SYLLABUS
GS-2: Bilateral, Regional and Global Groupings and Agreements involving India and/or affecting India’s interests.
GS-3: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Context: Recently, India and New Zealand have announced the conclusion of negotiations on a comprehensive Free Trade Agreement (FTA), marking a major economic and strategic milestone in India’s engagement with the Indo-Pacific region.
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- The agreement was concluded by holding continuous and intense discussions spread over 5 formal negotiation rounds, several in-person and virtual intercessions.
Key features of the FTA
- Aim: To double the bilateral trade in five years and yield an investment of $20 billion in India over the next 15 years.
- Tariff reduced: New Zealand will grant zero-duty market access to 100% of Indian exports, while India has offered tariff concessions on 70% of tariff lines, covering 95% of bilateral trade.
- Fillip to labour-Intensive Sectors: Duty-free access across all tariff lines strengthens the competitiveness of India’s labour-intensive sectors, supporting workers, artisans, MSMEs, and deeper integration into global value chains.
- Boost to Horticulture: New Zealand will also help India improve productivity in apples, kiwi and honey by establishing centres of excellence. In return India has allowed lower duty imports of these products but has imposed quotas.
- Pharmaceutical sector: Faster clearance for Indian pharma products and acceptance of inspection from recognised comparable regulators of US, UK, EU and Canada.
- Employment boost: New Zealand will give temporary employment visas for Indian professionals in skilled occupations with a quota of 5,000 visas annually and a stay of up to three years.
- The temporary employment visas cover AYUSH practitioners, yoga instructors, Indian chefs, and music teachers, as well as high-demand sectors including IT, engineering, healthcare, education, and construction, strengthening workforce mobility and services trade.
- Gain for New Zealand: The agreement will eliminate or reduce tariffs on 95% of New Zealand’s exports to India and is expected to boost New Zealand’s exports to India by $1.1–$1.3 billion annually over the next two decades.
- Exclusion: Dairy, animal products, sugar, artificial honey, vegetable fat and oils, gems and jewellery, and aluminium are excluded.
Significance of the FTA:
- The pact is expected to advance economic engagement, improve market access and boost investment flows along with deepening strategic ties between the two countries.
- The trade agreement is expected to create wide-ranging opportunities across sectors, benefiting innovators, entrepreneurs, farmers, MSMEs, students, and young professionals in both countries by fostering deeper economic and people-to-people engagement.
- The FTA reflects the growing strategic importance of India in world geopolitics.
- Represents a new-generation trade agreement built on tariffs, productivity, investment and talent.
- Reinforces India’s path towards a globally competitive, inclusive and resilient economy under Viksit Bharat 2047.