India and New Zealand said on Monday they had concluded a free trade agreement aimed at deepening economic ties amid growing trade uncertainty.
The announcement followed a conversation between Indian Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon, with officials describing the pact as a vehicle to expand commerce in goods, services and investment.
A formal signing is expected in the first quarter of 2026 after legal review of the text, according to Petal Dhillon, India’s chief negotiator. Negotiations ran for about nine months, and Indian officials said the deal would reduce tariffs and ease regulatory barriers while widening cooperation across multiple sectors.
Tariff Cuts And Market Access Built Into A Phased Plan
India would receive zero-duty access for all of its goods exports into New Zealand. In return, New Zealand would obtain duty concessions and market access for about 70% of India’s tariff lines, covering roughly 95% of New Zealand’s exports to India through phased implementation, Indian officials said.
India’s Trade Ministry said New Zealand committed $20 billion in investments in India over 15 years as part of the agreement.
Sector Winners And A Prominent Dairy Carve-Out
India said tariff-free entry into New Zealand should benefit exports from textiles, apparel, engineering goods, leather and footwear, and marine products. New Zealand’s expected gains include horticulture, wood exports, coal, and sheep wool and meat, among other products, according to Indian officials.
New Delhi also set out a list of exclusions tied to what it called “domestic sensitivities.” India kept dairy products such as milk, cream, whey, yoghurt, and cheese outside the deal, and excluded other animal and vegetable products including goat meat, onions, and almonds.
New Zealand Trade Minister Todd McClay said the agreement delivers openings India has not granted other partners in comparable pacts. “New Zealand is the first country to secure any access for apples and honey into India in an FTA,” he said, adding that Wellington had secured what he described as the best access for kiwi fruit among India’s trade partners.
Trade Targets As India Broadens Its Partnership Strategy
Trade officials emphasized that the deal starts from a relatively small base but is intended to scale. India’s Trade Secretary Rajesh Agarwal said two-way trade in goods and services totaled $2.4 billion in 2024, and both countries aim to double that figure in about five years.
Trade analyst Ajay Srivastava said the agreement is best understood as a framework rather than a near-term trade shock. “Given the limited scale of bilateral trade, the agreement is less a trade breakthrough than a framework for deeper cooperation,” he said.
On the New Zealand side, Luxon said exports to India are forecast to rise by $1.1 billion to $1.3 billion a year over the next two decades because of the agreement. In a post on X, he said, “Boosting trade means more Kiwi jobs, higher wages and more opportunities for hard working New Zealanders.”
The agreement also fits into India’s effort to diversify export destinations as tariff policy and geopolitics reshape trade planning. Higher U.S. import duties took effect in August, including an additional 25% levy tied to India’s purchases of discounted Russian oil, bringing combined U.S. tariffs on India to 50%. India has sought to widen its trade network, pointing to earlier deals with the United Arab Emirates and Australia, a free trade agreement announced with Britain in May, and a comprehensive economic partnership agreement with Oman signed last week. Officials also said India is in advanced talks with the European Union and Chile, and hopes to set terms of reference to negotiate with Canada.
India’s Trade Minister Piyush Goyal said the New Zealand agreement reflects India’s drive to expand trade ties with countries that complement the Indian economy rather than compete directly with it.
