Trade Relations: Mastering the India-New Zealand FTA for UPSC
Q. Regarding the India-New Zealand Free Trade Agreement (FTA) 2025, consider the following statements:
1. New Zealand has offered immediate duty elimination on 100% of its tariff lines for Indian exports.
2. India has provided reciprocal 100% duty-free access for New Zealand's dairy and agricultural products.
3. The agreement includes a dedicated Annex on Health and Traditional Medicine (AYUSH) for the first time.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 1 and 3 only
(c) 2 and 3 only
(d) 1, 2 and 3
Context
India and New Zealand concluded negotiations for a forward-looking Free Trade Agreement (FTA) in December 2025. Announced in March 2025, it is one of India’s fastest-concluded FTAs, aimed at delivering duty-free access for Indian exports while safeguarding sensitive domestic sectors like dairy and agriculture.
Bilateral Trade Overview
The agreement builds on a rapidly growing economic relationship and a strong Indian diaspora (nearly 300,000 people, or 5% of New Zealand's population).
- Merchandise Trade: Grew from USD 873 million in 2023–24 to USD 1.3 billion in 2024–25 (49% growth).
- Positive Balance: Indian exports rose to USD 711 million in 2024–25, maintaining a positive trade balance.
- Services Trade: India’s services exports reached USD 634 million in 2024, led by IT, travel, and business services.
Key Features of the FTA
The agreement establishes a predictable framework for goods, services, mobility, and investment.
1. Market Access for Goods
- Gains for India: New Zealand will eliminate duties on 100% of Indian exports (8,284 tariff lines) upon Entry into Force (EIF).
- Gains for New Zealand: India has offered market access in 70.03% of its tariff lines.
- Exclusions by India: To protect domestic interests, India has kept 29.97% of lines in the exclusion list, including:
- Dairy: Milk, cream, whey, cheese, etc.
- Vegetables: Onions, chana, peas, corn, almonds.
- Others: Sugar, honey, animal fats, gems & jewellery, copper, and aluminium.
2. Services and Mobility
- Student Mobility: New Zealand signed an Annex on Student Mobility for the first time. Indian students can work 20 hours/week while studying.
- Post-Study Visas: Extended visas for STEM Bachelors (3 years), Masters (up to 3 years), and Doctorates (up to 4 years).
- Skilled Visa Quota: A quota of 5,000 visas for skilled Indians (stay up to 3 years) in sectors like IT, Engineering, and AYUSH.
- AYUSH Recognition: For the first time, New Zealand facilitates trade in Ayurveda, Yoga, and traditional medicine through a dedicated Health Annex.
3. Investment and Cooperation
- FDI Commitment: New Zealand has committed to investing USD 20 billion in India over 15 years.
- Agriculture Productivity: A Joint Agriculture Productivity Council will monitor technical support for Indian growers of kiwifruit, apples, and honey.
- Pharma: Expedited regulatory pathways for medical devices and drugs, recognizing inspections from trusted global regulators.
Significance
This FTA marks a defining moment in India’s trade diplomacy. It secures duty-free access for labour-intensive sectors (textiles, leather, gems) while providing a strategic gateway to the wider Oceania and Pacific Island markets. By integrating mobility for Indian professionals and students, it strengthens India’s "soft power" and supports the vision of a globally integrated Viksit Bharat 2047.
🎯 Analysis & Insights
Prelims mastery
Correct Answer: (b) 1 and 3 only.
Reasoning: India has kept 29.97% of lines in exclusion, specifically protecting sensitive sectors like Dairy and Agriculture (Statement 2 is false).
Mains perspective
"The India-New Zealand FTA serves as a blueprint for balancing domestic agricultural sensitivities with the need for global market integration." Discuss the significance of this agreement for India's economic and strategic interests in the Oceania region. (150 words)