The India-New Zealand FTA, signed in New Delhi on April 27 after negotiations were substantively concluded in December 2025 and ratified by both countries this month, gives Indian exporters zero-duty access across all 8,284 New Zealand tariff lines from the first day of implementation. India, by contrast, has offered concessions on 70.03 percent of its tariff lines, covering about 95 percent of bilateral trade, while retaining protection over 29.97 percent, including dairy and several sensitive agricultural products.

The asymmetry reflects India's attempt to widen export opportunities while keeping politically sensitive sectors behind tariff protection. But it also exposes the central question surrounding the agreement: how much additional commerce can be generated in a market where New Zealand's average tariff was already relatively low?

Sohrab Bararia, Partner and Leader - Incentives Advisory at Grant Thornton Bharat, called the pact “an important step in India's evolving trade strategy”, but said its value would ultimately depend on execution.

“The comprehensive agreement covers goods, services, investment, professional mobility, customs facilitation, standards, intellectual property, sustainability and economic cooperation,” Bararia said.

Tariffs Open The Door, Exporters Must Walk Through

The immediate merchandise opportunity is concentrated in sectors where New Zealand's tariffs were high enough to affect India's price competitiveness.

Indian textile and apparel exports to New Zealand are only about $103 million despite India's global textile and clothing exports exceeding $36.9 billion, while New Zealand's textile imports approach $2.2 billion, according to Mithileshwar Thakur, secretary general of the Apparel Export Promotion Council.

New Zealand had imposed tariffs of up to 10 percent on some apparel and carpets and about 5 percent on home textiles, yarn and technical textiles. Their removal should improve the relative price position of Indian suppliers, particularly in a price-sensitive market.

“It can offer an important avenue for market diversification amid tariff uncertainty in the USA,” Thakur said.

The opportunity extends beyond textiles to leather and footwear, engineering goods, auto components, chemicals, pharmaceuticals, electronics and processed foods, particularly products where Indian manufacturers can compete on price and scale.

Trade economist Biswajit Dhar said the complete elimination of New Zealand tariffs created an export opening even though the country's average tariff level was modest.

“India's FTA with New Zealand opens up possibilities of expanding its exports, facilitated by New Zealand's offer to eliminate tariffs on all its imports from India,” Dhar said.

He noted that New Zealand's low average tariff concealed higher peak duties in sectors relevant to Indian exporters, including garments, electronic products, chemicals and leather.

That distinction is important. The 100-percent coverage of New Zealand's tariff schedule does not mean every Indian product receives the same economic benefit. The largest gains will accrue where tariffs previously created a measurable price disadvantage.

Ajay Srivastava of the Global Trade Research Initiative said India's goods exports to New Zealand were about $711.1 million, while New Zealand's average tariff was only 2.3 percent and 58.3 percent of its tariff lines were already duty-free.

“The India-New Zealand FTA offers limited gains in goods but greater opportunities in services,” Srivastava said.

TPCI Sees Food, Textiles And MSMEs Gaining

Mohit Singla, Chairman, Trade Promotion Council of India (TPCI), said the agreement could create particularly immediate opportunities for processed food, textiles and light engineering, provided Indian companies move quickly to use the preferences.

“The October 20 implementation marks a transformative milestone for Indian trade policy,” Singla said.

For agri-food exporters, tariffs on products including processed foods, spices, seasonings, confectionery, bakery products, packaged cereals, sauces, fruit juices and processed vegetables, some of which faced duties of up to 5 percent, will fall to zero from the first day.

TPCI expects the agreement to support value-added agricultural exports and deeper integration of Indian producers into regional supply chains. The council plans exporter-awareness programmes, trade delegations and buyer-seller meetings focused on agri-food processing and MSMEs, alongside efforts to connect Indian suppliers with New Zealand retailers and business organisations.

The focus on MSMEs is critical because a tariff concession has little value for a company that does not know it qualifies for the preference, cannot satisfy rules of origin or lacks the certification and distribution network required to enter the market.

Singla said the emphasis would therefore be on helping exporters translate formal market access into commercial relationships, rather than treating tariff elimination as an end in itself.

