India, New Zealand announce free trade agreement; to serve as catalyst for trade, investment

New Delhi [India], December 22 : Prime Minister Narendra Modi on Monday held a telephone conversation with the Prime Minister of New Zealand Christopher Luxon as the two leaders jointly announced a landmark India-New Zealand Free Trade Agreement. The leaders agreed that the FTA would serve as a catalyst for greater trade, investment, innovation and shared opportunities between both countries

The leaders also welcomed progress in other areas of bilateral cooperation including defence, sports, education and people-to-people ties.

With negotiations having been Initiated during New Zealand PM Luxon's visit to India in March 2025, the two leaders agreed that the conclusion of the FTA in a record time of 9 months reflects the shared ambition and political will to further deepen ties between the two countries. The FTA would significantly deepen bilateral economic engagement, enhance market access, promote investment flows, strengthen strategic cooperation between the two countries, and also open up new opportunities for innovators, entrepreneurs, farmers, MSMEs, students and youth of both countries across various sectors.

With the strong and credible foundation provided by the FTA, both leaders expressed confidence in doubling bilateral trade over the next five years as well as an investment of USD 20 billion in India from New Zealand over the next 15 years. The leaders also welcomed the progress achieved in other areas of bilateral cooperation such as sports, education, and people-to-people ties, and reaffirmed their commitment towards further strengthening of the India-New Zealand partnership.

Christopher Luxon, said in a post 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."

The agreement will significantly deepen cooperation across services, mobility, goods, investment and trade facilitation. As part of the deal, New Zealand has committed to invest USD 20 billion in India over a 15-year period, broadly on the lines of the European Free Trade Association (EFTA) model.

This investment commitment will be backed by a rebalancing mechanism, under which trade concessions may be suspended if the agreed investment targets are not achieved.

A major highlight of the agreement is services and mobility. New Zealand has offered market access in 118 services sectors and sub-sectors, along with Most Favoured Nation (MFN) treatment in 139 services sectors.

An annex on health and traditional medicine services has also been included to facilitate trade in health-related and traditional medicine services, marking the first time New Zealand has signed such an annex with any country.

The FTA places special emphasis on Micro, Small and Medium Enterprises (MSMEs), with provisions aimed at enhancing cooperation, strengthening institutional business linkages and improving access to trade-related information.

The agreement also establishes a balanced and robust Rules of Origin (ROO) framework, incorporating product-specific rules and safeguards to prevent circumvention, while ensuring the integrity of preferential market access.

On mobility, New Zealand has signed an Annex on Student Mobility and Post-Study Work Visas for the first time with any country. The arrangement includes no numerical caps and locks in 20 hours per week work rights for Indian students.

Post-study work visas have been agreed for up to three years for Science, Technology, Engineering and Mathematics (STEM) bachelor's graduates, up to three years for master's graduates, and up to four years for doctorate holders.

In addition, a new Temporary Employment Entry Visa pathway has been created, allowing up to 5,000 Indian professionals at any time in skilled occupations to stay in New Zealand for up to three years. These include Indian iconic occupations such as AYUSH practitioners, yoga instructors, Indian chefs and music teachers, as well as sectors such as IT, engineering, healthcare, education and construction.

A Working Holiday Visa with multiple entry for 1,000 young Indians annually for 12 months has also been agreed.

India, for its part, has offered market access to New Zealand in 106 services sectors and extended MFN treatment in 45 services sectors.

In goods trade, India's simple average MFN tariff of 16.2 per cent will reduce to 13.18 per cent upon entry into force of the FTA, further to 10.30 per cent after five years, and to 9.06 per cent by the tenth year.

Market access has been offered on 70.03 per cent of tariff lines, while 29.97 per cent have been excluded, largely covering sensitive sectors such as dairy, select animal and vegetable products, sugar, fats and oils, arms and ammunition, gems and jewelry, and copper and aluminum products.

India-New Zealand economic engagement has shown steady momentum. Bilateral merchandise trade reached USD 1.3 billion in 2024-25, while total trade in goods and services stood at approximately USD 2.4 billion in 2024, with services trade alone reaching USD 1.24 billion.

The India-New Zealand FTA is expected to enhance trade flows, improve regulatory certainty and strengthen long-term strategic and economic ties between the two countries.

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