India-New Zealand FTA to come into force next month, grants 100% duty-free access to Indian exports
The India-New Zealand Free Trade Agreement (FTA), signed in April 2026, is expected to come into force in October 2026
New Zealand will eliminate duties on 100% of its tariff lines (8,284 lines) immediately upon entry into force, granting duty-free access to all Indian exports
Previously, New Zealand levied tariffs of up to 10% on several key Indian goods including textiles, leather, gems and jewellery, engineering goods, auto components, pharmaceuticals, processed foods, spices and cereals
New Zealand has committed to investing USD 20 billion in India over the next 15 years, and the two sides have set a target to double bilateral trade to NZD 7 billion by 2030
The deal follows negotiations first launched in 2010 that stalled in 2015 (after nine rounds, partly due to both countries' parallel involvement in RCEP talks) and were revived in March 2025
Types of Trade Agreements — FTA vs CEPA vs CECA
A Free Trade Agreement (FTA) primarily focuses on eliminating or reducing tariffs on goods between two or more countries. A Comprehensive Economic Partnership Agreement (CEPA) and a Comprehensive Economic Cooperation Agreement (CECA) go further, covering services, investment, intellectual property and technical cooperation in addition to goods. India signs different agreement types depending on the depth of economic integration sought with the partner.
The India-NZ FTA illustrates India's post-RCEP strategy of pursuing bilateral FTAs/CEPAs with select partners (UAE, Australia, EFTA, UK) instead of large multilateral blocs, while protecting sensitive sectors like dairy.
Dairy as a Trade-Sensitive Sector in Indian FTAs
India has consistently kept dairy products (milk, butter, cheese, ghee) outside the ambit of tariff concessions in FTA negotiations, treating it as a "red line" due to the sector's importance to smallholder and cooperative-based livelihoods (e.g., Amul-style cooperatives) rather than corporate agriculture.
Key Details
- Dairy sensitivity was a key reason India stayed out of RCEP (New Zealand and Australia, both large dairy exporters, were RCEP members)
- India similarly excluded/limited dairy concessions in the India-Australia ECTA and the India-UK FTA (signed 2025)
- New Zealand is one of the world's largest dairy exporters, making this a central point of contention in the two-decade-long negotiation history
Despite finally concluding the FTA, India has maintained protection for its dairy sector, consistent with its position across all recent trade negotiations.
Rules of Origin and Non-Tariff Provisions in FTAs
Tariff elimination alone does not guarantee market access; Rules of Origin (RoO) provisions determine which goods qualify as originating from a partner country to claim preferential duty treatment, preventing trans-shipment of third-country goods through FTA partners.
Key Details
- RoO typically require a minimum percentage of value addition or a change in tariff classification within the exporting country
- FTAs also cover sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), and trade remedies (anti-dumping, safeguard duties)
- The India-New Zealand pact also includes investment facilitation commitments (the USD 20 billion pledge over 15 years) alongside the goods-tariff schedule
The "100% duty-free access" headline figure applies to tariff lines; actual utilisation by Indian exporters will depend on meeting RoO and SPS/TBT requirements under the agreement.
- FTA signed: April 2026; expected to enter into force: October 2026
- New Zealand tariff elimination: 100% of tariff lines (8,284 lines) with immediate effect
- Pre-FTA New Zealand tariffs on Indian goods: up to 10% on select items
- New Zealand's investment commitment: USD 20 billion over 15 years
- Bilateral trade target: NZD 7 billion by 2030
- Negotiations first launched: 2010; stalled 2015 (after 9 rounds); revived March 2025
- India withdrew from RCEP: November 2019