New Zealand PM hails trade pact with India: '57% tariff-free from day one'
New Zealand's government announced that 57% of its exports to India will become tariff-free from the day the bilateral Free Trade Agreement (FTA) takes effect
The announcement was made ahead of an official visit for trade, commerce and defence discussions, described as the first visit by an Indian Prime Minister to New Zealand in nearly four decades
All Indian exports are set to receive duty-free access to the New Zealand market from entry into force, while New Zealand's remaining tariff lines on exports to India are phased down over subsequent years
The agreement was framed as opening New Zealand access to a large consumer market while creating jobs and export opportunities in New Zealand
India's Dairy Sector Exclusion — A Consistent Pattern in Trade Negotiations
India has historically kept its dairy sector out of tariff concessions in every major trade negotiation, treating it as a politically and economically sensitive exception even while liberalising other goods. The India-New Zealand FTA (signed 27 April 2026) continues this pattern.
Key Details
- Dairy products — milk, cream, cheese, butter, yoghurt, whey and casein — are fully excluded from tariff concessions under the 2026 FTA, alongside sensitive agricultural items like onions, chana, sugar, spices and edible oils
- India's current applied tariffs on dairy imports remain in place: approximately 60% on skimmed milk, 40% on whey and 33% on cheese
- The agreement includes a "consultation clause": if India offers dairy market access to any other trading partner in future, it commits to consulting New Zealand on extending similar treatment — without being an automatic concession
- Roughly 70% of India's tariff lines (covering about 95% of bilateral trade value by volume) see some liberalisation, while about 30% remain excluded to protect domestic sensitivities
The headline "57% tariff-free from day one" describes only New Zealand's opening to Indian goods; India's own concessions to New Zealand exclude dairy entirely, reflecting the same sensitivity that led India to walk out of RCEP in 2019 over dairy market access concerns.
RCEP Withdrawal (2019) — Precedent for India's Agricultural Trade Caution
India was the only prospective member to opt out of the Regional Comprehensive Economic Partnership (RCEP) when the other fifteen members — the ten ASEAN states plus Australia, China, Japan, South Korea and New Zealand — finalised the pact at the November 2019 Bangkok ASEAN Summit.
Key Details
- A leading reason cited for India's withdrawal was concern over a potential flood of low-tariff dairy imports, particularly from New Zealand and Australia, threatening India's roughly 80 million dairy farming households
- India is the world's largest milk producer, and its dairy sector operates largely through cooperative models (e.g., Amul/GCMMF), which lobbied against opening the sector
- Beyond dairy, concerns over the trade deficit with China and market access for agriculture more broadly also contributed to India's decision to stay out of RCEP
- Unlike RCEP, India's bilateral FTAs (with Australia, UAE, and now New Zealand) have allowed India to selectively exclude dairy while still securing goods and services access elsewhere
The India-New Zealand FTA succeeds where RCEP failed for India precisely because it permits full dairy exclusion — a carve-out multilateral RCEP could not accommodate for a single member — illustrating why India favours bilateral over multilateral trade negotiations on agriculture-sensitive items.
FTA Tariff Phase-Down Mechanics — Negative List and Staging
Modern FTAs use a "negative list" approach: tariffs are eliminated on all goods except those explicitly listed as exclusions, with remaining eligible tariff lines reduced either immediately or in scheduled stages ("staging") over several years.
Key Details
- Immediate ("day one") elimination applies to tariff lines considered least sensitive; staged elimination (over 3, 5, 7 or more years) applies to moderately sensitive lines; permanent exclusion applies to the most sensitive lines (dairy, in India's case)
- The 57% figure for New Zealand's exports reflects the "day one" tranche; the remaining lines up to roughly 95% of trade value are staged down over the agreement's implementation period
- This mirrors the structure used in the India-Australia ECTA (2022) and India-UAE CEPA (2022), where tariff elimination is similarly split between immediate and staged tranches
Comparing "57% immediately" to "up to 95% eventually" for New Zealand's exports illustrates how staging schedules — not a single tariff number — determine the real pace of market opening under any FTA.
- India-New Zealand FTA signed: 27 April 2026; negotiated in approximately 9 months
- 57% of New Zealand's exports to India become tariff-free immediately; up to ~95% of bilateral trade value sees tariffs reduced/eliminated over the phase-in period
- 100% of Indian export tariff lines (~8,284 lines) get immediate duty-free access to New Zealand
- India's tariff liberalisation offer to New Zealand: about 70% of tariff lines; ~30% (including dairy) fully excluded
- Current Indian applied tariffs retained on New Zealand dairy: ~60% (skimmed milk), ~40% (whey), ~33% (cheese)
- India opted out of RCEP at the November 2019 Bangkok ASEAN Summit; dairy-import concerns were a key cited reason
- India is the world's largest milk producer, with an estimated 80 million dairy-farming households
- Bilateral visit dates: 10-11 July 2026 — first Indian PM visit to New Zealand in nearly 40 years