New Zealand and India have finalized a free trade agreement, paving the way for reduced tariffs on the majority of New Zealand’s exports. Trade Minister Todd McClay confirmed the deal today, with both nations anticipating its signing in the first half of next year.
Agreement Details
Negotiations began in March and concluded after nine months. Prime Minister Christopher Luxon described the agreement as a crucial step in strengthening ties with India, following his earlier visit this year and multiple ministerial exchanges.
Political Opposition
New Zealand First leader Winston Peters announced his party will oppose the agreement, creating a disagreement within the coalition Government. Peters characterized the deal as “neither free nor fair,” labeling it “quick,” “low quality,” and a “bad deal.” He argued it does not adequately benefit exporters and makes “excessive” concessions on immigration, giving “too much away” without securing enough in return for New Zealanders, particularly regarding dairy.
Tariff Reductions
Under the agreement, tariffs will be eliminated or reduced on 95% of New Zealand’s exports to India. Approximately 57% of exports will be duty-free upon implementation, increasing to 82% once fully enacted, with the remaining 13% subject to significant tariff cuts.
McClay stated the deal will level the playing field for New Zealand businesses and provide access to India’s expanding middle class. He believes the agreement will generate thousands of jobs and billions of dollars in additional exports.
India’s economy is projected to reach around NZ$12 trillion by 2030, and McClay views the agreement as a significant step toward New Zealand’s goal of doubling export value over the next decade.
Key outcomes include immediate tariff elimination on sheep meat, wool, coal, and over 95% of forestry and wood exports. Duty-free access for most seafood exports, including mussels and salmon, will be phased in over seven years. Duty-free access for most iron, steel, and scrap aluminum will occur over 10 years or less, and most industrial products will gain duty-free access over five to ten years.
A 50% tariff cut will be applied to a large quota of apples – nearly double recent average exports. Kiwifruit will receive duty-free access within a quota almost four times recent average exports, with tariffs halved for exports outside the quota. Duty-free access will also be granted for cherries, avocados, persimmons, and blueberries over 10 years.
Tariffs on wine will be reduced from 150% to either 25% or 50% (depending on wine value) over 10 years, with a Most Favoured Nations (MFN) commitment. Tariffs on mānuka honey will be cut from 66% to 16.5% over five years.
The deal also includes MFN status and liberalization across services exports, as well as duty-free access for dairy and other food ingredients for re-export from day one, and bulk infant formula and high-value dairy preparations over seven years. A 50% tariff cut will be applied to high-value milk albumins within a New Zealand-specific quota equal to current export volumes.
McClay highlighted “world-firsts” for New Zealand, including preferential market access for kiwifruit, apples, and mānuka honey, which have historically faced high barriers in the Indian market. The agreement also encompasses wide-ranging services commitments, building on India’s World Trade Organization obligations, with a focus on financial services, digital payments, and fintech.
To protect iconic Kiwi product names, the two countries will establish Geographical Indication rules, similar to those New Zealand has with the European Union. The deal also includes chapters on customs processes, biosecurity standards, sustainable development, and cultural cooperation, as well as a Treaty of Waitangi clause.
Immigration Component
New Zealand will allow India up to an average of 1667 three-year skilled work visas per year, targeting roles with skill shortages in healthcare, education, ICT, and engineering. An expanded Working Holiday Scheme will provide up to 1000 places annually to support tourism and rural work sectors.
Luxon stated the deal was a “landmark moment” and the result of a concentrated diplomatic effort, noting McClay visited India seven times and the Foreign Minister twice since the election. He also led New Zealand’s largest-ever trade mission to India earlier this year, and the country has hosted India’s President and two ministerial visits.
Both countries have agreed to review the agreement one year after it comes into force.
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