased output and employment across garments, home furnishings, fibers, and handlooms. Agricultural and processed food exports will benefit from tariff elimination.

The leather and footwear sector stands to gain from the removal of high duties, strengthening its global positioning. At the same time, tariff reductions across engineering and industrial segments, such as machinery, automotive, electronics, chemicals, plastics, and rubber, will support manufacturing exports and deeper integration into global value chains.

At the state level, gains are expected to be broad-based, reflecting regional specialization. Key exporting states, Gujarat (chemicals and gems), Maharashtra (pharmaceuticals and auto components), and Tamil Nadu (textiles, leather, and automotive products), are likely to benefit from improved price competitiveness. Other contributors, including Uttar Pradesh (leather and handicrafts), Punjab (agri-products), Karnataka (pharma and electronics), and West Bengal (tea and engineering goods), are also poised for export growth.

Coastal states such as Andhra Pradesh and Kerala may see higher value in marine exports, while the North-East could gain from improved access for tea, spices, bamboo, and organic produce. 

Services and mobility provisions

The agreement includes substantial commitments in services, with New Zealand offering market access across a wide range of sectors, including IT, professional services, education, and financial services.

It also introduces new mobility pathways, including a temporary employment entry visa scheme for Indian professionals and expanded opportunities for students through post-study work visas. These provisions are expected to strengthen workforce mobility and enhance skills exchange between the two countries.

Investment and economic cooperation

Related Reading

India–New Zealand FTA: Business, Trade & Market Access FAQs for Exporters and Investors

A notable aspect of the FTA is the commitment to facilitate up to US$20 billion in investment into India. The agreement intends to promote collaboration in areas such as renewable energy, digital services, infrastructure, and innovation, while incorporating mechanisms to ensure effective investment delivery.

India-New Zealand FDI trends as of February 2026

Foreign direct investment (FDI) flows between India and New Zealand remain relatively modest, though recent data indicates gradual diversification and evolving investment patterns.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), New Zealand’s cumulative FDI into India stood at approximately US$75.11 million during the period 2000–2021. Annual inflows have remained limited in recent years. 

Source: DPIIT

India’s outward direct investment (ODI) into New Zealand has also been limited. Data from the Department of Economic Affairs, under the Ministry of Finance, shows that cumulative Indian investment in New Zealand reached approximately US$90 million between April 2000 and February 2026.

Insights from the Reserve Bank of India (RBI) indicate that India’s outbound investments into New Zealand in 2025 were spread across multiple sectors, including wholesale and retail trade, manufacturing, and financial services. This suggests a gradual broadening of investment activity, even as overall volumes remain comparatively low.

Opportunities in pharmaceuticals, medical devices, and AYUSH

The India-New Zealand FTA also presents opportunities in pharmaceuticals and medical devices. As per reports, industry representatives have welcomed provisions enabling faster regulatory approvals, including the recognition of GMP and GCP inspection reports from comparable international regulators. These measures are expected to reduce compliance burdens and accelerate market access for Indian manufacturers.

Notably, the FTA includes a dedicated chapter on health and traditional medicine, marking a first for both countries and formally recognizing the role of AYUSH (Ayurveda, Yoga & Naturopathy, Unani, Siddha, and Homeopathy) sectors in bilateral cooperation.

Conclusion

The India-New Zealand FTA represents a major leap in advancing bilateral economic integration, combining comprehensive tariff liberalization with expanded access in services, investment, and mobility. By enabling duty-free market access and addressing non-tariff barriers, the agreement is expected to enhance the competitiveness of Indian exports while supporting sectoral diversification and regional participation.

Although bilateral trade and investment flows remain relatively modest, the FTA establishes a forward-looking framework to scale engagement across goods, services, and strategic sectors such as pharmaceuticals, digital services, and renewable energy. Over the medium term, its effectiveness will depend on timely implementation, regulatory alignment, and the ability of businesses to leverage emerging opportunities in both markets.

Entering or expanding in India requires careful assessment of market conditions, regulatory frameworks, and sector competitiveness. Business intelligence insights help companies evaluate opportunities, benchmark competitors, and align investment strategies with India’s evolving economic landscape.

Koushan Das

Manager

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