India–New Zealand FTA: Zero-Duty Access On Indian Exports And What It Means For Trade, MSMES, Workers And Students

December 22, 2025

PMO

Prime Minister Narendra Modi and his New Zealand counterpart Christopher Luxon held a telephone conversation on Monday and announced the conclusion of the India-New Zealand Free Trade Agreement (FTA). Both leaders underlined that the pact will boost trade, investment, innovation and shared economic opportunities between the two countries.

Talks on the FTA began during New Zealand Prime Minister Christopher Luxon’s visit to India in March 2025, with both sides projecting the agreement as a key step towards deepening economic engagement. The deal is expected to significantly strengthen bilateral trade, improve market access, encourage investment flows and reinforce strategic cooperation. It is also projected to open fresh avenues for innovators, entrepreneurs, farmers, MSMEs, students and young professionals across multiple sectors.

India-New Zealand Free Trade Agreement: Key Highlights

Once the FTA takes effect, Indian exports to New Zealand will enjoy zero-duty access, with tariffs eliminated across all tariff lines. The agreement is expected to benefit farmers, MSMEs, workers, artisans, women-led enterprises and youth, while creating additional opportunities in labour-intensive industries such as textiles, apparel, leather and footwear.
Manufacturing-focused sectors including engineering, automobiles, electronics, machinery, plastics, pharmaceuticals and chemicals are also poised to gain, as the pact seeks to deepen trade and economic ties between the two nations.
The FTA aims to expand cooperation in services, mobility, goods, investment and trade facilitation, with a stated objective of doubling bilateral trade over the next five years.
Under the deal, New Zealand has committed to invest $20 billion in India over a 15-year period, based on a framework similar to the European Free Trade Association model. These investments are expected to flow into manufacturing, infrastructure, services, innovation and job creation, providing a substantial boost to India’s investment ecosystem.
Agriculture is a major pillar of the agreement. Indian farmers are projected to gain better access to New Zealand’s market for products such as fruits, vegetables, coffee, spices, cereals and processed foods.
Through initiatives like the Agricultural Productivity Partnership, Centres of Excellence and access to New Zealand’s advanced agri-technologies, farmers are expected to benefit from higher productivity, better quality and improved incomes. Specific measures for horticulture products such as honey, kiwifruit and apples are designed to support sustainable growth in the sector.
At the same time, India has ring-fenced sensitive domestic sectors. Agriculture and allied products including dairy, sugar, coffee, spices, edible oils, precious metals like gold and silver, precious-metal scrap, copper cathodes and rubber-based products have been shielded under the FTA to protect farmers, MSMEs and local industries.
The agreement also unlocks opportunities for India’s services sector in areas such as information technology and IT-enabled services, finance, education, tourism and construction.
Services and mobility form a core component of the pact. New Zealand has offered market access in 118 services sectors and sub-sectors and extended Most Favoured Nation (MFN) treatment in 139 service sectors. India has, in turn, granted New Zealand market access in 106 service sectors and MFN treatment in 45. The FTA also carries a dedicated annex on health and traditional medicine services to promote trade in these areas, marking the first time New Zealand has signed such an annex with any country.
Mobility provisions feature prominently. For the first time, New Zealand has agreed to an Annex on Student Mobility and Post-Study Work Visas with another nation. There are no numerical caps, and Indian students are guaranteed the right to work 20 hours per week while studying. Post-study work visas of up to three years are available for graduates with bachelor’s degrees in Science, Technology, Engineering and Mathematics, up to three years for master’s degree holders and up to four years for PhD graduates.
The FTA also creates a new route for Temporary Employment Entry Visas, allowing up to 5,000 Indian professionals in skilled occupations to live and work in New Zealand for up to three years. Eligible categories include AYUSH practitioners, yoga instructors, Indian chefs and music teachers, alongside professionals from sectors such as IT, engineering, healthcare, education and construction. Additionally, a Working Holiday Visa scheme will permit 1,000 young Indians each year to visit New Zealand on multiple-entry visas for a 12‑month period.
On the goods side, India’s simple average MFN tariff of 16.2 percent will reduce to 13.18 percent when the FTA comes into force, further declining to 10.30 percent after five years and to 9.06 percent by the tenth year. Market access has been granted on 70.03 percent of tariff lines, while 29.97 percent have been excluded, largely covering sensitive segments such as dairy, select animal and vegetable products, sugar, fats and oils, arms and ammunition, gems and jewellery, and copper and aluminium products.

New Zealand Prime Minister Christopher Luxon wrote on X, “I’ve just spoken with India’s Prime Minister Narendra Modi following the conclusion of the NZ-India Free Trade Agreement. The FTA reduces or removes tariffs on 95% of our exports to India. It’s forecast that NZ exports to India could increase $1.1B to $1.3B per year over the coming two decades. Boosting trade means more Kiwi jobs, higher wages and more opportunities for hard working New Zealanders. The agreement builds on the strong friendship between our two countries. India is one of the fastest-growing economies in the world, and this gives Kiwi businesses access to 1.4 billion Indian consumers. Our Government is relentlessly focused on fixing the basics and building the future – with new trade deals like this helping to grow our economy so all Kiwis can get ahead.”

In the 2024-25 fiscal year, bilateral merchandise trade stood at $1.3 billion, while total trade in goods and services reached around $2.4 billion in 2024, with services alone accounting for $1.24 billion.