New India-New Zealand Free Trade Agreement Takes Effect With 100% Duty-Free Access for Indian Exports

India's free trade agreement with New Zealand came into force on October 20, marking the seventh such trade pact to take effect in the last five years. Commerce and Industry Minister Piyush Goyal noted that bilateral trade in goods and services currently stands at $2.4 billion, while specific figures for 2024-25 put total bilateral trade at $1.3 billion, with India's goods exports at $711.1 million and imports at $587.13 million. The new pact grants India duty-free access to 100 percent of New Zealand's tariff lines, a milestone that sets it apart from previous trade deals. Before this agreement, New Zealand charged a 10 percent tariff on Indian imports across sectors like textiles, apparel, leather, footwear, engineering goods, plastics, rubber, and electronics. Duties on items like pharmaceuticals, agriculture and allied services, marine products, and chemicals have now dropped from 5 percent to zero.

Investment and Mobility

Under the official terms of the agreement, New Zealand will promote foreign direct investment into India with the goal of increasing it by U.S. dollars 20 billion within 15 years. This investment target is tied to India's estimated nominal GDP growth rate and past performance. The deal also introduces new provisions for student and worker mobility. Two new Temporary Employment Entry visa categories for highly skilled and iconic Indian professions will allow up to 5,000 visa holders in New Zealand at once for a three-year period without a residence pathway. Starting November 16, 2026, Indian graduates with New Zealand PhDs can get post-study work visas for up to four years. Indian students are guaranteed an allowance of 20 hours of in-study work per week, and a new working holiday scheme will allow up to 1,000 young Indian nationals aged 18 to 30 to spend up to 12 months in New Zealand.

Tariff Protections

In return, India has extended market access on 70 percent of tariff lines in a phased manner while keeping 30 percent excluded to protect sensitive domestic sectors. India agreed to zero-duty imports from New Zealand on 30 percent of tariff lines, including wood, wool, sheep meat, and raw leather hides. Another 35.6 percent of tariff lines will see duties eliminated over four phases spanning three, five, seven, and 10 years, covering items like petroleum oils, vegetable oils, and selected machinery. Tariffs will be reduced on 4.37 percent of items such as pharmaceutical drugs and aluminium, while 0.06 percent of goods like Manuka honey, apples, and kiwifruit receive reductions under a tariff rate quota. Sensitive sectors like dairy, onions, chickpeas, peas, corn, almonds, and sugar remain fully excluded from the deal.

Context

Free trade agreements are formal pacts between countries designed to boost commerce by removing or lowering taxes and limits on goods moving across borders. Governments typically negotiate these deals to help local businesses sell more products abroad while carefully shielding vulnerable domestic industries from cheap foreign competition.