India-New Zealand FTA Goes Beyond Trade And Investment

Importantly, the trade pact inked Monday allows India to expand its engagement in the Indo-Pacific and Oceanic region.

While India has positioned itself as a key player in the Indo-Pacific region, its engagement in the South Pacific has remained weak. The India-New Zealand FTA will, however, help to address the gap. 

"The India–New Zealand FTA is a landmark agreement that goes beyond tariffs to integrate trade, investment, services, and talent mobility, strengthening India’s strategic footprint in the Indo-Pacific," said Manoj Mishra, Partner, Grant Thornton Bharat.

Negotiations Began Last Year

Driven primarily by women, the negotiations concluded deftly in less than a year.  

Apart from eliminating 100% of the duty on over 8,280 lines of Indian exports to New Zealand, Wellington has committed to investing US$20 billion in India in the next 15 years.

Sensitive sectors — including agriculture and dairy — will remain protected.

“The India–New Zealand Free Trade Agreement marks a defining milestone in India’s engagement with the developed world,” Commerce and Industry Minister Piyush Goyal said.

The sectors poised to gain the most include textiles, leather, pharmaceuticals, gems and jewellery, in addition to MSMEs.  

Notably, the trade deal will provide enhanced opportunities for students as well as skilled professionals.

The Trade Promotion Council of India said that lower tariffs will improve the price competitiveness of the country’s exporters and help Indian products penetrate niche and premium segments in New Zealand.

Challenge For MSMEs

The pain points lie elsewhere.

While recent trade agreements have significantly helped India shape its economy and engagements with the world, a large number of stakeholders and businesses, especially MSMEs, continue to grapple with challenges. “Many of them are unaware of the benefits that these trade agreements provide, and they lack knowledge of the finer details. This needs to be addressed for businesses to leverage such agreements,” an analyst said on condition of anonymity.

Issues related to tariff reduction, rule of origin, and logistics costs continue to irk the exporting MSMEs. Often, the stringent compliance framework adds to the cost, acting as a deterrent for a large number of exporters categorised as small and medium.

“Awareness about these issues is weak, and there is little recourse for the smaller businesses. A large number of these MSMEs have no knowledge of the dynamics and the finer points of the trade agreements,” an exporter dealing in engineering goods told The Secretariat.

The Federation of Indian Export Organisations (FIEO) has underlined the need for the government to work closely with the stakeholders in building awareness.

The signing of the FTA with New Zealand marks India’s second trade pact this year, the first one being with the European Union.