India, New Zealand Seal FTA, with Zero Duty Access, Investment Pact 

Mumbai, 23 December 2025: India and New Zealand finalised the India–New Zealand Free Trade Agreement (FTA) through a bilateral meeting between Prime Minister of India, Narendra Modi and New Zealand Prime Minister, Christopher Luxon. The agreement marks a holistic reset of the bilateral eco͏no͏mic roll-out − covering trade in goods, services, investment, agriculture, education and mobility. It also lays out a path for expanding trade, further reducing tariff cuts, increasing investment flows and strengthening people-to-people ties between the two countries. 

The announcement comes at the end of negotiations that began in March 2025. The FTA is envisaged to be a major cornerstone of India–New Zealand economic relations with sectoral long-term implications. 

March 2025 Negotiations Result in Comprehensive Trade Package after Modi–Luxon Exchange 

Negotiations on the trade deal were in progress while Prime Minister Christopher Luxon was visiting India in March 2025, with both sides expressing interest in expanding bilateral trade relations through a comprehensive trade pact. The signing of the agreement following the recent Modi–Luxon meeting in New Delhi demonstrates the sustained diplomatic impetus and congruence on the matters of trade liberalisation, promotion of investment and collaboration in strategic sectors. 

The FTA will promote enhanced market access, regulatory cooperation and innovation-related colla͏borati͏on͏, and bring about expanded business opportunities for companies, entrepreneurs, farmers, students and professionals from the two economies. It also demonstrates an equal aspiration to bilateral trade between the two economies above the existing levels in terms of scale and depth. 

Zero Duty Access for All Tariff Lines Changes Entry Barrier for Indian Exports 

Among the crucial clauses of the agreement is the provision for zero duty access for Indian exports to New Zealand in the form of elimination of tariffs on all tariff lines. This significantly alters the framework of market access for Indian exporters by removing all customs-tariff barriers that were previously levied on Indian products entering the New Zealand market. 

The benefits of zero tariffs are expected to reach a wide range of Indian stakeholders, which include: 

• Farmers 
• Micro, Small and Medium Enterprises (MSMEs) 
• Workers and artisans 
• Women-led enterprises 
• ͏Youth-le͏d businesse͏s 

Labour-intensive industries such as textiles, apparel, leather and footwear are explicitly covered, reflecting the focus of the agreement on sectors which generate jobs and provide opportunities for inclusion in the value chain. 

Broader Access for Manufacturing Sectors as Trade Cooperation Goes Beyond Agriculture 

In addition to the labour-intensive sectors, the pact also covers some manufacturing-based industries. The sectors under the agreement are engineering, automobiles, electronics, machinery, plastic, pharmaceutics and chemicals. These business sectors are expec͏ted to benefit particularly from enhanced market access and simplified trade facilitation measures in the FTA. 

The agreement also sets the wider objective of doubling two-way trade in five years and implies a desire to pursue further development in traditional and higher-value areas of economic engagement and supply chain integration. 

$20 Billion New Zealand Investment Commitment Stretched over 15 Years 

The commercial deal also involves a significant investment component, with New Zealand pledging to invest $20 billion in India in 15 years. The investment regime is loosely modelled on the European Free Trade Association (EFTA) regime, which promotes “long-term capital” rather than short-term investments. Expected investments are likely to take place in: 

• Manufacturing 
• Infrastructure 
• Services 
• Innovation 
• Job creation. 

Commitment to investment provides FTA with a long-term orientation and establishes the agreement as a strategic rather than purely a tariff-focused, economic arrangement. 

Agriculture Provisions Integrate Market Access with Productivity and Technology Support 

Agriculture is expected to play a major role in the Free Trade Agreement (FTA) and Indian farmers will get access to the New Zealand market in fruits, vegetables, coffee, spices, cereals and processed foods. The aim of these measures is to increase export opportunities and to promote diversification in agricultural value chains. 