India's FTA Challenge Begins After Signing

That problem has characterised much of India's experience with FTAs. The negotiation of tariff concessions is visible and measurable; utilisation is not. Exporters, particularly smaller firms, can face rules-of-origin requirements, certification costs, documentation, technical standards, labelling rules and regulatory procedures that reduce the practical value of preferential tariffs.

Bararia said the New Zealand agreement would have to overcome precisely those constraints, with benefits depending on compliance with “rules of origin, technical standards and biosecurity requirements”.

Distance and logistics costs are another limitation. New Zealand is a relatively small market geographically distant from India's major manufacturing clusters, meaning tariff savings can be eroded by freight and supply-chain costs.

The agreement provides for faster customs procedures, including clearance within 48 hours and within 24 hours for perishables and express shipments. That could improve the economics of food and other time-sensitive exports, but it cannot substitute for reliable delivery, product quality or established buyers.

Thakur said the immediate priority should be turning tariff gains into “sustained shipments through stronger buyer linkages, exporter awareness, quality, compliance and reliable delivery”.

That will be a more meaningful measure of success than the number of tariff lines covered.

Services May Provide The Bigger Payoff

The agreement's potentially more consequential gains may come from services and professional mobility. India receives access across 118 services sectors, with most-favoured-nation treatment across about 139 sub-sectors. New Zealand will provide 1,667 three-year Temporary Employment Entry visas annually for Indian professionals in specified skilled occupations, with a maximum of 5,000 holders at any one time. Another 1,000 working-holiday places will be available each year.

Indian students will be able to work up to 20 hours a week while studying, while post-study pathways provide extended opportunities for eligible STEM graduates and doctoral scholars.

Dhar said the opening of services markets should support greater bilateral services trade, although the scale of the professional-mobility commitment needs to be kept in perspective.

“New Zealand would provide 1,667 three-year temporary employment entry visas annually to Indian professionals in skilled occupations. However, this number is less than the average number of total skilled visas New Zealand issues each year,” he said.

For India's IT, healthcare, engineering, education and professional-services industries, however, mobility can matter disproportionately because the ability to deploy personnel can determine whether companies can execute cross-border contracts.

The starting position remains challenging. Srivastava estimates India exported about $255.8 million in services to New Zealand in FY2025, compared with imports of roughly $550 million, much of them associated with tourism. “India must increase service exports,” he said.

The more than 300,000-strong Indian diaspora in New Zealand could also provide commercial networks for business, tourism, investment and professional services.

Dairy Remains The Biggest Political-Economic Compromise

The agreement's limits are most visible in agriculture, particularly dairy. India has kept dairy products such as milk, cream, cheese, yoghurt, whey and caseins outside its tariff concessions, along with a range of sensitive farm products including onions, sugar, selected spices, edible oils and rubber.

Dairy was the principal sticking point in the negotiations because New Zealand is a major dairy exporter and has long sought greater access to India's large but protected market.

Dhar said India had refused to lower dairy tariffs but had accepted two commitments that could become important in future trade negotiations.

Under the first, India will establish a “fast-track mechanism” for duty-free imports of New Zealand dairy products for further processing and re-export.

That could create opportunities for New Zealand suppliers to participate in Indian value chains, including products that could subsequently be exported to India's other FTA partners.

The second commitment provides that if India opens its dairy market to another country in the future, New Zealand's dairy industry would receive comparable treatment.

“The latter commitment, in particular, could open a Pandora's box, as the US has been demanding that India lower tariffs on dairy products,” Dhar said.

The immediate effect is limited because India's dairy market remains protected. The longer-term implication, however, could be more important if future negotiations require India to offer another trading partner access to its dairy market.

Apples Expose The Import-Side Risk

India has adopted a more cautious approach to apples, kiwifruit and Mānuka honey, using tariff-rate quotas, minimum import prices and safeguards rather than unrestricted liberalisation.

Srivastava said New Zealand apple imports were worth about $38.4 million in calendar 2025 and cautioned that lower within-quota duties could put pressure on growers in Himachal Pradesh and Kashmir.

