India–New Zealand FTA: What the Deal Says About India’s Changing Place in Global Trade

At a moment when the global trading system is marked by uncertainty, protectionist impulses and fractured supply chains, India finds itself at an inflection point. The announcement of the India–New Zealand Free Trade Agreement (FTA) by Prime Minister “Narendra Modi” and his New Zealand counterpart “Christopher Luxon” on December 22, 2025, signals more than a bilateral trade pact. It reflects India’s growing stature as a reliable economic partner and its quiet re-emergence as a rule-shaper in global trade.

Why this FTA comes at a critical moment

The agreement comes amid a broader recalibration of global trade relationships. Developed and developing economies alike are diversifying partners to hedge against geopolitical shocks, trade weaponisation and supply-chain disruptions. India’s recent FTAs with the UK and Oman, followed by New Zealand, fit squarely into this pattern.

What stands out is the pace. Negotiations were concluded within nine months — unusually fast by India’s standards — underlining a clear political push to align trade diplomacy with national economic goals and India’s stated commitment to a fair, rules-based trading system.

Services and mobility take centre stage

Unlike many traditional FTAs that focus narrowly on goods, the India–New Zealand agreement places services and labour mobility at its core — sectors where India enjoys a structural advantage but has historically struggled to secure deep access.

New Zealand has offered India its most liberal services commitments so far, covering IT, education, fintech, telecom, tourism and construction. For India, this represents a qualitative leap. Skilled mobility provisions for professionals in IT, engineering, healthcare and education, along with post-study work opportunities for Indian students, could significantly boost India’s services exports.

At a time when policy unpredictability in several advanced economies is constraining skilled migration, these provisions provide stability and alternative pathways for India’s expanding talent pool.

Market access without major domestic disruption

On goods, the agreement reflects careful calibration. New Zealand has committed to eliminating duties on 100% of its tariff lines, granting Indian exports complete duty-free access. India, in turn, has opened about 70% of its tariff lines.

This asymmetric liberalisation benefits India’s labour-intensive sectors — textiles, apparel, leather, engineering goods, pharmaceuticals and select farm products — while protecting politically sensitive areas. Crucially, no duty concessions have been extended in dairy, sugar, spices or edible oils, ensuring that farmer livelihoods remain insulated from import shocks.

The agreement also allows duty-free access to key intermediate inputs such as wooden logs, coking coal and metal scrap, which could lower production costs for Indian manufacturers in steel, construction and engineering.

Agriculture and health: cautious openness, strategic intent

Agriculture, often the most contentious part of trade talks, has been handled with notable balance. Instead of tariff-heavy concessions, the FTA emphasises value-chain development through knowledge sharing and agri-technology cooperation in products like apples, kiwifruit and honey.

Equally significant is the inclusion of a dedicated annex on health and traditional medicine services. This opens new space for India’s pharmaceutical and healthcare sectors and strengthens India’s credentials as a global health partner — an area where it already competes closely with China and the European Union.

The utilisation challenge India cannot ignore

Bilateral trade between India and New Zealand stood at around $2.4 billion in 2024–25 and is projected to double by 2030 once the FTA is implemented. But experience offers a cautionary note. India’s FTA utilisation rate has historically hovered around 25%, far below the 70–80% seen in developed economies.

Low awareness, compliance hurdles and non-tariff barriers have often blunted the impact of trade deals. The India–New Zealand FTA attempts to address this through regulatory cooperation, streamlined customs procedures and greater transparency. Still, effective utilisation will depend on coordinated action by industry bodies, firms and policymakers. As industry groups like the Confederation of Indian Industry have emphasised, the real gains will come from expanding services trade, deepening skills linkages and leveraging diaspora networks.

What the deal says about India’s global positioning

Beyond trade numbers, the strategic significance of the agreement is substantial. With this deal, India has now concluded economic partnership agreements with all members of the “Regional Comprehensive Economic Partnership”, except China — a notable signal of India’s selective but widening integration with the global economy.

More importantly, the depth of services access and mobility concessions offered by New Zealand reflects growing trust among developed economies in India’s trade policy stability. This has implications beyond Wellington. As India continues negotiations with partners such as the European Union, the India–New Zealand FTA strengthens its case as a country capable of negotiating balanced, high-quality agreements that protect domestic interests while promoting openness.

In that sense, the agreement marks a coming of age — not just of India’s trade diplomacy, but of how India is increasingly perceived in a fragmented global economic order.