In a significant development for Indo-Pacific economic cooperation, India and New Zealand have relaunched negotiations for a Free Trade Agreement (FTA) after a hiatus of over ten years. The announcement came during the official visit of New Zealand Prime Minister Christopher Luxon to India from March 16-20, 2025, marking a pivotal moment in the bilateral relationship. The talks, which had stalled in 2015, were revived following high-level discussions between Luxon and Indian Prime Minister Narendra Modi, alongside meetings between senior delegates, including New Zealand Trade and Investment Minister Todd McClay and Indian Commerce Minister Piyush Goyal. This move reflects both nations’ commitment to deepening economic ties and enhancing supply-chain integration amid a shifting global trade landscape.

The relaunch of FTA negotiations is a “major breakthrough,” as described by Luxon, fulfilling a key promise from his 2023 election campaign. For India, it aligns with a broader strategy to secure trade agreements with key partners, particularly in light of recent global trade uncertainties, such as U.S. President Donald Trump’s tariff policies. The first round of negotiations is slated to begin in April 2025, with both sides expressing optimism about overcoming past challenges, including contentious issues like dairy market access.

Major Outcomes of the Discussions

The talks between the prime ministers and senior delegates yielded several concrete outcomes, signaling a multifaceted strengthening of ties beyond trade. Key highlights include:

Launch of FTA Negotiations: Both nations agreed to initiate comprehensive FTA talks aimed at achieving balanced outcomes, enhancing market access, and integrating supply chains. This marks a fresh start, distinct from the nine rounds held between 2010 and 2015.

Digital Connectivity Initiatives: New Zealand committed to collaborating on integrating India’s Unified Payments Interface (UPI) system, aiming to facilitate smoother financial transactions and boost economic interactions.

Defense and Security Cooperation: Agreements were signed to increase joint military exercises, training programs, and port visits, reinforcing strategic ties in the Indo-Pacific region.

Memoranda of Understanding (MoUs): Several MoUs were inked in areas such as education, defense, horticulture, and sports, laying the groundwork for broader collaboration.

Sectoral Engagement: Both leaders emphasized enhanced cooperation in dairy, food processing, pharmaceuticals, renewable energy, and critical minerals, sectors critical to both economies.

People-to-People Ties: Plans were outlined to boost educational exchanges, tourism, and cultural linkages, with Luxon highlighting India’s potential in doubling New Zealand’s export value over the next decade.

These outcomes underscore a holistic approach to bilateral relations, blending economic ambitions with strategic and cultural priorities.

Bilateral Relations Over the Last Three Years (2022-2024)

The India-New Zealand relationship has seen steady growth in recent years, though trade volumes remain modest compared to their potential.

Below is a detailed breakdown of exports and imports over the last three financial years (April-March), based on available data up to 2023-24, with projections for 2024-25 informed by current trends:

2021-22:

India’s Exports to New Zealand: $570.2 million

New Zealand’s Exports to India: $452.1 million

Total Bilateral Trade: $1.02 billion

2022-23:

India’s Exports to New Zealand: $523.6 million

New Zealand’s Exports to India: $498.8 million

Total Bilateral Trade: $1.02 billion

2023-24:

India’s Exports to New Zealand: $438.9 million

New Zealand’s Exports to India: $434.5 million

Total Bilateral Trade: $873.4 million

Over this period, bilateral trade hovered around $1 billion annually, dipping slightly in 2023-24. The decline from $1.02 billion in 2022-23 to $873.4 million in 2023-24 reflects global economic headwinds and specific sectoral challenges, such as India’s protective stance on dairy imports. However, both nations see the FTA as a catalyst to reverse this trend and aim for a target closer to $2 billion in the near future, as suggested by Luxon’s export-doubling goal.

Major Products Traded Between India and New Zealand

The trade basket between India and New Zealand is diverse, with each country leveraging its strengths:

India’s Major Exports to New Zealand:

Pharmaceuticals: Medicines and medical devices form a significant portion, reflecting India’s global leadership in generic drugs.

Textiles: Cotton fabrics, garments, and yarn cater to New Zealand’s consumer market.

Engineering Goods: Machinery and auto components are increasingly in demand.

Gems and Jewelry: Polished diamonds and gold jewelry are notable exports.

Agricultural Products: Spices, tea, and processed foods round out the list.

New Zealand’s Major Exports to India:

Agricultural Products: Wool, apples, and protein products dominate, with nearly half of New Zealand’s $520 million in goods exports to India in 2023 being agricultural.

Dairy: Though limited by India’s tariff barriers, dairy products like milk powder remain a key export, with potential for growth under an FTA.

Forestry Products: Logs and timber are significant, supporting India’s construction sector.

Education Services: Not a physical export but a major contributor, with Indian students contributing to New Zealand’s economy via tuition fees.

India’s reluctance to open its dairy market has historically been a sticking point, given New Zealand’s status as a dairy powerhouse and India’s need to protect its small-scale farmers. The renewed talks aim to address such issues creatively, possibly through phased liberalization or future reviews.

Looking Ahead

The relaunch of FTA negotiations after a decade-long gap signals a maturing partnership between India and New Zealand. For New Zealand, India represents a vast and growing market critical to its export ambitions. For India, New Zealand offers high-quality agricultural goods, advanced technology, and a strategic ally in the Indo-Pacific. The discussions in March 2025, bolstered by Luxon’s high-level delegation—the largest he has led to date—highlight the priority both nations place on this relationship.

As the first round of talks approaches, challenges like dairy access and tariff disparities will test negotiators’ ingenuity. Yet, the broader commitments to defense, digital connectivity, and sectoral collaboration suggest a relationship poised for a quantum leap. If successful, this FTA could not only double bilateral trade but also set a precedent for India’s evolving trade strategy in a multipolar world.