India and New Zealand have officially announced a historic free trade agreement (FTA), expected to significantly boost trade between the two countries by hundreds of millions of dollars annually. The deal, confirmed on December 22, 2025, is slated for formal signing in the first quarter of 2026.

This agreement comes amid a global push for countries to diversify trade links, driven by the uncertainty caused by US tariffs under former President Donald Trump. Governments worldwide are seeking bilateral agreements to reduce exposure to rising protectionism and global trade volatility.

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Key Features of the India–New Zealand Trade Deal

Under the agreement:

• India will gain zero-duty access for all goods exported to New Zealand.
• New Zealand will receive duty concessions and phased market access to around 70% of India’s tariff lines, covering roughly 95% of New Zealand’s exports to India.

Major beneficiaries in New Zealand include:

• Dairy
• Fruit and horticulture
• Wool
• Wine
• Wood products and sheep wool

India’s key sectors poised to benefit include:

• Textiles and apparel
• Engineering goods
• Leather and footwear
• Marine products

Additionally, New Zealand has committed to investing $20 billion in India over 15 years, while skilled Indian professionals are expected to gain easier access to New Zealand’s job market, fostering economic cooperation beyond trade.

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Strategic Importance

The FTA reflects India’s wider strategy to diversify export destinations and shield the economy from global uncertainties. Prime Minister Narendra Modi has actively pursued trade agreements this year, including talks with Russia, the US, and Canada, highlighting India’s approach to balancing geopolitical interests with economic growth.

New Zealand Prime Minister Christopher Luxon projected that the deal could increase Kiwi exports to India by $1.1 billion to $1.3 billion annually over the next two decades, creating more jobs, higher wages, and new opportunities for New Zealanders.

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Criticism and Trade Sensitivities

The agreement has faced criticism from New Zealand First, a right-wing populist party, whose leader Winston Peters argued the deal “gives too much away, especially on immigration”.

India has also sought to protect domestic sensitivities, excluding certain products from the deal, such as:

• Dairy products: milk, cream, whey, yoghurt, cheese
• Specific animal and vegetable products: goat meat, onions, almonds

The final signing will follow a legal review of the negotiated text, according to India’s chief negotiator, Petal Dhillon.

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Economic Impact and Outlook

The India–New Zealand FTA is expected to:

• Enhance bilateral trade and investment flows
• Boost employment in key export sectors in both countries
• Promote sustainable economic cooperation and skilled labor mobility
• Reduce dependency on unpredictable global trade conditions

This agreement marks a major milestone in India–New Zealand relations, strengthening ties in trade, investment, and economic partnership while navigating global uncertainties in international markets.