New Zealand and India’s long-anticipated free trade agreement (FTA) has been hailed as a landmark economic moment for both countries. Announced by Trade Minister Todd McClay and his Indian counterpart Piyush Goyal during Prime Minister Christopher Luxon’s visit to India last March, the negotiations concluded nine months later, just before Christmas.

Both governments have framed the agreement as a growth catalyst. McClay has described it as a “once-in-a-generation” opportunity, while India called it a “forward-looking partnership” that will boost labour-intensive sectors such as textiles and leather. For New Zealand, the deal opens the door to India’s rapidly expanding middle class, expected to exceed 700 million people within five years.

Below, The Indian Weekender breaks down what has been agreed, who benefits, and what challenges remain.

Where does the Agreement stand now?

Although negotiations are complete, the FTA must still be ratified by both parliaments. In India, this is expected to be relatively smooth under Prime Minister Narendra Modi’s coalition government.

In New Zealand, the pathway is more complex. Coalition partner New Zealand First has opposed the agreement, with leader Winston Peters calling it “neither free nor fair.” As a result, the government may need opposition support to pass enabling legislation before the general election later this year.

If ratified, the agreement could be signed in the first half of the year, with a formal review scheduled one year after it comes into force.

How has the Deal been Received?

Reaction across export sectors has been overwhelmingly positive. Groups such as Export NZ, the Meat Industry Association, Beef + Lamb New Zealand, Horticulture New Zealand and the NZ Forest Owners Association have welcomed the agreement.

However, dairy remains a sore point. The Dairy Companies Association acknowledged the deal’s overall benefits but noted that core dairy products like butter and cheese were excluded. Some consolation comes from reduced tariffs on niche dairy products and new quotas for milk proteins such as albumins.

Media commentators have also backed the agreement. Business leaders argue it could reshape New Zealand’s export mix and strengthen political and economic ties with India.

The Trade Numbers at a Glance

Two-way trade between New Zealand and India was valued at NZ$3.68 billion in the year to June 2025. New Zealand exports accounted for NZ$1.79 billion, making India its 21st-largest goods export market and fifth-largest services export market.

Key New Zealand exports include travel and education services, forestry products, horticulture (notably apples and kiwifruit), wool and specialised dairy ingredients. India, meanwhile, exports machinery, pharmaceuticals, textiles, vehicles and precious metals to New Zealand.

What Happens to Tariffs?

The agreement eliminates tariffs on 100 percent of Indian imports into New Zealand and provides tariff-free or reduced-tariff access for 95 percent of New Zealand’s exports to India.

Major wins for New Zealand include:

• Removal of tariffs on forestry products, wool and sheep meat
• Gradual elimination of tariffs on seafood, cherries and avocados
• Significant reductions for wine, cutting current tariffs of up to 150 percent

Dairy access remains limited, but some tariffs on specialised products will be phased out, and future improvements are possible if India opens its dairy market to comparable countries.

Beyond Goods: Visas, Investment and Services

The FTA goes beyond trade in goods. It includes:

• Working holiday visas for 1,000 young Indians annually
• Expanded post-study work rights for Indian graduates
• Temporary employment visas for skilled professionals, including IT specialists, engineers, chefs and yoga instructors

New Zealand has also committed to promoting up to US$20 billion in private sector investment into India over 15 years, supported by a dedicated New Zealand Investment Desk.

Frequently Asked Questions (FAQ)

Is this a fully free trade agreement?

Not entirely. While most tariffs are reduced or eliminated, sensitive sectors-especially dairy-remain protected.

When will the agreement take effect?

After ratification by both parliaments. If legislation passes this year, the deal could come into force in the first half of the year.

Who benefits most in New Zealand?

Forestry, meat, horticulture, wool and wine exporters are expected to gain the most from improved access and lower tariffs.

What does India gain?

Improved access for textiles, leather goods, pharmaceuticals and skilled professionals, alongside investment commitments.

Will this increase migration to New Zealand?

The government says no significant surge is expected, as visa numbers are capped and modest relative to existing flows.