India and New Zealand finalize a free trade agreement, eyeing growth as global uncertainties persist

India and New Zealand have finalized a free trade agreement, officials from both countries announced Monday, marking a significant step toward strengthening economic ties amid growing global trade uncertainties.

The agreement, which comes after nine months of negotiations, is expected to be formally signed in the first quarter of next year following legal review of the negotiated text, according to India’s chief negotiator Petal Dhillon.

Under the terms of the deal, India will gain zero-duty export access for all its goods to New Zealand, while Wellington will receive duty concessions and market access for approximately 70% of India’s tariff lines. These concessions will cover about 95% of New Zealand’s exports, to be implemented in phases, Indian officials said.

The pact highlights India’s accelerating efforts to diversify its export destinations as part of a broader strategy to offset the impact of steep U.S. import tariffs imposed earlier this year. In August, the United States implemented additional tariffs, including a 25% levy on Indian goods in response to India’s continued purchases of discounted Russian oil, bringing the combined tariffs to 50%.

“This agreement demonstrates India is rapidly expanding its trade relations with countries that complement the Indian economy rather than competing with it,” said Indian Trade Minister Piyush Goyal.

Key Indian sectors expected to benefit from tax-free exports include textiles, apparel, engineering goods, leather and footwear, and marine products. For New Zealand, major gains will come in horticulture, wood exports, coal, and sheep wool and meat, among others.

New Zealand has committed to investments worth $20 billion in India over a 15-year period as part of the agreement, according to India’s Trade Ministry. New Zealand Prime Minister Christopher Luxon said in a social media post that he had spoken with Indian Prime Minister Narendra Modi about the conclusion of talks, noting that New Zealand’s exports to India are forecast to increase by $1.1 billion to $1.3 billion annually over the next two decades.

“Boosting trade means more Kiwi jobs, higher wages, and more opportunities for hard-working New Zealanders,” Luxon stated.

New Zealand Trade Minister Todd McClay emphasized the unprecedented market access gained through the deal: “New Zealand is the first country to secure any access for apples and honey into India in an FTA. We have secured the best access for kiwifruit into India of any country in the world.”

India has notably excluded several sensitive agricultural products from the agreement, including dairy imports such as milk, cream, whey, yogurt, and cheese, along with various animal and vegetable products like goat meat, onions, and almonds, citing “domestic sensitivities.”

Current bilateral trade between India and New Zealand, including merchandise goods and services, stands at $2.4 billion as of 2024. Both countries hope to double this figure within approximately five years, according to Trade Secretary Rajesh Agarwal.

Trade analyst Ajay Srivastava offered a measured assessment of the agreement, stating, “Given the limited scale of bilateral trade, the agreement is less a trade breakthrough than a framework for deeper cooperation.”

The India-New Zealand deal is part of India’s broader push to secure trade partnerships beyond traditional markets as global commerce faces pressures from unpredictable tariffs, geopolitical tensions, slowing growth, and rising protectionism.

In recent years, India has signed comprehensive economic cooperation agreements with the United Arab Emirates, Australia, and most recently, Oman. In May, Britain and India announced a significant free trade agreement reducing tariffs on products including Scotch whisky and English gin exported to India, and Indian food and spices sent to the UK.

India continues to pursue additional trade agreements, with negotiations in advanced stages with the European Union and Chile. The country also hopes to finalize terms of reference soon for negotiations with Canada.

This flurry of trade activity reflects India’s strategy to build a wider network of international agreements to help cushion against external economic shocks while supporting its ambitious export goals in an increasingly uncertain global trade environment.