India–New Zealand FTA Talks Resume After a Decade, Dairy Market Access Emerges as Key Sticking Point
New Delhi, May 9, 2025 — After a decade-long pause, India and New Zealand are back at the negotiating table to pursue a long-anticipated Free Trade Agreement (FTA), now positioned under a Comprehensive Economic Cooperation Agreement (CECA) framework. The first round of talks, which began on May 5, wraps up today, rekindling hopes of deepened economic ties—but not without key challenges.
Initially launched in 2010, the India–New Zealand CECA negotiations were stalled in 2015 after ten inconclusive rounds. However, with bilateral trade recovering and surpassing USD 1 billion during April–January FY25, both countries are eager to unlock new trade opportunities in goods, services, and investments.
Yet, one issue looms large: access to India’s protected dairy sector.
New Zealand, a global leader in dairy exports, has long sought reduced tariffs and greater entry into India’s vast and price-sensitive dairy market. India, however, remains cautious, citing the need to protect its 80+ million small-scale dairy farmers. To date, India has never offered tariff concessions on dairy in any trade pact, and current imports from New Zealand in this category remain negligible—just USD 0.57 million.
“For India, dairy is not just a commodity—it’s the backbone of rural livelihoods,” said an expert from the Global Trade Research Initiative (GTRI). “Any relaxation could destabilize domestic pricing and farmer income.”
Tariff Gaps and Market Asymmetry Pose Challenges
Another hurdle in the talks is the stark contrast in tariff regimes. New Zealand’s average import tariff is only 2.3%, with over 50% of tariff lines already duty-free. Indian exports already enjoy broad access to New Zealand’s markets. In contrast, India’s average tariff is 17.8%, meaning tariff cuts would disproportionately impact Indian producers.
“For the FTA to move forward, negotiators must creatively bridge these structural differences,” said Ajay Srivastava, GTRI founder.
Trade Snapshot: Beyond Dairy
India’s exports to New Zealand include textiles, pharmaceuticals, refined fuel, farm equipment, electronics, and basmati rice. Key imports include agri-products like apples, kiwifruit, and meat, as well as timber, wool, and minerals.
Services trade is also vibrant. India exported USD 214 million in IT, telecom, and health services to New Zealand in FY24. Meanwhile, New Zealand exported USD 456.5 million in services, dominated by education, tourism, fintech, and aviation training.
As the first round concludes, all eyes are on how negotiators balance economic ambition with domestic sensitivities, especially around the dairy sector, which remains a red line for India.
