New Zealand Parliament clears India trade deal, 95% of exports to get tariff cuts

New Zealand on Wednesday (Sep 16) passed legislation establishing a free trade agreement with India. Under the FDA, tariffs on about 95 per cent of New Zealand's exports to India would be eliminated or reduced significantly reduced.

The bill passed by 93 votes to 29, with support from the opposition Labour Party as well as the ruling National Party. The agreement, signed by India and New Zealand on April 27, is aimed at expanding trade and investment between the two countries.

Which products will see reduced tariffs?

Under the deal, tariffs on about 95 per cent of New Zealand’s current exports to India will eventually be eliminated or reduced significantly. New Zealand’s trade ministry said 57 per cent of its exports will become duty-free from the first day of implementation.

"For exporters, the benefits are immediate and substantial," New Zealand Trade Minister Todd McClay said.

"We expect this high-quality agreement to enter into force this year, delivering on our promise to complete a free trade agreement with India this term."

What does India get in return?

The agreement provides duty-free access in New Zealand for 100 per cent of Indian exports, covering all tariff lines. India has offered New Zealand market access across 70.03 per cent of its tariff lines, covering around 95 per cent of bilateral trade. Nearly 30 per cent of tariff lines remain excluded, including sensitive areas such as dairy and several agricultural products.

New Zealand will immediately eliminate duties on 30 per cent of the tariff lines covered by its concessions to India, while additional tariffs will be phased out over three, five, seven, or 10 years.

Products benefiting from the agreement include wood, wool, sheep meat, and raw hides. Other goods, including wine, pharmaceuticals, polymers, and selected aluminium, iron, and steel products, will receive tariff reductions. Quotas will apply to some products such as Mānuka honey, apples, kiwifruit, and albumins.

$20 billion investment commitment

Wellington has also committed to investing $20 billion in India over the next 15 years, with the agreement covering cooperation in areas including agriculture, manufacturing, infrastructure, technology, research and innovation, and renewable energy.

The pact is also expected to open opportunities for Indian labour-intensive sectors such as textiles and apparel, leather and footwear, gems and jewellery, engineering goods and processed foods.

New Zealand has made commitments across 118 service sectors and offered Most-Favoured Nation treatment in 139 sectors, according to the Indian government's summary of the agreement.

Visa pathways for Indian professionals and students

The FTA includes a Temporary Employment Entry visa pathway for up to 5,000 skilled Indians, with stays of up to three years in specified occupations.

A Working Holiday Visa arrangement will allow 1,000 young Indians a year to travel to New Zealand for up to 12 months.

The agreement also contains provisions covering student mobility and post-study work rights.

What happens next?

New Zealand Prime Minister Christopher Luxon welcomed the parliamentary vote, saying the agreement would give New Zealand businesses greater access to India’s large consumer market.

"People told me a Free Trade Agreement with India wasn’t possible. Well, today that deal passed its final vote in Parliament. It’s happening," Luxon said in a post on X.

Indian Commerce Secretary Rajesh Agrawal said the agreement could potentially become operational in October. The pact will formally take effect once both countries complete their respective ratification procedures.