India-New Zealand FTA: 100% Duty-Free Exports and Its Impact on Trade, Workers, MSMEs

India and New Zealand have completed talks on a Free Trade Agreement after a phone call between Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon. During the conversation, both leaders agreed to strengthen economic ties and work more closely together.

The agreement aims to reduce or remove tariffs on many goods, increase trade between the two countries over the next five years, and encourage more investment from New Zealand into India. This marks an important step forward in the relationship between the two nations.

What is a Free Trade Agreement?

A Free Trade Agreement is a deal between two or more countries to reduce or remove barriers to trade. These barriers include customs duties, complex rules, and restrictions on services and investment. By lowering these barriers, countries aim to increase trade, attract investment, and create jobs.

The India-New Zealand FTA goes beyond goods. It also covers services, investment, education, skill mobility, agriculture cooperation, and regulatory transparency. This makes it a modern and comprehensive agreement.

What does 100 percent duty-free exports mean?

Under this FTA, all Indian exports to New Zealand will face zero customs duty from the date the agreement comes into force. Earlier, many Indian products faced tariffs of up to 10 percent. Removing these duties lowers costs for Indian exporters and makes Indian products cheaper and more attractive for New Zealand buyers.

This is especially important because New Zealand is a high-income country with strong purchasing power. Duty-free access helps Indian exporters compete with suppliers from other countries and expand their market share.

Impact on Indian trade

The agreement is expected to boost India’s exports to New Zealand hugely. Key sectors that benefit include:

• Textiles and clothing
• Leather and footwear
• Engineering goods and auto components
• Pharmaceuticals and medical devices
• Gems and jewellery
• Marine products
• Processed foods and agricultural products

Many of these sectors are labour-intensive and export-oriented. With zero duty, Indian exporters can price their products more competitively and increase volumes. Over time, this can lead to higher export earnings and a stronger trade relationship between the two countries.

The FTA also provides India with a gateway to the wider Oceania and Pacific Island markets, as Indian firms gain experience and networks in the region.

Benefits for workers and jobs

Trade growth directly supports employment. When exports increase, factories produce more, service firms hire more people, and supply chains expand. The biggest winners are workers in labour-intensive sectors such as textiles, leather, footwear, food processing, and engineering.

These sectors employ large numbers of women, youth, and semi-skilled workers. Better market access helps stabilize jobs and creates opportunities for new employment, especially in export hubs across India.

The agreement also improves access for Indian professionals in sectors such as IT, engineering, healthcare, education, and construction. Dedicated visa pathways and improved mobility provisions make it easier for Indian talent to work in New Zealand, gaining global exposure and experience.

Impact on MSMEs

Micro, Small, and Medium Enterprises are among the biggest beneficiaries of the FTA. MSMEs often struggle with high tariffs, complex customs procedures, and limited market access. Zero-duty access removes one of the biggest cost barriers they face.

Many MSMEs are active in textiles, handicrafts, leather goods, engineering components, pharmaceuticals, and processed foods. With the FTA:

• Their products become more price-competitive
• Entry into a developed market becomes easier
• Orders can increase, improving cash flow
• Integration into global value chains becomes possible

The agreement also includes cooperation measures to help MSMEs access trade-related information, comply with standards, and connect with overseas buyers. This can help small firms move from local to global markets.

Safeguards for sensitive sectors

India has opened many tariff lines but it has also protected sensitive sectors, especially in agriculture. Products such as dairy, milk, cheese, sugar, edible oils, onions, and certain farm items are excluded from tariff liberalisation.

For selected products like apples, kiwifruit, and honey, market access is linked to quotas and minimum import prices. At the same time, India and New Zealand will work together on agricultural productivity through technology transfer and Centres of Excellence. This ensures that Indian farmers benefit from better productivity without facing unfair competition.

Investment and long-term growth

Another major feature of the FTA is New Zealand’s commitment to facilitate around USD 20 billion of investment into India over the next 15 years. This investment is expected to support manufacturing, infrastructure, services, innovation, and job creation.

For Indian companies, the agreement provides a stable and predictable policy environment. Clear rules on trade, services, and regulations reduce uncertainty and encourage long-term planning.

Conclusion

The India-New Zealand Free Trade Agreement is more than a trade deal. It is a people-focused partnership that links trade with jobs, skills, and growth. The provision of 100 percent duty-free access for Indian exports is a major achievement that will help Indian businesses compete globally.

For workers, MSMEs, and young professionals, the FTA opens new opportunities at home and abroad. Over time, it can strengthen India’s export capacity, create quality employment, and deepen economic ties with a key partner in the Pacific region.

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