India and New Zealand wrap up free trade negotiations despite persistently high US tariffs

Free trade agreement (FTA) talks between India and New Zealand came to an end on Monday amid hefty US tariffs that have unsettled investors and led to the cancellation of orders from India's biggest export market. In the context of 50% US tariffs, the New Zealand agreement, if signed, would be India's second free trade agreement (FTA) following the Oman agreement. It would also be the country's third accord this year as it works to diversify its exports.According to information made public by the government, Wellington would remove tariffs on 100% of its tariff lines for all Indian exports, while India has committed to lower tariffs on 95% of New Zealand exports. However, New Zealand's typical tariffs are among the lowest in the world—between two and three percent—and their removal could not immediately boost exports.

In order to bring some symmetry to the agreement, New Zealand has "committed" to investing $20 billion in India over the next fifteen years in exchange for market access in a rapidly expanding Indian consumer market that is subject to high tariffs (over 15%). Because of the unfair tariff rates, New Zealand may benefit more from goods trade than India.In 2024–2025, bilateral trade between India and New Zealand was only $1.3 billion. "This FTA opens doors for Indian businesses in the region through well-integrated directional exports and gives our youth choices to learn, work, and grow on a global stage," stated Commerce Minister Piyush Goyal."India's strengths are expanding exports, supporting labor-intensive growth, and power services," stated Commerce Secretary Rajesh Agrawal. New Zealand's access to India's sizable and expanding economy is deeper and more reliable. These qualities are brought together by the migration of individuals, professionals, students, and skilled workers. The FTA contains provisions to address non-tariff barriers through improved regulatory cooperation, transparency, and streamlined customs, sanitary and phyto-sanitary (SPS) measures, and technical barriers to trade disciplines, according to the Commerce and Industry Ministry, in addition to tariff liberalization. According to the Ministry, "all systemic facilitations and fast-track mechanisms for imports that serve as inputs for our manufactured exports ensure that tariff concessions translate into effective and meaningful market access."