India and New Zealand should target doubling bilateral trade within the next five years, according to a recent report by the Global Trade Research Initiative (GTRI), as both countries move closer to concluding a long-pending comprehensive free trade agreement (FTA). The renewed push reflects a shared strategic interest in diversifying trade partnerships amid global economic uncertainty.
Current bilateral trade between the two nations stands at USD 1.3 billion in FY25, a relatively modest figure given the complementary nature of their economies. GTRI has called for early tariff relief on select products, deeper sectoral cooperation, and improved connectivity through direct flights and relaxed visa norms to unlock trade potential.
GTRI Founder Ajay Srivastava noted that a clearly defined target could provide momentum to negotiations that stalled in 2015 and resumed this year. He highlighted agriculture, forestry, fintech and education as priority sectors where collaboration could yield rapid gains.
Tariff Asymmetry and Negotiation Priorities
A key challenge in the negotiations lies in the asymmetry of tariff structures. New Zealand’s average import tariff is just 2.3 per cent, compared to India’s significantly higher 17.8 per cent. As a result, the talks are expected to focus heavily on tariff rationalisation, particularly for industrial products, textiles, engineering goods, and select agricultural items.
While the proposed FTA is likely to eliminate or substantially reduce duties on a wide range of goods, sensitive agricultural commodities, especially those linked to rural livelihoods, are expected to remain protected. This cautious approach reflects India’s domestic political and socio-economic considerations.
Trade Composition: Goods and Services
India’s exports to New Zealand are relatively diversified. Aviation turbine fuel leads the basket at USD 110.8 million, followed by textiles and pharmaceuticals. Machinery, petroleum products, automobiles, and food products such as basmati rice and shrimp also feature prominently.
In contrast, New Zealand’s exports to India are dominated by raw materials and agricultural inputs, including wood, metal scrap and other primary products. This structure underlines the scope for value-chain integration rather than direct competition in manufacturing.
Dairy: A Persistent Sensitivity
The dairy sector remains the most sensitive area in the negotiations. India has consistently maintained a firm stance on protecting its millions of smallholder dairy farmers. Consequently, dairy trade between the two countries remains negligible, with New Zealand’s dairy exports to India amounting to just USD 1.07 million in FY25.
This cautious approach suggests that any market access offered to New Zealand dairy products, if at all, would be highly calibrated and limited in scope, reflecting the political and social significance of the sector in India.
Services Trade and Strategic Gains
Services trade is emerging as a critical pillar of the India–New Zealand economic relationship. India’s services exports to New Zealand reached USD 214.1 million in FY24, led by IT, software and healthcare services. Meanwhile, New Zealand’s services exports to India stood higher at USD 456.5 million, driven by education, tourism and specialised aviation training.
Improved services access, combined with easier mobility for professionals and students, could significantly deepen bilateral engagement beyond goods trade.
Strategic Implications
For India, a stronger partnership with New Zealand offers a gateway to the high-income Pacific market, strengthening its presence in the broader Asia-Pacific region. For New Zealand, enhanced access to India provides exposure to one of the world’s fastest-growing large economies, helping diversify trade amid rising global protectionism.
If concluded with pragmatic safeguards and phased liberalisation, the India–New Zealand FTA could serve as a model for balanced trade agreements that align economic ambition with domestic sensitivities.