India-New Zealand FTA finalised; 100% of Indian exports to get duty-free access from October 20
India and New Zealand have finalised a free trade agreement (FTA) that will come into force on October 20, 2026
New Zealand will offer duty-free access for 100% of Indian exports from the date the agreement takes effect
The pact is expected to significantly expand bilateral trade in goods and services over the coming years, with New Zealand committing to invest an estimated USD 20 billion in India over 15 years
Labour-intensive Indian sectors such as textiles, apparel, leather, footwear, gems and jewellery, engineering goods and processed foods stand to gain from the removal of New Zealand's peak tariffs (up to 10% on items like ceramics, carpets, automobiles and auto components)
The agreement expands mobility provisions for Indian students and professionals seeking to study or work in New Zealand
It also includes cooperation frameworks in investment, technology and renewable energy
Free Trade Agreements (FTA) under WTO Law
A Free Trade Agreement is a reciprocal arrangement between two or more countries to eliminate tariffs and other trade barriers on goods moving between them, while each partner retains its own external tariff toward non-members (unlike a customs union). Under GATT 1994, Article XXIV permits WTO members to form FTAs as an exception to the Most Favoured Nation (MFN) principle, provided duties are eliminated on "substantially all the trade" between the constituent parties.
Key Details
- Article XXIV:8(b) of GATT 1994 is the legal basis allowing FTAs to bypass the MFN obligation that would otherwise require extending the same tariff treatment to all WTO members
- "Substantially all trade" has no fixed numeric definition in the treaty text; in practice countries often use a benchmark near 90% of trade coverage, though interpretation is contested
- India distinguishes several tiers of trade pacts in its own nomenclature: PTA (Preferential Trade Agreement, partial tariff concessions), FTA (goods-focused, deeper concessions), and CEPA/CECA (Comprehensive Economic Partnership/Cooperation Agreement, covering goods, services, investment and other areas)
The India-New Zealand deal is structured as an FTA offering 100% duty-free access on the New Zealand side, going beyond a partial PTA while covering goods, services and mobility elements associated with a comprehensive pact.
Comparing India's Recent Trade Agreements
India has concluded several major bilateral and regional trade agreements in the past two decades, each with different depth and coverage of tariff liberalisation. Comparing the New Zealand FTA against these helps place it within India's broader trade-policy trajectory of moving from regional blocs toward deeper bilateral deals.
Key Details
- ASEAN-India Trade in Goods Agreement: signed August 13, 2009; effective January 1, 2010 — a regional FTA covering the 10-member ASEAN bloc
- India-UAE CEPA: signed February 18, 2022; effective May 1, 2022 — UAE's near-uniform 5% duty was cut to 0% for the vast majority of Indian exports; bilateral trade nearly doubled from about USD 43 billion to over USD 100 billion within three years
- India-Australia ECTA (Economic Cooperation and Trade Agreement): signed April 2, 2022; came into force December 29, 2022 — Australia eliminated tariffs on 96.4% of tariff lines (98.3% by value) while India offered preferential access on about 70% of tariff lines
- India-New Zealand FTA: signed April 27, 2026; enters into force October 20, 2026, with New Zealand offering duty-free access on 100% of Indian exports
The New Zealand FTA's 100% duty-free commitment on the partner side is comparable in ambition to the UAE CEPA and Australia ECTA, continuing India's post-2022 pattern of concluding deeper bilateral trade agreements rather than relying solely on regional blocs like ASEAN.
Trade in Services and Mode 4 Mobility
Cross-border trade in services is classified by the WTO's General Agreement on Trade in Services (GATS) into four "modes of supply." Mode 4 covers the temporary movement of natural persons — such as professionals, consultants or students — across borders to supply a service, distinct from permanent migration.
Key Details
- GATS identifies four modes: Mode 1 (cross-border supply, e.g. outsourced IT services), Mode 2 (consumption abroad, e.g. medical tourism), Mode 3 (commercial presence, e.g. a subsidiary), and Mode 4 (movement of natural persons)
- Mode 4 explicitly excludes measures on citizenship, permanent residence, or permanent employment — it applies only to temporary, service-linked presence
- India has consistently pushed for better Mode 4 commitments in trade negotiations, given the competitiveness of its IT and professional services workforce
The FTA's expanded mobility provisions for Indian students and professionals moving to New Zealand function as a Mode 4-type commitment, a recurring ask from India in its recent trade agreements alongside goods market access.
- FTA signed: April 27, 2026, in New Delhi
- FTA enters into force: October 20, 2026
- New Zealand duty-free access for Indian exports: 100%
- New Zealand's investment commitment: approximately USD 20 billion over 15 years
- New Zealand's prior peak tariffs on Indian goods (pre-FTA): up to 10% on items such as ceramics, carpets, automobiles and auto components
- Comparable Indian FTAs: ASEAN-India (2009/2010), India-UAE CEPA (2022), India-Australia ECTA (2022)