India–New Zealand Seal Landmark Free Trade Agreement: Zero Tariffs, Services Access and $20 Billion Investment Pledge

India and New Zealand have concluded a landmark free trade agreement after nine months of talks, offering zero-duty access for all Indian exports and easing tariffs on 95% of New Zealand’s exports. The pact expands services access, enables skilled worker mobility, commits $20 billion in New Zealand investment, and aims to double bilateral trade within five years.

India and New Zealand have successfully concluded negotiations on a comprehensive free trade agreement (FTA), marking a major milestone in their bilateral economic relationship. Finalised after nine months of intensive talks and five negotiating rounds, the agreement was jointly announced by Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon following a phone conversation between the two leaders.

The pact is expected to be formally signed within the next two to three months after legal vetting, with implementation likely in 2026, pending parliamentary approval in New Zealand. Officials on both sides have described the agreement as a catalyst for doubling bilateral trade within five years and deepening cooperation across goods, services, investment, technology and people-to-people ties.

A Fast-Tracked Deal Aligned with India’s Growth Vision

Negotiations for the India–New Zealand FTA began on March 16, 2025, and concluded in record time, making it one of India’s fastest trade deals. The agreement aligns closely with India’s Viksit Bharat 2047 vision, aiming to boost employment, MSME growth, innovation and global integration.

Once implemented, New Zealand’s average applied tariff of 2.2 per cent will fall to zero, giving Indian exporters duty-free access across all tariff lines.

Zero-Duty Access for Indian Exports

Under the agreement, New Zealand will eliminate tariffs on 100 per cent of its tariff lines, granting duty-free access to all Indian exports. This is expected to deliver significant gains for labour-intensive and manufacturing sectors such as textiles, apparel, leather, footwear, gems and jewellery, handicrafts, engineering goods, automobiles, ceramics, carpets and auto components.

For Indian exporters, the removal of duties—currently as high as 10 per cent in several categories—will enhance price competitiveness and market penetration.

Deepest-Ever Commitments on Services and Mobility

The FTA includes India’s most extensive services commitments to date, covering around 118 services sectors. Indian firms will gain improved access to New Zealand’s market in IT and IT-enabled services, professional services, education, finance, tourism, construction and other business services, opening new avenues for high-skilled employment.

A major highlight is the creation of a new Temporary Employment Entry Visa, allowing up to 5,000 skilled Indian professionals at any given time to work in New Zealand for up to three years. Eligible occupations include AYUSH practitioners, yoga instructors, Indian chefs and music teachers, as well as roles in IT, engineering, healthcare, education and construction.

In addition, the agreement removes caps on Indian students, guarantees at least 20 hours of work per week during studies, and extends post-study work rights—up to three years for STEM graduates and four years for PhD holders. A separate working holiday visa scheme will allow 1,000 young Indians annually to receive multiple-entry visas valid for 12 months.

Agriculture, Pharma and Regulatory Cooperation

The two countries will launch Agri-Technology Action Plans focused on kiwifruit, apples and honey, aimed at improving productivity, technology adoption, research collaboration, quality standards and value-chain development. These initiatives will include Centres of Excellence, improved planting material, grower training and technical support for orchard management, post-harvest practices and food safety, with pilot projects expected to raise farm incomes.

Indian pharmaceutical and medical device exporters will benefit from faster regulatory approvals, as New Zealand will accept GMP and GCP inspection reports from comparable regulators such as the US FDA, EMA and UK MHRA. This is expected to reduce compliance costs, avoid duplicate inspections and speed up market access.

$20 Billion Investment Commitment

New Zealand has committed to facilitating $20 billion in investments in India over the next 15 years, supporting manufacturing, infrastructure, services, innovation and job creation under the Make in India programme. A “rebalancing mechanism” allows India to suspend FTA benefits if the investment commitment is not met, mirroring safeguards included in India’s agreement with the EFTA bloc.

Between January 2000 and September 2025, New Zealand’s cumulative FDI into India stood at about $88.24 million, with growing interest in infrastructure-linked and manufacturing sectors.

The agreement also includes commitments on Geographical Indications, with New Zealand agreeing to amend its laws to allow registration of Indian wines, spirits and other GI products, extending benefits similar to those already available to the European Union.

What New Zealand Gains

For New Zealand, India has agreed to remove or reduce tariffs on about 95 per cent of exports by value, one of the most ambitious outcomes achieved by any of India’s FTAs. Nearly 57 per cent of exports will become duty-free from day one, rising to 82 per cent once the agreement is fully implemented. The remaining tariff lines will see sharp reductions.

India’s average tariff on imports from New Zealand is expected to decline from the current MFN rate of 16.2 per cent to 13.18 per cent initially, falling further to 10.3 per cent after five years and 9.06 per cent by the tenth year.

Immediate tariff elimination applies to sheep meat, wool, coal and over 95 per cent of forestry and wood products. Most seafood exports, including mussels and salmon, will become duty-free over seven years. Tariffs on iron, steel and scrap aluminium will be phased out over 10 years or less, while most industrial goods will see zero-duty access within five to ten years.

Apples will receive a 50 per cent tariff cut under a large quota nearly double recent export levels. Kiwifruit will gain duty-free access within a quota almost four times current exports, with tariffs halved outside the quota. Cherries, avocados, persimmons and blueberries will become duty-free over 10 years. Wine tariffs will fall sharply from 150 per cent to 25 or 50 per cent over a decade, while tariffs on manuka honey will be reduced from 66 per cent to 16.5 per cent over five years.

India has, however, excluded nearly 30 per cent of tariff lines to protect sensitive domestic sectors. Dairy products—such as milk, cream, whey, yoghurt and cheese—remain fully excluded, along with certain animal products, onions, chickpeas, peas, corn, almonds, sugar and artificial honey. While New Zealand had sought broader dairy access, India has maintained safeguards for its domestic producers, with a consultation clause included should India open its dairy market to other countries in the future.

Strategic and Economic Impact

Bilateral trade in goods and services currently stands at around $2.4 billion, with services accounting for $1.24 billion. Merchandise trade reached $1.3 billion in FY25. India’s key exports include aviation turbine fuel, textiles, pharmaceuticals, machinery and petroleum products, while imports from New Zealand largely comprise wood, steel and aluminium scrap, coking coal, wool, milk albumins, apples and kiwifruit.

Prime Minister Modi described the agreement as “landmark,” highlighting India’s young workforce, startup ecosystem and reform-oriented economy as key attractions for New Zealand investors. Commerce and Industry Minister Piyush Goyal noted that this is India’s seventh trade pact since 2021 and its third with a “Five Eyes” nation, following agreements with Australia and the UK.

Trade experts view the deal as a strong platform for long-term cooperation rather than an immediate trade surge, with its success hinging on supply-chain integration, services expansion, education partnerships and effective use of mobility provisions. Collectively, the agreement reinforces India’s strategy of deepening trade ties with advanced economies while positioning New Zealand as a gateway to the wider Pacific region.