India-New Zealand Free Trade Agreement Comes into Force: Zero Duty on All Indian Exports
The India-New Zealand Free Trade Agreement (FTA) came into force on 20 October 2026. From this day, New Zealand charges zero import duty on 100% of its tariff lines for goods coming from India.
Before this, Indian textiles, clothing, leather and footwear faced duties of up to 10% in New Zealand. Pharmaceuticals, farm and marine products, plastics, chemicals and electrical goods faced duties of up to 5%. All of these are now zero.
India, in return, has opened about 70% of its tariff lines (70.03%) to New Zealand goods, either at once or step by step. It has kept about 30% of lines out of the deal, including dairy, sugar, edible oils and several farm products, to protect Indian farmers.
A few New Zealand products (apples, kiwifruit, Manuka honey and albumins) get limited entry into India through a quota system with a minimum import price and fixed import seasons.
The deal was signed in New Delhi on 27 April 2026. Talks began on 16 March 2025 and ended in about nine months, making it India's fastest-concluded FTA.
Bilateral goods trade was USD 1.3 billion in 2024-25, up 49% from the year before. India's exports to New Zealand were USD 711 million, so India already runs a trade surplus.
India-New Zealand Relations: From Commonwealth Cousins to Strategic Partners
India and New Zealand are two democracies linked by the Commonwealth, the English common law system and cricket. They are far apart on the map, and their trade has always been small. New Zealand is a rich farm-exporting country of about 5 million people. For India, it is a partner in the Indo-Pacific and a doorway to the Pacific Island countries. The 2026 trade agreement is the biggest step in their economic relationship so far.
The FTA coming into force turns a thin trade relationship into a structured economic partnership. It also adds investment, student and worker mobility, and farm cooperation to a relationship that was earlier built mostly on diaspora and Commonwealth ties.
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. Normally, the WTO's Most-Favoured Nation (MFN) rule says a country must treat all WTO members equally. FTAs are an allowed exception to this rule, but only if they cover "substantially all trade" between the partners. Modern FTAs also cover services, investment, movement of people and rules on standards.
The India-New Zealand deal shows the typical shape of India's new FTAs: full duty-free access for Indian labour-intensive goods abroad, while India keeps sensitive farm sectors like dairy fully outside its own tariff cuts.
Tariff-Rate Quota (TRQ) Mechanism
A Tariff-Rate Quota (TRQ) is a two-level import tax. A fixed quantity of a product (the quota) can come in at a low tariff. Anything imported beyond that quantity pays a much higher tariff. Think of it like a mobile data pack: the first few GB come at a cheap rate, and every GB after that is costly. TRQs let a country open its market a little without flooding its own farmers with cheap imports. They became common after the WTO's Agreement on Agriculture (Uruguay Round, in force 1995).
India used TRQs to give New Zealand limited, controlled access for apples, kiwifruit and honey. This gives New Zealand something it wanted, while protecting Indian fruit growers and beekeepers.
- In force: 20 October 2026; signed: 27 April 2026 (New Delhi); talks launched: 16 March 2025 (concluded in about 9 months)
- New Zealand: zero duty on 100% of tariff lines for Indian goods from day one
- India: market access on 70.03% of tariff lines (covering about 95% of New Zealand's exports to India); 29.97% of lines excluded
- India's split: 30% immediate elimination; 35.60% phased over 3/5/7/10 years; 4.37% reduction only; 0.06% under TRQs
- Excluded by India: dairy (milk, cream, whey, yoghurt, cheese), sugar, edible oils, onions, chana, peas, almonds, artificial honey, copper and aluminium items, arms, gems and jewellery
- Earlier New Zealand duties removed: up to 10% (textiles, clothing, leather, footwear); up to 5% (pharma, farm and marine products, plastics, chemicals, electrical goods)
- Investment commitment: USD 20 billion over 15 years, with a rebalancing clause
- Visas: 5,000 Temporary Employment Entry visas (up to 3 years); 1,000 Working Holiday visas a year
- Services: commitments in 118 sectors; MFN treatment in 139 sectors
- Trade 2024-25: USD 1.3 billion total (49% growth); Indian exports USD 711 million