India-New Zealand Free Trade Agreement
A comprehensive analysis of the landmark bilateral trade agreement between India and New Zealand, featuring 100% duty-free market access, USD 20 billion investment commitment, and the world's first AYUSH & Traditional Medicine annex in a bilateral FTA.
Executive Summary
Agreement Overview
Official Designation: India-New Zealand Economic Cooperation and Trade Agreement (ECTA)
Signing Date: December 22, 2025
Negotiation Timeline: March 2025 - December 2025 (9 months)
Scope: Comprehensive coverage of goods, services, investment, mobility, traditional medicine, and sustainable development
Unique Feature: World's first bilateral FTA with dedicated AYUSH & Traditional Medicine annex
The India-New Zealand Free Trade Agreement represents a transformative economic partnership concluded with unprecedented speed and comprehensive coverage. As one of India's fastest FTAs, completed in record 9 months from March to December 2025, this agreement underscores both nations' commitment to expediting quality trade partnerships that deliver tangible benefits for businesses and citizens.
The agreement goes beyond conventional market access commitments to include groundbreaking provisions for traditional medicine, sustainable development, and people-to-people mobility. With 100% duty-free access on all tariff lines, USD 20 billion FDI commitment over 15 years, 5,000 skilled visas annually, and liberalization across 118 services sectors, the FTA creates unprecedented opportunities across diverse economic sectors.
Current bilateral trade stands at USD 2.4 billion (2024-25), with the FTA targeting ambitious doubling within 5 years through comprehensive tariff elimination, services liberalization, and enhanced investment flows. The agreement particularly benefits MSMEs, farmers, and service providers through zero tariff market access, streamlined certification processes, and enhanced mobility provisions.
Current Trade Performance
| Metric | 2023-24 | 2024-25 (Apr-Oct) | Growth Rate | Trend |
|---|---|---|---|---|
| Total Bilateral Trade | USD 2.2 billion | USD 2.4 billion (projected annual) | +9.1% | Growing steadily |
| Merchandise Trade | USD 1.6 billion | USD 2.38 billion | +49% YoY | Strong acceleration |
| India's Exports | USD 1.2 billion | USD 1.59 billion | +32% YoY | Robust expansion |
| India's Imports | USD 400 million | USD 800 million | +100% YoY | Doubling |
| Services Trade | USD 600 million | USD 750 million (est.) | +25% | Expanding services |
| Trade Balance | USD 800 million (India surplus) | USD 790 million (India surplus) | Stable | Balanced growth |
Trade Composition Highlights
Trade Growth Trajectory
The impressive growth in merchandise trade (49% YoY) and exports (32% YoY) reflects deepening economic integration even before FTA implementation. The doubling of imports demonstrates balanced trade expansion, with New Zealand dairy, wood products, and horticulture finding strong demand in India's growing consumer market.
Post-FTA Projections: With 100% tariff elimination and services liberalization, bilateral trade is targeted to reach USD 5 billion within 5 years, with particular growth expected in pharmaceuticals, textiles, engineering goods, IT services, and education services.
Comprehensive Market Access: 100% Duty-Free Coverage
Universal Tariff Elimination
The FTA achieves 100% duty-free access on all tariff lines, making this one of India's most comprehensive market opening agreements. Unlike typical FTAs with phased or partial liberalization, this agreement provides immediate or near-term zero tariffs across all product categories.
Sectoral Coverage Breakdown
Six Winning Sectors
MSME-Focused Benefits
The comprehensive tariff elimination particularly benefits MSMEs by:
- Zero Cost Barrier: Eliminating tariff costs that disproportionately affect smaller exporters
- Simplified Compliance: Streamlined certificate of origin procedures reducing paperwork
- Market Predictability: Locked-in duty-free access providing certainty for long-term planning
- Competitive Pricing: Ability to offer competitive prices in New Zealand's quality-conscious market
- Value Chain Integration: Opportunities to participate in regional and global supply chains
Historic AYUSH & Traditional Medicine Annex
World's First Comprehensive Traditional Medicine Framework in FTA
The India-New Zealand FTA makes history as the world's first bilateral trade agreement to include a comprehensive annex dedicated to AYUSH (Ayurveda, Yoga, Unani, Siddha, Homeopathy) and Traditional Medicine. This groundbreaking achievement positions traditional healing systems within a modern, rules-based trade framework, creating entirely new avenues for product exports, service delivery, research collaboration, and wellness tourism.
Key Provisions & Opportunities
Market Opportunity Assessment
New Zealand Wellness Market: Growing consumer interest in alternative medicine, preventive healthcare, and holistic wellness creates receptive market for AYUSH products and services.
Regulatory Environment: New Zealand's progressive approach to complementary medicine and natural products provides favorable framework for market entry.
Export Potential: Indian AYUSH industry can leverage FTA to establish distribution networks, wellness centers, and integrated service offerings in New Zealand's NZD 1.2 billion wellness market.
