India-New Zealand FTA Comes Into Force: Tariffs, Investment and Mobility Explained
The India-New Zealand Free Trade Agreement (FTA) came into force on 20 October 2026. It is the seventh trade agreement to take effect for India in the last five years.
New Zealand gives duty-free access on 100% of its tariff lines to Indian goods. Before the deal, it charged 10% on Indian textiles, clothing, leather and footwear, engineering goods, plastics and rubber, and electronics. Duties of 5% on medicines, farm products, marine products and chemicals have also gone to zero.
New Zealand has committed to promote USD 20 billion of foreign direct investment (FDI) into India within 15 years. This aim is linked to India continuing to grow as it has in the past. Money routed through New Zealand by outside investors with no real business there will not count.
On mobility (movement of people): two new Temporary Employment Entry (TEE) visa types allow up to 5,000 Indian professionals in New Zealand at any time, for up to three years (no path to permanent residence). Indian PhD graduates from New Zealand universities get post-study work visas of up to four years (from 16 November 2026). Indian students are guaranteed at least 20 hours of work a week while studying. A new working holiday scheme will allow up to 1,000 Indians aged 18 to 30 to spend up to 12 months in New Zealand.
India opened 70% of its tariff lines in phases and excluded about 30% to protect sensitive sectors. Dairy (milk, cream, cheese, butter, yoghurt, whey), onions, chana, peas, corn, almonds, sugar, artificial honey, vegetable fats and oils, and arms are kept out.
India removed duties at once on 30% of lines (such as wood, wool, sheep meat and raw hides). It will remove duties on another 35.6% in steps over 3, 5, 7 and 10 years. Duties are only reduced on 4.37% of lines, and on 0.06% (such as Manuka honey, apples and kiwifruit) cuts apply only up to a fixed import quota.
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, but they share an interest in a stable, open Indo-Pacific region. New Zealand is home to a large and growing Indian community, and many Indian students study there. Trade between them has been small compared to their economies, which is why the free trade agreement is seen as a turning point.
With the FTA now in force, the relationship gains a strong economic base. The deal links trade, investment and the movement of students and workers, the three areas where India and New Zealand had the most room to grow.
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 goods they trade with each other. Modern FTAs also cover services, investment, the movement of people and rules on standards. World Trade Organization (WTO) rules normally require a country to treat all members equally, but FTAs are allowed as an exception, as long as they cover "substantially all the trade" between the partners (Article XXIV of the GATT). India uses several names for such deals: FTA, CEPA, CECA and ECTA.
The India-New Zealand deal is a complete FTA, not an interim one. It covers goods, investment and mobility together, and gives India the widest goods access of any full trade deal it has signed so far.
Sensitive Sector Protection in Trade Agreements
When two countries sign a trade deal, they do not cut taxes on every product. Each country keeps a list of products where it does not cut import duties, or cuts them only slowly, because opening that sector could hurt many poor workers or farmers. These products are called sensitive items, and the list is often called an exclusion list or sensitive list. Other tools include long phase-out periods and tariff-rate quotas (a low tax only up to a fixed quantity of imports).
The New Zealand deal shows India's standard approach: open up where Indian industry or consumers gain (wood, wool, machinery inputs), go slowly in the middle, and fully protect dairy and key farm products where millions of small producers could be hurt.
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, education, health and tourism. It came into force on 1 January 1995, along with the WTO. It divides services trade into four "modes", based on where the supplier and the customer are. India's biggest interest is in Mode 4, the temporary movement of people (like engineers or nurses) to work abroad, because India has a large skilled workforce.
The New Zealand deal's TEE visas are a Mode 4 gain, and its student work rights and longer post-study visas support Mode 2. India has long pushed for such mobility commitments, and this deal writes them into a treaty.
- India-New Zealand FTA: launched 16 March 2025, signed 27 April 2026, in force 20 October 2026
- Seventh trade agreement to take effect for India in five years
- New Zealand: 100% of tariff lines duty-free for India; earlier 10% tariffs on textiles, leather, engineering goods and electronics, 5% on pharma, farm, marine and chemicals
- New Zealand aims to promote USD 20 billion FDI in India within 15 years
- TEE visas: up to 5,000 at a time, valid 3 years, no path to residence
- PhD post-study work visa: up to 4 years (from 16 November 2026), up from 3
- In-study work: at least 20 hours a week guaranteed for Indian students
- Working holiday: up to 1,000 Indians aged 18 to 30, up to 12 months
- India's offer: 30% of lines duty-free at once; 35.6% phased over 3, 5, 7, 10 years; 4.37% reduced only; 0.06% under quotas; 29.97% excluded
- Bilateral merchandise trade 2024-25: about USD 1.3 billion