Trading smart: On the India-New Zealand FTA
The India-New Zealand Free Trade Agreement (FTA), signed on 27 April 2026, is set to enter into force on 20 October 2026.
Under the agreement, 100% of Indian exports to New Zealand will get duty-free access from day one, while about 95% of New Zealand's exports to India (by value) will see tariffs eliminated or reduced — with roughly 57% duty-free immediately, rising to about 82% over time.
Dairy products (milk, cream, cheese, butter, yoghurt, whey) have been kept entirely outside tariff concessions, with India's duty of up to 60% on New Zealand dairy imports remaining unchanged.
Limited exceptions exist for select dairy-linked products: tariffs on bulk infant formula (33%) and peptones (22%) will be phased out over seven years, alongside a fast-track mechanism for duty-free supply of certain New Zealand dairy ingredients for further manufacturing and re-export.
The deal followed a fast-tracked negotiation: talks were relaunched on 16 March 2025 and the agreement was concluded within the same year, on 22 December 2025, after five rounds — one of the quickest FTA conclusions in India's trade history.
FTA Negotiation Lifecycle and India-New Zealand's Long Road
India and New Zealand first began FTA negotiations in April 2010, but talks stalled after about ten rounds around 2015 when India instead pursued the Regional Comprehensive Economic Partnership (RCEP) negotiations. India withdrew from RCEP in November 2019 over concerns about trade deficits and import surges, particularly from China and in dairy from New Zealand and Australia. The India-New Zealand track was formally revived only in March 2025.
Key Details
- Original FTA talks: launched April 2010, stalled around 2015 after roughly ten rounds.
- India exited RCEP negotiations in November 2019.
- Talks relaunched 16 March 2025; concluded 22 December 2025; signed 27 April 2026; enters into force 20 October 2026.
The 2026 FTA shows how bilateral negotiations that stall for a decade can be revived and concluded quickly once both sides re-align priorities, in contrast to India's long-stalled participation in mega-regional deals like RCEP.
Dairy as a "Sensitive Sector" in Indian Trade Agreements
India consistently excludes or heavily restricts dairy market access in its trade agreements to protect its politically and economically significant dairy sector, dominated by small and marginal farmers under a cooperative model (e.g., Amul/NDDB structure). This was also the central reason India cited for not joining RCEP, since Australia and New Zealand — both major dairy exporters — sought greater access.
Key Details
- India's applied MFN tariff on dairy products can go up to 60%, among the highest tariff bands in India's schedule.
- Dairy exclusions or minimal concessions are a consistent feature across India's major FTAs (RCEP walkout, Australia ECTA carve-outs, and now the New Zealand FTA).
- India's exception here — allowing only bulk infant formula and peptones to see phased tariff elimination — reflects a calibrated compromise rather than a full opening.
The dairy carve-out in the India-NZ FTA is a direct continuation of India's established negotiating red line on this sector across all its trade agreements.
CEPA/ECTA vs FTA: India's Layered Trade Agreement Strategy
India has built a portfolio of bilateral trade agreements of varying depth in recent years rather than relying on one mega-regional pact: the India-UAE CEPA (signed 18 February 2022, in force 1 May 2022), the India-Australia ECTA (signed and in force December 2022), the India-EFTA Trade and Economic Partnership Agreement, TEPA (signed 10 March 2024, in force 1 October 2025, covering Switzerland, Norway, Iceland, and Liechtenstein), and the India-UK Comprehensive Economic and Trade Agreement (signed 24 July 2025).
Key Details
- Each agreement uses a different label (CEPA, ECTA, TEPA, FTA) reflecting negotiated scope, though all function as comprehensive-style trade pacts covering goods, services, and often investment.
- Smaller, faster-concluded deals like India-NZ allow India to lock in gains and build negotiating templates for larger, more complex talks (such as the ongoing India-EU FTA talks).
- Trade between India and New Zealand stood at about USD 2.4 billion in 2024-25, a relatively modest base compared to India's larger FTA partners.
The India-NZ deal fits India's evolving pattern of stacking smaller, quickly concluded bilateral trade agreements alongside its pursuit of larger deals like the India-EU FTA.
- India-NZ FTA: signed 27 April 2026; enters into force 20 October 2026.
- 100% of Indian exports to NZ get immediate duty-free access; ~95% of NZ exports to India get tariff elimination/reduction over time (~57% immediately, rising to ~82%).
- Dairy tariffs (up to 60%) unchanged, except bulk infant formula (33%) and peptones (22%), phased to zero over 7 years.
- Original FTA talks began April 2010; stalled ~2015; revived 16 March 2025; concluded 22 December 2025.
- India-NZ bilateral trade: approximately USD 2.4 billion in 2024-25.