India-New Zealand FTA can be a ‘beacon’ for global trade, says minister Todd McClay
The India–New Zealand Free Trade Agreement, signed in New Delhi in April 2026, is set to enter into force within about a month of the report
Indian exporters will get zero-tariff access to the New Zealand market from day one of implementation
New Zealand's Parliament has passed the implementing legislation, clearing the way for entry into force
Both governments have set an ambition to double bilateral trade, which currently stands at roughly NZ$4 billion, by 2030
Direct flights between India and New Zealand are expected to begin within about a year of the agreement taking effect
PTA vs FTA vs CECA/CEPA — India's Trade Agreement Typology
India uses a graded typology of trade agreements based on depth of coverage. A Preferential Trade Agreement (PTA) reduces tariffs only on a "positive list" of specified tariff lines and does not cover substantially all trade. A Free Trade Agreement (FTA) eliminates tariffs on substantially all trade in goods between parties. A Comprehensive Economic Cooperation Agreement (CECA) or Comprehensive Economic Partnership Agreement (CEPA) goes further, adding services, investment, regulatory cooperation, and mobility-of-persons provisions on top of goods liberalisation.
Key Details
- India–UAE CEPA (signed 18 February 2022, effective 1 May 2022) made about 90% of India's exports to the UAE immediately duty-free
- Under the India–NZ FTA, New Zealand offers duty-free access to 100% of India's exports; India in turn liberalises around 70% of tariff lines, covering roughly 95% of bilateral trade by value from New Zealand's side
- The India–NZ deal has a pronounced services and labour-mobility component (financial services, telecom, professional services, temporary movement of natural persons), similar in structure to a CEPA
- Administered domestically through the Directorate General of Foreign Trade (DGFT), which issues Rules of Origin notifications and Certificate of Origin procedures for each agreement
The zero-tariff-from-day-one language for Indian exporters mirrors the "substantially all trade" standard used to classify an arrangement as an FTA rather than a limited PTA, and the emphasis on services/labour mobility places it closer to India's CEPA-style agreements (UAE, Australia's ECTA, Singapore CECA) than to narrower goods-only FTAs.
WTO Article XXIV — The Legal Basis for Bilateral FTAs
Bilateral and regional trade agreements like the India–NZ FTA are permitted under the WTO framework as an explicit exception to the Most Favoured Nation (MFN) principle in GATT Article I, which normally requires a member to extend any trade concession to all other WTO members equally.
Key Details
- GATT Article XXIV allows customs unions and free trade areas provided duties are eliminated on "substantially all the trade" among the constituent members
- Members are barred from raising trade barriers against non-parties above pre-agreement levels when forming such an area
- Agreements must be notified to the WTO for review
- India is a WTO founding member (1995, succeeding GATT from 1948) and has used the Article XXIV route for its FTAs with ASEAN, Japan, South Korea, UAE, Australia, and now New Zealand
The India–NZ FTA is a textbook Article XXIV arrangement — it grants New Zealand and India preferential access to each other's markets that is not extended to other WTO members, which is legally permissible only because it meets the "substantially all trade" threshold.
India–Pacific Economic Engagement and the "Trade Diversification" Rationale
India has increasingly pursued FTAs with mid-sized, non-adversarial trade partners (UAE, Australia, EFTA, now New Zealand) as part of a strategy to diversify export markets and secure critical goods amid global tariff uncertainty, rather than concentrating trade with a small number of large partners.
Key Details
- India–Australia Economic Cooperation and Trade Agreement (ECTA) came into force December 2022, India's first FTA with a developed economy in over a decade
- India–EFTA Trade and Economic Partnership Agreement (TEPA) came into force October 2025, involving a $100 billion investment commitment from EFTA states over 15 years
- New Zealand is a dairy and horticulture exporter (notably kiwifruit); the FTA is expected to save its kiwifruit industry roughly NZ$125 million in tariffs over five years
- India's total FTA count has grown steadily since 2022 after a decade-long pause following the RCEP withdrawal in November 2019
The minister's framing of the deal as a "beacon" for global trade reflects this diversification narrative — signalling that bilateral, rules-based FTAs remain viable even as multilateral trade talks and larger regional blocs face uncertainty.
- India–NZ FTA signed: April 2026, New Delhi; New Zealand Parliament passed implementing legislation on 15 September 2026
- Current bilateral trade: approximately NZ$4 billion; target is to double this by 2030
- New Zealand tariff liberalisation for India: 100% of Indian exports duty-free from entry into force
- India's tariff liberalisation for New Zealand: about 70% of tariff lines, covering ~95% of NZ's bilateral export value
- India–UAE CEPA (2022) comparator: ~90% of Indian exports made duty-free immediately
- India withdrew from RCEP negotiations in November 2019, citing trade deficit and market-access concerns