India-New Zealand FTA Takes Effect, Ending Tariffs on Indian Goods

The India-New Zealand Free Trade Agreement (FTA) officially came into force on October 20, marking a significant milestone in trade relations between the two countries. This new pact removes tariffs on Indian exports entering New Zealand, aiming to boost trade volumes and expand market access for several key sectors.

Sampath Kumar, Additional Director General of Foreign Trade (DGFT), spoke from Hyderabad about the benefits the FTA will bring. He explained that the agreement eliminates import duties of up to 10% on a wide range of Indian goods shipped to New Zealand, effectively making tariffs on all New Zealand tariff lines zero from the day the FTA took effect.

"Starting tomorrow, the India-New Zealand Free Trade Agreement will be implemented. The standout feature is that 100% of tariff lines will become zero right away," Kumar said. This change is especially advantageous for labour-intensive industries such as textiles, leather, and footwear, which previously faced tariffs of up to 10%.

Pharmaceutical products, agricultural goods, marine items, plastics, chemicals, and electrical products will also see the removal of tariffs that ranged as high as 5% before the agreement.

By eliminating these import duties, Indian exporters can offer more competitive prices in the New Zealand market, potentially increasing their market share. The reduction in costs is expected to create fresh opportunities for Indian businesses to grow their presence abroad.

Kumar expressed optimism about the FTA's impact on bilateral trade. "This free trade agreement will help increase the trade surplus with New Zealand and strengthen the overall ties between our countries," he noted.

According to India's Ministry of Commerce and Industry, bilateral trade in merchandise between India and New Zealand reached USD 1.3 billion in the 2024-25 financial year. This figure represents a 49% rise compared to the previous year. Indian exports to New Zealand during that period totaled USD 711 million, highlighting the growing commercial exchange between the two nations.

The agreement was signed in New Delhi on April 27, 2026, by India's Union Commerce and Industry Minister Piyush Goyal and New Zealand's Minister for Trade and Investment Todd McClay. While New Zealand agreed to remove tariffs on all its tariff lines immediately, India opted for a phased approach. It will liberalize tariffs on about 70% of its tariff lines but continues to protect sensitive sectors such as dairy and selected agricultural products.

This measured approach reflects India’s efforts to balance opening markets with safeguarding domestic producers in vulnerable industries. The FTA is expected to facilitate stronger trade and investment flows while offering new avenues for Indian exporters, particularly smaller enterprises and those operating in labour-intensive sectors.

Overall, the India-New Zealand Free Trade Agreement represents a step toward closer economic integration between the two countries. It underscores a mutual commitment to reducing trade barriers and fostering sustainable growth in bilateral commerce.