India–New Zealand FTA Explained: Zero Duty on Indian Exports and What It Means for Trade, MSMEs, Workers and Students

India and New Zealand have finalised a landmark Free Trade Agreement (FTA) that is expected to significantly deepen economic ties between the two countries. The announcement followed a telephonic conversation between Prime Minister Narendra Modi and his New Zealand counterpart Christopher Luxon.

The agreement aims to enhance trade, investment, services, mobility, innovation and people-to-people links, while opening up new opportunities for businesses, MSMEs, farmers, workers and students. Negotiations for the pact began during Luxon’s visit to India in March 2025 and have now culminated in one of India’s most comprehensive trade deals in recent years.

Zero Duty on 100% of Indian Exports: A Major Win

One of the biggest highlights of the India–New Zealand FTA is zero-duty access for all Indian exports to New Zealand, with tariff elimination across all tariff lines.

This is expected to benefit:

• Farmers and agri-exporters
• MSMEs and artisans
• Women-led enterprises
• Youth and labour-intensive industries

Sectors such as textiles, apparel, leather, footwear, handicrafts and processed foods are expected to see immediate gains, helping Indian exporters become more competitive in the New Zealand market.

Boost for Manufacturing and Industrial Sectors

Manufacturing-oriented industries are also set to benefit from the agreement. These include:

• Engineering goods
• Automobiles and auto components
• Electronics and machinery
• Plastics
• Pharmaceuticals and chemicals

By improving market access and reducing tariffs, the FTA is expected to strengthen supply chains and enhance India’s manufacturing exports.

Doubling Bilateral Trade in Five Years

The agreement aims to double India–New Zealand bilateral trade within five years by expanding cooperation in:

• Goods
• Services
• Investment
• Trade facilitation
• Mobility

In FY 2024–25, bilateral merchandise trade stood at $1.3 billion, while total trade in goods and services reached around $2.4 billion, with services trade alone accounting for $1.24 billion.

$20 Billion Investment Commitment from New Zealand

As part of the agreement, New Zealand has committed to investing $20 billion in India over 15 years, following a framework similar to the European Free Trade Association (EFTA) model.

These investments are expected to flow into:

• Manufacturing
• Infrastructure
• Services
• Innovation and technology
• Job creation

This is likely to provide a significant boost to India’s investment ecosystem and employment generation.

Agriculture: Market Access with Safeguards

Indian farmers are expected to gain improved access to New Zealand’s market for:

• Fruits and vegetables
• Coffee and spices
• Cereals
• Processed foods

Initiatives such as Agricultural Productivity Partnerships, Centres of Excellence, and access to New Zealand’s advanced agri-technologies are expected to improve productivity, quality and farmer incomes.

At the same time, India has protected sensitive domestic sectors, including:

• Dairy
• Sugar
• Edible oils
• Coffee and spices
• Gold, silver and precious-metal scrap
• Rubber-based products

These safeguards are aimed at protecting farmers, MSMEs and domestic industries.

Big Push for Services, Professionals and Students

Services and mobility form a key pillar of the agreement.

Services Market Access

• New Zealand has offered market access in 118 services sectors and MFN treatment in 139 sectors
• India has granted market access in 106 services sectors and MFN treatment in 45 sectors

The agreement also includes a health and traditional medicine services annex, a first for New Zealand in any FTA.

Student Mobility and Work Opportunities

For the first time, New Zealand has signed an Annex on Student Mobility and Post-Study Work Visas with another country.

Key highlights:

• No numerical cap on Indian students
• Right to work 20 hours per week
• Post-study work visas:
  • Up to 3 years for STEM bachelor’s graduates
  • Up to 3 years for master’s graduates
  • Up to 4 years for doctoral graduates

New Employment and Youth Pathways

The FTA introduces several new mobility routes:

• Temporary Employment Entry Visas for up to 5,000 Indian professionals, valid for up to three years
• Eligible professions include AYUSH practitioners, yoga instructors, Indian chefs, music teachers, and professionals in IT, engineering, healthcare, education and construction
• Working Holiday Visa for 1,000 young Indians annually, allowing multiple entries for 12 months

Tariff Reductions on Goods

India’s simple average MFN tariff of 16.2% will decline:

• To 13.18% at entry into force
• To 10.30% after five years
• To 9.06% by the tenth year

Market access has been granted on 70.03% of tariff lines, while 29.97% — largely sensitive sectors — have been excluded.

What New Zealand Says

Reacting to the agreement, Prime Minister Christopher Luxon said the FTA would reduce or remove tariffs on 95% of New Zealand exports to India and could increase NZ exports by $1.1–$1.3 billion annually over the next two decades.

He noted that India’s fast-growing economy and massive consumer base offer significant opportunities for Kiwi businesses.

The Bigger Picture

The India–New Zealand FTA represents a strategic economic partnership, combining trade liberalisation with investment, services, education and mobility. For India, the agreement promises new export markets, jobs, global exposure for professionals and students, and stronger ties with a key Indo-Pacific partner.

Related Topics:
India News | Trade Policy | Free Trade Agreements | MSMEs | Education & Jobs

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