India and New Zealand have concluded a comprehensive Free Trade Agreement (FTA), marking a significant milestone in India’s engagement with developed economies in the Indo-Pacific region.
Announced after a phone conversation between Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon, the agreement is expected to act as a catalyst for deeper trade, investment, innovation and people-to-people ties between the two countries.
What stands out is the speed. Negotiations were formally launched on March 16, 2025, during New Zealand Prime Minister Luxon’s visit to India and were wrapped up in just nine months. Both leaders described the swift conclusion as a reflection of strong political will and shared strategic ambition.
No tariffs on 95% of New Zealand’s exports to India
A key headline feature of the pact is New Zealand’s commitment to reduce or eliminate tariffs on 95 per cent of its exports to India. Prime Minister Luxon said the agreement could lift New Zealand’s exports to India by $1.1 billion to $1.3 billion annually over the next two decades, calling it a boost for jobs, wages and opportunities for Kiwi businesses.
I’ve just spoken with India’s Prime Minister Narendra Modi following the conclusion of the NZ-India Free Trade Agreement.
The FTA reduces or removes tariffs on 95% of our exports to India. It’s forecast that NZ exports to India could increase $1.1B to $1.3B per year over the… pic.twitter.com/FEat7BQWOI
— Christopher Luxon (@chrisluxonmp) December 22, 2025
For India, the agreement balances market access with safeguards. India has offered tariff liberalisation on 70.03 per cent of tariff lines, covering around 95 per cent of bilateral trade, while excluding sensitive sectors. These exclusions largely cover dairy, select animal and vegetable products, sugar, fats and oils, arms and ammunition, gems and jewellery, and copper and aluminium products, areas where domestic producers remain protected.
India’s simple average MFN (Most Favoured Nation) tariff of 16.2 per cent will fall to 13.18 per cent when the FTA comes into force, further to 10.30 per cent after five years, and to 9.06 per cent by the tenth year.
Services and mobility take centre stage
The agreement places strong emphasis on services and talent mobility, a growing priority in India’s modern trade deals. New Zealand has offered market access in 118 services sectors and sub-sectors, along with Most Favoured Nation (MFN) treatment in 139 services sectors, reported ANI.
For the first time in any FTA signed by New Zealand, an annex on health and traditional medicine services has been included. This is aimed at facilitating trade in healthcare and traditional medicine services, opening new opportunities for practitioners and service providers.
Mobility provisions are among the most expansive. New Zealand has signed an annex on Student Mobility and Post-Study Work Visas, also a first. Indian students will have no numerical caps and guaranteed work rights of 20 hours per week.
Post-study work visas have been agreed for up to three years for Science, Technology, Engineering and Mathematics (STEM) bachelor’s graduates, up to three years for master’s graduates, and up to four years for doctorate holders.
In addition, a new Temporary Employment Entry Visa pathway allows up to 5,000 Indian professionals at any time to work in New Zealand for up to three years. These include AYUSH practitioners, yoga instructors, Indian chefs, music teachers, and professionals across IT, engineering, healthcare, education and construction. A Working Holiday Visa with multiple entry for 1,000 young Indians annually for 12 months has also been finalised.
Investment commitment with safeguards
Another cornerstone of the agreement is New Zealand’s commitment to invest $20 billion in India over a 15-year period, broadly aligned with the European Free Trade Association (EFTA) investment model. This pledge is backed by a rebalancing mechanism, under which trade concessions may be suspended if agreed investment targets are not met.
The investment is expected to support manufacturing, infrastructure, services and innovation, aligning closely with India’s Make in India and Viksit Bharat 2047 vision.
MSMEs, farmers and innovators in focus
The FTA places special emphasis on Micro, Small and Medium Enterprises (MSMEs), with provisions designed to strengthen institutional business linkages, improve access to trade-related information and enhance cooperation. Indian officials say this could help smaller firms integrate into global value chains with greater confidence.
Commerce and Industry Minister Piyush Goyal described the agreement as people-centric. “Today this Free Trade Agreement is about building trade around people and launching opportunities, for our farmers, for our entrepreneurs, for our students, for our Women and for our innovators,” he said.
New Zealand will eliminate tariffs on 100 per cent of its tariff lines for Indian exports, which is expected to significantly benefit labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles.
Where trade stands today
India-New Zealand economic ties have been gaining momentum. Bilateral merchandise trade stood at $1.3 billion in 2024-25, while total trade in goods and services reached approximately $2.4 billion in 2024. Services trade alone accounted for about $1.24 billion, led by travel, IT and business services.
With a stable and predictable framework now in place, both governments have expressed confidence that bilateral trade can double over the next five years.
Beyond numbers, officials on both sides see the FTA as a strategic agreement that strengthens long-term economic and geopolitical ties. Commerce Secretary Rajesh Agrawal called it “a new generation trade agreement built on tariffs, agricultural productivity, investment and talent with complementarity at the core.”
