India-NZ deal to boost exports, services sector

India and New Zealand announced the conclusion of an ambitious and mutually beneficial free trade agreement (FTA) on Monday, with New Delhi securing zero-duty access for all Indian goods in the island country, a $20 billion investment commitment by New Zealand over 15 years, and concessions in professional mobility while shielding its dairy sector.

- Rajeev Jayaswal

Prime Minister Narendra Modi and his counterpart Christopher Luxon announced the conclusion of the trade deal the second finalised by India this month after an agreement with Oman - during a telephone conversation. The FTA was concluded nine months after negotiations began during Luxon's visit to India in March, and both leaders said this reflected the "shared ambition and political will to further deepen ties".

In return, India allowed calibrated market access in 70.03% of tariff lines, covering 95% of New Zealand's exports to India. While New Zealand would get immediate tariff elimination on 30% of tariff lines such as sheep meat, wool, leather-raw hides, wooden logs and metal scraps. A little more than 35.6% tariff lines, including petroleum oil, malt extract, vegetable oils, and selected electrical and mechanical machinery would see phased duty elimination in three to 10 years. About 4.37% tariff lines such as wine, pharmaceuticals, polymers, aluminium, and steel articles would see tariff reduction. And 0.06% tariff line covering items like honey, apples, kiwi fruit, and albumins would fall under tariff rate quotas (TRQS). TRQ is a trade mechanism that allows import of only a specific quantity of any specified product at a concessional tariff.

The deal places 29.97% tariff lines in an exclusion category, covering items such as milk, cream, whey, yoghurt, cheese, animal products (other than sheep meat), and vegetables such as onions, chickpea, peas, corn and almonds.

With the strong foundation provided by the FTA, Modi and Luxon "expressed confidence in doubling bilateral trade over the next five years as well as an investment of $20 billion in India from New Zealand over the next 15 years", the external affairs ministry said in a readout.