India–New Zealand Free Trade Agreement: A Strategic Masterstroke in India’s Trade Diplomacy
In 2025, India took a decisive leap in reshaping its global trade architecture by signing its third Free Trade Agreement (FTA) of the year, this time with New Zealand. Following earlier FTAs with the United Kingdom and Oman, the India–New Zealand agreement marks another milestone in India’s evolving trade diplomacy and reflects its broader strategy of export expansion, market diversification, and protection of sensitive domestic sectors.
A Shift in India’s Trade Strategy: Historical Context
Over the past five years, India has signed seven FTAs, signaling a renewed push towards trade liberalisation after a long phase of cautious engagement. Before the onset of U.S. protectionist policies under former President Donald Trump, India had signed only four FTAs in four years. However, the global trade disruptions triggered by the U.S.–China trade war compelled India to reduce its overdependence on the United States and actively seek alternative markets.
This strategic shift has accelerated India’s engagement with multiple regions, including Europe, the Middle East, and the Pacific, with the New Zealand FTA emerging as one of the most advantageous deals negotiated so far.
Key Features of the India–New Zealand FTA
The India–New Zealand FTA has drawn attention internationally, particularly because of its asymmetric benefits in India’s favour, a point strongly criticised by New Zealand’s opposition parties.
One of the most significant provisions of the agreement is India’s decision to eliminate tariffs on nearly 95% of New Zealand’s export items, granting New Zealand extensive access to India’s vast consumer market. At the same time, India has strategically safeguarded its dairy sector, refusing to open domestic markets to New Zealand’s dairy products such as milk, butter, cheese, curd, and yogurt.
This protection is crucial for India, where the dairy sector supports millions of small and marginal farmers. Opening the sector to cheaper and highly competitive dairy imports from New Zealand could have destabilised rural livelihoods. Consequently, while the agreement expands trade, it also reflects India’s firm stance on protecting sensitive sectors.
The deal has also incorporated enhanced immigration and mobility provisions, enabling New Zealand to recruit skilled Indian professionals more easily. This aligns with India’s growing role as a global supplier of skilled labour, particularly in technology and services.
Economic Impact and Investment Prospects
Currently, bilateral trade between India and New Zealand stands at approximately $2.4 billion. With the implementation of the FTA, trade volumes are expected to rise sharply to $5–7 billion in the coming years. Moreover, the agreement includes a long-term investment commitment of $20 billion over the next 15 years, indicating deepening economic engagement beyond trade in goods alone.
Broader Implications for India’s Global Trade Policy
India’s sequential signing of FTAs with countries such as the UK, Oman, and now New Zealand has broader geopolitical and economic implications. Collectively, these agreements increase diplomatic and economic pressure on the United States to reconsider its trade engagement with India.
At the same time, India’s approach highlights a balanced trade philosophy—liberalising non-sensitive sectors while shielding critical domestic industries like agriculture and dairy. This model may shape future negotiations, including potential FTAs with the Eurasian Economic Union (EAEU), comprising Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan.
Conclusion
The India–New Zealand Free Trade Agreement represents a strategic win for India’s trade diplomacy. By securing expanded market access, protecting domestic farmers, encouraging skilled migration, and unlocking long-term investments, India has demonstrated a nuanced and assertive approach to global trade negotiations.
As global trade dynamics continue to shift in the post-protectionism era, India’s growing network of FTAs underscores its ambition to emerge as a diversified, resilient, and influential trading power in the global economy.
India–New Zealand Free Trade Agreement: A Strategic Masterstroke in India’s Trade Diplomacy
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