India-New Zealand FTA likely to enter into force by year-end: Minister Todd McClay
The India-New Zealand Free Trade Agreement, signed in April 2026, is expected to enter into force by the end of the year, according to New Zealand's Trade and Investment Minister.
New Zealand's Parliament has already passed the agreement through its first reading, an early stage in that country's treaty-implementation process.
The agreement is expected to strengthen economic and trade ties between the two countries and contribute to more resilient supply chains.
India is set to receive zero-tariff access to New Zealand on a wide range of exports from the date of entry into force, while New Zealand's tariff reductions in India will be phased in gradually over several years.
India's Treaty-Making Power — Article 73 and Article 253
Under the Constitution, the power to negotiate and conclude treaties with foreign states rests with the Union Executive under Article 73 (read with Entry 14 of the Union List — "entering into treaties and agreements with foreign countries"). Unlike some parliamentary democracies, Indian treaties do not require prior parliamentary ratification to be internationally binding; Parliament's role is triggered only under Article 253, which empowers it to legislate to give domestic legal effect to a treaty, particularly where the subject falls within State List competence.
Key Details
- India has no general law (comparable to a "treaty ratification act") mandating parliamentary approval before the Executive signs or ratifies an international agreement — the process is left largely to executive discretion, a point periodically flagged for greater parliamentary oversight.
- Article 253 gives Parliament overriding legislative competence to implement any treaty even on subjects otherwise reserved to State Legislatures, since foreign treaty-implementation is treated as a Union subject regardless of the treaty's substantive content.
- This contrasts with New Zealand's process, where the FTA required a formal "first reading" vote in Parliament as part of treaty examination before ratification — reflecting a more parliamentary-scrutiny-heavy treaty process than India's executive-led model.
New Zealand's FTA is going through a parliamentary first-reading stage precisely because that country's system requires legislative treaty examination; India, having already had the Union Cabinet approve and sign the same agreement, does not need an equivalent parliamentary ratification step before entry into force, though any domestic legislative changes needed to implement it would draw on Article 253.
Dairy Sector Protection in India's FTA Negotiating Strategy
India has consistently excluded dairy products from tariff liberalisation in every major FTA negotiation, treating the sector as a "red line" given its role in rural livelihoods and its cooperative-based structure (unlike New Zealand's export-oriented, corporate dairy industry).
Key Details
- In the India-New Zealand FTA, India extended market access on roughly 70% of tariff lines while keeping the remaining share — including core dairy products such as milk, butter, cheese, and whey — outside duty-free access.
- The dairy impasse was also the central reason the original India-New Zealand Comprehensive Economic Cooperation Agreement (CECA) negotiations, launched in 2010, stalled and were shelved after 2015 (following ten negotiating rounds) without conclusion.
- The same dairy-protection stance was a key factor in India's 2019 decision to withdraw from the Regional Comprehensive Economic Partnership (RCEP) negotiations, reflecting a consistent policy of shielding smallholder dairy farmers from competition with large dairy-exporting economies such as New Zealand and Australia.
The FTA now nearing entry into force succeeded, after 15 years of intermittent talks, in large part because both sides worked around — rather than resolved — the dairy impasse, with India again ring-fencing the sector even in this concluded agreement.
Classification of India's Trade Agreements — FTA, CEPA, and CECA
India uses different nomenclature for its bilateral trade agreements depending on scope and depth: a Free Trade Agreement (FTA) typically covers goods tariff liberalisation and may include limited services provisions; a Comprehensive Economic Partnership Agreement (CEPA) or Comprehensive Economic Cooperation Agreement (CECA) additionally covers services, investment, and broader economic cooperation chapters.
Key Details
- India's CEPA with the UAE (signed 18 February 2022, in force 1 May 2022) and CECA with Australia (in the earlier 2011-2015 negotiation round, later concluded as the narrower ECTA in 2022) illustrate the naming distinction, though in practice the terms have been used inconsistently across India's trade agreements.
- The original India-New Zealand negotiation (2010-2015) was styled a CECA; the revived 2025-2026 negotiation, launched in March 2025 and signed in April 2026, was concluded as a standalone Free Trade Agreement.
- All such agreements must, under GATT Article XXIV, cover "substantially all trade" between the parties and be notified to the WTO to qualify for the FTA exception to the Most-Favoured-Nation principle.
The label change from the shelved 2010-2015 "CECA" talks to the concluded 2026 "FTA" reflects how India's approach evolved over the intervening decade, though the underlying legal basis (GATT Article XXIV) and the core dairy sensitivity remained constant.
India-New Zealand Trade Relations and Diversification Context
New Zealand is a comparatively small trading partner for India in absolute terms, but the agreement fits into India's broader post-2019 strategy (after exiting RCEP) of pursuing bilateral deals with dairy- and agriculture-exporting economies on terms that protect India's sensitive sectors while gaining market access for its own manufacturing and services exports.
Key Details
- The revived FTA negotiation, launched on 17 March 2025 between India's Commerce and Industry Minister and New Zealand's Trade Minister, was concluded in about a year and signed in New Delhi in April 2026 — far faster than the original decade-long, ultimately unsuccessful 2010-2015 round.
- India is expected to secure zero-tariff access to New Zealand from entry into force across sectors including agricultural machinery, automobiles, and chemicals, while up to 95% of New Zealand's exports to India are set to become tariff-free or see significant tariff cuts over a seven-to-eight-year phase-in.
- The deal is comparable in design to India's other recent agreements with developed, agriculture-exporting economies (Australia's ECTA, 2022) that similarly balanced Indian manufacturing/services gains against protection for Indian agriculture and dairy.
The "resilient supply chains" framing in current statements echoes the broader post-pandemic, post-RCEP Indian trade strategy of diversifying partnerships with mid-sized developed economies rather than relying solely on large multilateral blocs.
- India-New Zealand FTA signed: April 2026, at Bharat Mandapam, New Delhi, by India's Commerce and Industry Minister and New Zealand's Trade Minister
- Original CECA negotiations: launched 2010, stalled/shelved after 2015 (ten rounds), chiefly over dairy access
- Revived negotiations launched: 17 March 2025; concluded and signed within about a year
- New Zealand's parliamentary first reading vote on the FTA: passed roughly 93 to 26
- India's tariff-line market access offered: about 70% of lines liberalised; dairy fully excluded
- New Zealand's export liberalisation to India: up to 95% of exports tariff-free or reduced over 7-8 years
- India's treaty-making power: Article 73 (Union Executive) + Entry 14, Union List; Parliament's implementing role under Article 253
- Comparable Indian FTA benchmark: India-UAE CEPA, signed 18 February 2022, in force 1 May 2022