India and New Zealand Formalize Trade Pact
India and New Zealand have officially concluded a Free Trade Agreement (FTA), enhancing economic collaboration between the two countries. The announcement was made in New Delhi, with officials expressing optimism about doubling bilateral trade over the next five years.
This FTA, the third signed in 2023, follows agreements with the United Kingdom and Oman. It grants India tariff-free access to a significant portion of the New Zealand market, aiming to bolster competitiveness in various labor-intensive sectors.
Significance of the Agreement
This trade pact is particularly crucial amid rising geopolitical tensions, serving as a strategic milestone in India’s broader engagement within the Indo-Pacific region. It reflects India’s commitment to strengthening economic ties and global market integration.
Key Features of the Free Trade Agreement
Market Access and Investment
India has extended market access to New Zealand for over 70% of tariff lines, covering approximately 95% of the trade value, while also safeguarding nearly 30% of products from these terms. Notably, dairy products and certain staple foods will be excluded to protect domestic industries and farmers.
In return, New Zealand has pledged to facilitate an investment of $20 billion across the next 15 years, which is expected to significantly boost economic prospects for both countries.
Support for Indian Sectors
The FTA is anticipated to enhance the competitiveness of several Indian sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, engineering goods, and automobiles. Piyush Goyal, Minister of Commerce and Industry, emphasized that the agreement provides opportunities across all sections of the export community.
He stated, “This FTA provides opportunities for all sections of our export community, opens up new doors for new exporters with new products wishing to diversify their export basket.” Goyal highlighted the potential for significant gains across various regions in India, indicating that the agreement will benefit diverse sectors from north to south and east to west.
Technical Collaborations and Enhanced Mobility
Innovative Practices and Technology Transfer
As part of the agreement, New Zealand will assist India through technical collaboration in various agricultural practices, including fruit cultivation and honey production. This collaboration aims to impart advanced modern technology to Indian farmers, ultimately increasing their incomes.
Goyal also indicated that this would improve productivity and sustainable practices in agriculture. “They will bring the latest modern technology to India to help our farmers increase incomes,” he remarked.
Visa Provisions for Professionals and Students
The FTA includes improved visa provisions for Indian professionals and students, providing opportunities for work during study periods and dedicated pathways for post-study work. A new temporary employment visa catering to skilled occupations will allow Indian professionals to stay for up to three years, with a quota of 5,000 visas allocated at any given time.
This provision encompasses various professions, notably Ayush practitioners and yoga instructors, thereby facilitating greater cultural and professional exchange between the two nations.
Government Reassurances and Future Prospects
In an effort to address concerns about the impact on local industries, Goyal reassured that India will maintain strict controls over its dairy sector, stating, “India will never open up its dairy sector in any FTA.” This stance aims to protect local farmers and industries from foreign competition.
Looking ahead, the government plans to monitor the implementation and outcomes of the FTA closely, ensuring that the benefits are equitably distributed among all stakeholders.
Conclusion and Next Steps
India and New Zealand’s trade pact signals a pivotal step towards strengthening economic ties and enhancing trade opportunities. The successful execution of this agreement is poised to impact multiple sectors positively, with particular benefits highlighted for the MSME (Micro, Small and Medium Enterprises) sector.
Further updates regarding specific timelines and implementation measures are expected in the coming months as both countries work towards realizing the full potential of this comprehensive agreement.
This trade partnership not only promises economic benefits but also emphasizes collaboration in innovation and technology—a key aspect for the future growth of both nations.