New Delhi: India and New Zealand decided to relaunch negotiations for a free trade agreement on Saturday after a gap of 10 years, a move aimed at deepening economic ties between the two countries against the backdrop of geopolitical tensions.
Commerce and industry minister Piyush Goyal and New Zealand’s trade minister Todd McClay met on the eve of the bilateral meeting between Prime Minister Narendra Modi and New Zealand’s PM Christopher Luxon to announce the launch of negotiations for a comprehensive and mutually beneficial India-New Zealand Free Trade Agreement (FTA) negotiations.
“This marks a significant milestone in our partnership, reflecting our shared vision to deepen trade ties and expand economic opportunities,” Goyal said on microblogging site X after meeting McClay.
“With bilateral trade continuing to grow steadily surpassing $1 billion during April-Jan 2025, the FTA negotiations aim to unlock new avenues for businesses and consumers, fostering mutual growth and prosperity of our nations,” said Goyal.
The India-New Zealand FTA negotiations aim to achieve balanced outcomes that enhance supply chain integration and improve market access. This milestone reflects a shared vision for a stronger economic partnership, fostering resilience and prosperity, said a statement from the commerce and industry ministry.
Talks between the two countries had started in April 2010 to deepen trade in goods & services, and investment but stalled after 10 rounds of negotiations due to a raft of issues, including disagreements over market access and trade priorities.
The latest FTA negotiations come against the backdrop of several other deals that India is negotiating with the US, the UK, the European Union, Oman and other countries. The urgency to stitch together bilateral deals has been triggered by the threat of “tariff war” which has been unleashed by the US after Donald Trump was elected President.
“A major challenge in the renewed talks will be the disparity in tariff structures. New Zealand’s average import tariff is only 2.3%, with over half of its tariff lines already duty-free, meaning Indian goods already have substantial access to its market. In contrast, India’s average tariff stands at 17.8%, meaning it would have to make significant reductions, making a traditional FTA less attractive for India,” said Ajay Srivastava, head of the trade think tank GTRI.
“As talks resume, both countries will need to find common ground on these issues to move forward successfully,” said Srivastava.
He said India-New Zealand trade in FY24 stood at just over $1.5 billion, highlighting a significant underperformance in economic ties.