In addition to market access, the agreement includes productivity-enhancing measures such as: 

• The Agricultural Productivity Partnership 
• Establishment of Centres of Excellence 
• Access to New Zealand’s advanced agricultural technologies 

They are finely tuned to encourage production of higher yields, better quality standards, and enhanced income to an Indian farmer.” The agreement also comprises specific provisions for horti͏cultura͏l ͏produc͏ts such as honey, ki͏w͏i frui͏t, a͏n͏d ap͏͏pl͏es, with the aim of promoting sustainable secto͏ra͏l g͏rowth. 

India Retains Strategic Trade Safeguards for a Few Sensitive Sectors. 

Although it opened up trade in many areas, India retained FTA coverage for sensitive segments of the domestic economy. The following are the exempted categories: 

• Dai͏ry 
• Sugar 
• Coffee 
• S͏pices 
• Edible o͏ils 
• Gold and silver 
• P͏r͏eciou͏s Metal scrap 
• Copper catho͏d͏es 
• Rubber-associated products 

These exemptions will shield farmers, consumers and workers, help to drive domestic economic growth, and allow trade liberalization to proceed in tandem with protection in sectors where necessary. 

Services Liberised in More than 100 Areas with MFN Commitments on Both Sides. 

Services and movement of people are also a significant component of the agreement. New Zealand has offered commitments in 118 service sub-sectors and with MFN treatment in 139 service sectors. Simultaneously, India has accorded New Zealand improved market access in 106 service sectors and MFN in 45 sectors. 

The deal also contains a separate annex on health and traditional medicine services, which is the first such annex that New Zealand has signed with any country. This arrangement provides for systematic trade cooperation in those specialised service areas. 

Student Mobility and Post-Study Work Rights Also Expanded, but Without Numerical Controls 

The provisions relating to mobility are the most detailed in the FTA. New Zealand has, for the first time, concluded an Annex on Student Mobility and Post-Study Work Visas with another country. There are no limits on numbers and Indian students are permitted to work up to 20 hours a week while studying. 

The duration of the Post-study Work visa may vary including: 

• Three years for bachelor graduates in Science, Technology, Engineering and Mathematics (STEM) 
• Up to three years for master’s degree holders 
• Doctoral graduates can stay for a maximum of four years 

These provisions would significantly open up education-related mobility pathways between the two cou͏ntries. 

Professional Mobility offers Temporary Jobs for 5,000 Indians  

The accord establishes a new Temporary Employment Entry Visa category, which will allow up to 5000 skilled Indian professionals to stay and work in New Zealand for a maximum of 3 years. AYUSH practitioners, yoga teachers, Indian cooks and music tutors, together with specialists in information technology, engineering, healthcare, education and construction, are the eligible categories. 

Besides this, 1,000 young Indians will be allowed to travel to New Zea͏land on “Working Holiday Visa” every year, which will further promote youth mobilization und͏er the FTA fr͏am͏ework. They will have multiple entries for a period of 12 months when they enter New Zealand. 

Goods Trade Liberalisation Supported by Staged MFN Tariff Reductions 

On the plus side, a schedule-based tariff reduction for the simple average MFN tariff for India is announced, going down from 16.2% to 13.18% by immediate effect or date of entry into force, further going down to 10.30% in the next 5 years and then further down to 9.06% in the 10th year. 

Whereas 70.03% of the tariff lines are open to market access, the rest 29.97% of the tariff lines will see the market closed for items like dairy products, specific animal and vegetable products, sugar, fats, and oils, arms and ammunition, gems, jewellery, and copper and aluminium products. 

Existing $2.4 Billion Trade Base Prepares Ground for the Agreement 

The Arrangement is based upon the existing trade regime; under the latter, the volume of bilateral trade in goods in the financial year 2024-25 stood at $1.3 billion, while trade in goods and services for the year 2024 was valued at $2.4 billion and services trade to $1.24 billion. These are the levels of ground entry and increased trade through the FTA is expected to come out of these levels. 

Prime Minister of New Zealand: Access to Markets and Prospects of Trade Relationships 

Writing on X, “Prime Minister Christopher Luxon said the agreement would result in the removal or reduction of tariffs on 95 percent of exports from India to New Zealand. He pointed out the “growth of exports by an additional $1.1 billion to $1.3 billion over the next two decades, and access to a marketplace of 1.4 billion consumers in India.” 

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