That illustrates the other side of India's FTA strategy. Opening markets can lower input and consumer costs and widen product choice, but it can also expose less competitive domestic producers to imports.

The agreement therefore includes agricultural cooperation on apples, kiwifruit and Mānuka honey, as well as productivity, technology, storage and post-harvest practices.

For India, the longer-term answer cannot be tariff protection alone. Cold-chain infrastructure, grading, storage, logistics and fragmented agricultural marketing remain determinants of farm competitiveness.

$20 Billion Investment Ambition Faces A Credibility Test

Investment is another major pillar, with New Zealand committing to facilitate $20 billion of investment into India over 15 years. The potential areas include manufacturing, infrastructure, agritech, innovation, emerging technologies, renewable energy, logistics and food processing.

Bararia said the proposed investment could support “manufacturing, infrastructure, agritech, innovation and emerging technologies”.

But the $20 billion should be treated as an investment ambition rather than guaranteed capital inflow.

Srivastava noted that New Zealand investment into India had remained below $1 billion over roughly 25 years. Converting the new target into reality will therefore require commercially viable projects, predictable regulation, financing structures and faster investment approvals.

The strongest opportunities could lie in areas where New Zealand expertise and Indian scale are complementary, including agricultural technology, food processing, renewable energy, logistics and cold-chain infrastructure.

New Zealand Gets A Substantial Opening

The FTA is not a one-sided export arrangement for India. New Zealand receives preferential access covering about 95 percent of its exports to India. Around 57 percent will become duty-free immediately, rising to 82 percent once the agreement is fully implemented, with another 13 percent receiving substantial tariff reductions.

Forestry and wood products, sheep meat, wool and coal receive extensive immediate access, while seafood tariffs will be phased out over seven years. Apples, kiwifruit and Mānuka honey receive more controlled access through quotas and other safeguards.

New Zealand Trade and Investment Minister Todd McClay said the agreement would “level the playing field and unlock access for Kiwi businesses in one of the fastest growing markets in the world”.

For New Zealand, the agreement therefore provides an opportunity to expand agricultural and resource exports into India while improving access for its businesses and investors.

For India, that creates a reciprocal competitive pressure: the country must generate enough additional exports and services revenue to make the broader trade relationship commercially sustainable.

The Bigger Lesson For India's FTA Strategy

The New Zealand agreement comes as India has moved from a period of caution toward a more active FTA strategy, but its previous agreements show that negotiated access does not automatically translate into export growth.

The recurring obstacles are familiar: rules of origin, certification, technical standards, inadequate awareness among smaller exporters, weak buyer networks and the inability of some domestic producers to compete even after tariffs disappear.

New Zealand presents an unusually clear test because the average tariff was already low. If Indian exports rise sharply, the gains will have to come from exploiting the higher tariff peaks that existed in selected sectors, improving product competitiveness and expanding into areas where India previously had little market presence.

At the same time, a widening merchandise deficit should not automatically be treated as evidence that an FTA has failed. Imports can provide cheaper inputs and technology, while investment, services and productivity gains may produce benefits that do not appear in the merchandise trade balance.

GTRI puts bilateral trade at about $2.1 billion in calendar 2025 and projects India's trade deficit with New Zealand to widen from about $170.2 million in 2025 to $353.6 million in 2026. The numbers underline why the agreement needs to be assessed across goods, services, investment and productivity rather than exports alone.

Bararia described the agreement as part of a shift toward “calibrated openness”, but stressed that “effective implementation, exporter awareness, regulatory cooperation and investment facilitation” will determine whether it generates sustained gains in trade, employment and competitiveness. That is the harder test.

From October 20, the tariff barriers will largely disappear for Indian exports. What follows will determine whether the agreement becomes another preferential trade framework that exporters use selectively or a platform for building new supply chains, expanding services exports, attracting investment and diversifying India's trade.

The measure of the FTA will ultimately be found not in its 8,284 tariff lines, but in the orders that Indian companies win, the services contracts they execute, the investment projects that materialise and the productivity gains that allow them to compete after the preferential margin itself has been exhausted.