India-New Zealand Free Trade Agreement Comes Into Force: Zero Duty on All Indian Goods
India's Free Trade Agreement (FTA) with New Zealand comes into force on 20 October 2026, at 12:01 am Indian time.
From day one, New Zealand removes import duty (customs tax) on 100% of its tariff lines for Indian goods. Earlier, Indian exporters paid duties of up to 10%. The government calls this India's first FTA that gives full duty-free access on all tariff lines from the first day.
Sectors expected to gain include textiles and clothing, leather and footwear, pharmaceuticals, engineering goods, marine products, processed foods, tea, coffee and spices.
India, in return, cuts or removes duty on 70% of its tariff lines, covering about 95% of trade value. About 30% of lines stay on an exclusion list (no cuts at all), including dairy, sugar, onions, chana, edible oils, gems and jewellery, and copper and aluminium articles. Apples, kiwifruit and manuka honey get only limited duty cuts through quotas (a fixed quantity), with minimum import prices as a safety net.
On services, New Zealand opens 118 service sectors to Indian providers and creates a new temporary work visa route for up to 5,000 skilled Indians at any one time, for stays of up to 3 years.
The deal is expected to bring about USD 20 billion of investment from New Zealand into India over 15 years. Both sides aim to take two-way trade to about NZ$7 billion by 2030, from roughly USD 2.4 billion of goods and services trade today.
India-New Zealand Relations: From Commonwealth Cousins to Strategic Partners
India and New Zealand are two democracies that share Commonwealth membership, a common-law legal system and a love of cricket. They are far apart on the map, but they meet in the Indo-Pacific, where both want open sea lanes and a rules-based order. New Zealand also has a large and growing Indian-origin community. Trade between them has stayed small, which is why the new free trade agreement matters so much.
The FTA is now the centrepiece of India-New Zealand ties. It turns a small trade relationship into a structured economic partnership, with an agriculture productivity partnership for kiwifruit, apples and honey, and a skilled-worker visa route that ties the two societies closer.
Free Trade Agreements: Concept and WTO Framework
A Free Trade Agreement (FTA) is a deal between two or more countries to remove or sharply cut import taxes (tariffs) on most of the goods they trade with each other. Each country still keeps its own tariffs for countries outside the deal. Modern FTAs also cover services, investment, customs procedures and rules of origin. Under World Trade Organization (WTO) rules, an FTA is an allowed exception to the rule that every member must be treated equally.
The India-New Zealand pact is a classic asymmetric FTA. New Zealand opens fully at once, while India opens 70% of tariff lines and keeps sensitive farm products like dairy on the exclusion list to protect small Indian farmers.
GATS and the Four Modes of Trade in Services
The General Agreement on Trade in Services (GATS) is the WTO's rulebook for trade in services, such as IT work, banking, teaching or tourism. It came into force with the WTO on 1 January 1995. GATS sorts services trade into four "modes" based on where the supplier and the customer are when the service is given. Many FTAs, including India's, now include services chapters built on these same four modes.
Beyond goods, the biggest gain for India in this deal is on Mode 4. New Zealand's commitments on 118 service sectors and a dedicated skilled-worker visa pathway give Indian professionals a clearer legal route to work there temporarily.
- Entry into force: 20 October 2026, 12:01 am IST
- New Zealand: zero duty on 100% of tariff lines for Indian goods from day one (earlier duties up to 10%)
- India: tariff concessions on 70% of tariff lines (about 95% of trade value); about 29.97% of lines excluded
- Excluded by India: dairy, sugar, onions, chana, peas, corn, almonds, edible oils, arms and ammunition, gems and jewellery, copper and aluminium articles
- Quota-based access with minimum import prices: apples, kiwifruit, manuka honey, albumins
- Services: 118 sectors opened by New Zealand; up to 5,000 skilled Indians on temporary employment visas (stay up to 3 years)
- Expected FDI: about USD 20 billion from New Zealand over 15 years
- Bilateral trade 2025-26: about USD 1.15 billion (down about 11%); India had a small trade deficit of about USD 22.6 million
- Timeline: talks launched 16 March 2025; concluded 22 December 2025; signed April 2026; in force 20 October 2026
- Customs targets: 48 hours for cargo, 24 hours for express and perishable goods