New Zealand Parliament Passes India FTA, Cutting Tariffs on 95% of Exports

New Zealand's parliament on Wednesday passed legislation to implement a comprehensive free trade agreement with India, securing a 93-29 vote in favour with support from the opposition Labour Party. The bilateral pact, originally inked in April, eliminates or significantly reduces tariffs on approximately 95% of New Zealand exports to India once fully realised.

New Zealand Trade Minister Todd McClay stated that 57% of the nation's exports to India will become duty-free immediately from day one, with the kiwifruit sector alone projected to save roughly $125 million in tariffs over five years. Two-way trade between the two nations reached NZ$3.99 billion, equivalent to $2.29 billion, in the year leading to June 2026, positioning India as New Zealand's ninth-largest market for goods and services exports.

Under the terms of the agreement, New Zealand will provide immediate duty-free access for 100% of Indian exports across all tariff lines, bolstering labour-intensive domestic sectors including textiles, apparel, leather, footwear, gems, jewellery, engineering goods, and processed foods. In contrast, India has offered tariff liberalisation on 70% of New Zealand tariff lines, covering 95% of bilateral trade value.

India has maintained protectionist safeguards by excluding nearly 30% of product categories from the pact. Sensitive domestic segments such as dairy products, including milk, cream, whey, yoghurt, and cheese, alongside specific agricultural items like onions, pulses, and sugar, remain strictly outside the agreement. Selected goods such as coking coal, waste metal scraps, and wooden logs will enjoy duty-free entry into India, while items like petroleum oils and machinery face phased reductions over three to ten years.

Prime Minister Christopher Luxon celebrated the legislative milestone in a public statement, emphasising that the agreement opens direct access to 1.4 billion consumers and fulfills his administration's first-term pledge. The pact includes a $20 billion foreign direct investment commitment by New Zealand into India over the next 15 years, marking only the second time India has secured such a binding investment pledge in a trade pact.

Both nations are moving towards domestic ratification procedures with the objective of bringing the trade framework into formal operation next month. Commerce Secretary Rajesh Agrawal previously indicated that Indian authorities are looking to operationalize the framework as soon as possible, aligning with Prime Ministers Narendra Modi and Christopher Luxon's shared goal to double two-way bilateral trade by 2030.

Beyond merchandise trade, the agreement establishes dedicated regulatory pathways for service sector cooperation across 118 sectors, with New Zealand offering Most-Favoured Nation treatment in 139 areas. Indian professionals gain access to a new temporary employment entry visa pathway, capped at a quota of 5,000 skilled workers at any given time for stays of up to three years.

The framework introduces specialised mobility channels, including a Working Holiday Visa arrangement allowing 1,000 young Indians annually to travel for up to 12 months. Furthermore, a dedicated student mobility annex permits eligible Indian students to work up to 20 hours weekly during terms and receive extended post-study work visas based on completed qualifications.