India and New Zealand Revive Free Trade Talks
New Delhi: India and New Zealand have announced the relaunch of negotiations for a free trade agreement (FTA) after a decade-long hiatus. This significant development aims to strengthen economic ties between the two nations amid rising geopolitical tensions. The announcement was made by India’s Commerce and Industry Minister Piyush Goyal and New Zealand’s Trade Minister Todd McClay ahead of a bilateral meeting between Prime Ministers Narendra Modi and Christopher Luxon.
Renewed Commitment to Economic Partnership
During their meeting, Goyal emphasized the importance of this renewed commitment, stating that it marks a “significant milestone” in the partnership between India and New Zealand. He highlighted the shared vision of both countries to deepen trade ties and expand economic opportunities. The bilateral trade between the two nations has been steadily increasing, surpassing $1 billion from April to January 2025. The FTA negotiations are expected to unlock new avenues for businesses and consumers, fostering mutual growth and prosperity.
The Indian government views this FTA as a crucial step towards enhancing supply chain integration and improving market access. A statement from the commerce and industry ministry reiterated the goal of achieving balanced outcomes that would benefit both countries. The revival of these talks comes after previous negotiations, which began in April 2010, stalled after ten rounds due to disagreements over market access and trade priorities.
Addressing Trade Disparities
One of the major challenges facing the renewed negotiations is the disparity in tariff structures between the two countries. New Zealand’s average import tariff is relatively low at 2.3%, with over half of its tariff lines already duty-free. This means that Indian goods already enjoy significant access to the New Zealand market. In contrast, India’s average tariff stands at 17.8%, which would require substantial reductions to make a traditional FTA appealing for India.
Ajay Srivastava, head of the trade think tank GTRI, pointed out that finding common ground on these tariff issues will be essential for the success of the negotiations. He noted that the trade volume between India and New Zealand in FY24 was just over $1.5 billion, indicating a significant underperformance in their economic ties. As both countries prepare to resume talks, addressing these disparities will be crucial for moving forward.
Context of Global Trade Dynamics
The urgency to finalize bilateral trade agreements has been heightened by the evolving global trade landscape. India is currently negotiating several other FTAs with countries including the United States, the United Kingdom, and the European Union. The backdrop of these negotiations includes the potential threat of a “tariff war,” particularly following the election of Donald Trump as President of the United States. As India and New Zealand embark on this renewed journey towards a comprehensive FTA, both nations are hopeful that the outcome will not only enhance their economic partnership but also contribute to greater resilience and prosperity in the face of global challenges. The upcoming discussions will be closely watched as both sides work to navigate the complexities of trade relations in a rapidly changing world.
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