India and New Zealand Resume FTA Talks After a Decade to Boost Economic Ties

New Delhi/Wellington, 17th March 2025: India and New Zealand have decided to restart negotiations for a free trade agreement (FTA) after a decade-long pause, aiming to strengthen economic ties amid evolving geopolitical challenges.

Commerce and Industry Minister Piyush Goyal and New Zealand’s Trade Minister Todd McClay met ahead of the scheduled bilateral discussions between Prime Minister Narendra Modi and his New Zealand counterpart, Christopher Luxon. The ministers announced the resumption of talks for a comprehensive India-New Zealand FTA designed to enhance trade relations and economic collaboration.

“This marks an important step in our partnership, reflecting our commitment to expanding trade and economic opportunities,” Goyal stated on social media platform X after his discussion with McClay.

With bilateral trade surpassing $1 billion between April 2024 and January 2025, the FTA negotiations aim to create new opportunities for businesses and consumers, fostering mutual economic growth. The discussions seek to establish balanced trade outcomes, improve market access, and enhance supply chain integration. A statement from India’s Commerce and Industry Ministry emphasized the shared goal of strengthening economic cooperation and ensuring long-term prosperity.

Negotiations for the agreement initially began in April 2010 to facilitate trade in goods, services, and investments. However, after ten rounds, discussions stalled due to disagreements on market access and trade priorities.

The renewed push for the India-New Zealand FTA coincides with India’s ongoing trade negotiations with multiple partners, including the US, UK, European Union, and Oman. The urgency to secure bilateral agreements has intensified following the rise of protectionist policies, particularly after Donald Trump was elected US President, which has raised concerns over potential tariff conflicts.

A key challenge in these negotiations is the disparity in tariff structures. New Zealand maintains an average import tariff of just 2.3%, with over half of its tariff lines already duty-free, providing Indian exports with significant market access. In contrast, India’s average tariff stands at 17.8%, requiring substantial reductions to align with a traditional FTA, which may be less favourable for India.

“As negotiations move forward, both nations will need to address these differences to reach a mutually beneficial agreement,” said Ajay Srivastava, head of trade think tank GTRI. He also noted that India-New Zealand trade in FY24 amounted to just over $1.5 billion, reflecting untapped economic potential between the two countries.