Implementation Framework
The AYUSH annex includes specific implementation mechanisms:
- Working Group: Bilateral AYUSH working group to oversee implementation, address regulatory issues, and facilitate cooperation
- Quality Standards: Development of mutual recognition framework for product quality, manufacturing standards, and practitioner qualifications
- Clinical Evidence: Joint research programs to build evidence base for traditional treatments and therapies
- Market Development: Cooperative initiatives for consumer awareness, professional networking, and business matchmaking
- Traditional Knowledge: Protection mechanisms for traditional knowledge while facilitating commercial applications
Services Liberalization: 118 Sectors Opened
Key Services Sectors
Enhanced Mobility Provisions
The FTA includes comprehensive mobility framework:
- Skilled Visas: 5,000 annual visas for Indian professionals in IT, engineering, healthcare, and other sectors
- Student Work Rights: International students can work 20 hours per week during studies
- Post-Study Pathway: 3-year post-study work visa for graduates, facilitating talent retention
- Intra-Company Transfers: Streamlined procedures for multinational company transfers
- Recognition Framework: Pathway for professional qualification recognition in key sectors
Investment Framework: USD 20 Billion Commitment
Comprehensive Investment Architecture
The FTA establishes a robust investment framework with USD 20 billion New Zealand FDI commitment over 15 years, targeting manufacturing, infrastructure, renewable energy, and innovation sectors. This represents one of the largest bilateral investment commitments in India's recent FTA negotiations.
Investment Priority Sectors
Investment Protection & Facilitation
Key Provisions:
National Treatment: Equal treatment for investors from both countries
MFN Treatment: Most-favored-nation status ensuring non-discrimination
Performance Requirements: Prohibition of unreasonable performance requirements
Transfer of Funds: Free transfer of investment-related funds
Expropriation Protection: Safeguards against arbitrary expropriation
Dispute Resolution: Investor-state dispute settlement mechanism
Strategic Context & Significance
Geopolitical & Economic Positioning
The India-New Zealand FTA strengthens India's Indo-Pacific engagement strategy, deepening economic integration with a key partner sharing democratic values and commitment to rules-based international order. This agreement complements India's broader trade architecture including CECA with Singapore, CEPA with UAE and Australia, and ongoing negotiations with EU and UK.
Bilateral Relationship Context
India and New Zealand share strong democratic values, commitment to rules-based international order, and complementary economic strengths. Both nations are members of the Commonwealth and maintain active cooperation in multilateral forums including the WTO, UN, and various Indo-Pacific initiatives.
Growing Diaspora: The Indian diaspora in New Zealand has grown significantly, contributing to business, education, healthcare, and cultural exchange, providing a natural bridge for enhanced economic cooperation.
Sustainable Development Goals Alignment
The FTA explicitly incorporates sustainable development principles:
- Environmental Protection: Cooperation on climate change mitigation and adaptation
- Renewable Energy: Joint initiatives in solar, wind, and clean energy technologies
- Sustainable Agriculture: Organic farming promotion and sustainable food systems
- Green Technology: Collaboration on environmental technologies and circular economy
- Responsible Investment: ESG principles integrated into investment framework
Implementation & Next Steps
Pathway to Operationalization
Current Status: Agreement signed and sealed on December 22, 2025
Next Phase: Ready for domestic ratification in 2026
Expected Timeline: Implementation following completion of domestic legal processes in both countries
Stakeholder Engagement: Industry consultations and awareness programs to prepare businesses for FTA utilization
Cooperation Mechanisms
Joint Trade Committee
Establishment of a bilateral committee to oversee FTA implementation, address trade issues, and explore further cooperation opportunities.
Sectoral Working Groups
Specialized groups for agriculture, services, investment, and AYUSH to develop sector-specific implementation roadmaps.
Business Facilitation
Support mechanisms including trade facilitation centers, market intelligence, and buyer-seller networking platforms.
Capacity Building Programs
Training initiatives for exporters, MSMEs, and service providers on FTA utilization, market requirements, and compliance procedures.
Standards Cooperation
Ongoing dialogue on technical standards, sanitary and phytosanitary measures, and regulatory harmonization.
Dispute Resolution
Transparent mechanisms for addressing trade disputes and ensuring smooth implementation of FTA provisions.
Business Preparation
Both governments are working with industry associations, chambers of commerce, and trade promotion bodies to:
Awareness Campaigns: Educate businesses about FTA benefits and utilization procedures
Market Studies: Provide sector-specific market intelligence and opportunity analysis
Capacity Building: Training programs on export procedures, quality standards, and market entry strategies
Digital Platforms: Online resources for certificate of origin, tariff information, and trade documentation
Conclusion: A Partnership for Shared Prosperity
The India-New Zealand Free Trade Agreement, concluded in record time on December 22, 2025, represents a landmark achievement in bilateral economic cooperation and India's Indo-Pacific engagement strategy. As one of India's fastest FTAs, negotiated in just 9 months, this agreement demonstrates both countries' commitment to expediting quality trade partnerships that deliver tangible benefits for businesses, workers, and communities.
The FTA's comprehensive framework—featuring 100% duty-free access on all tariff lines, USD 20 billion FDI commitment over 15 years, 5,000 skilled visas annually, and liberalization across 118 services sectors—creates unprecedented opportunities for diverse stakeholders. From farmers gaining access to New Zealand's premium food market through 1,379 duty-free agricultural lines, to MSMEs leveraging zero tariffs across textiles (1,057 lines), engineering goods (1,396 lines), and other key sectors, the agreement is designed for inclusive growth.
The historic AYUSH and Traditional Medicine annex represents a groundbreaking achievement, making this the first bilateral trade agreement to include comprehensive commitments on traditional healing systems. This breakthrough opens entirely new avenues for India's AYUSH sector—from product exports and service delivery to research collaboration and wellness tourism—positioning traditional medicine within a modern, rules-based trade framework.
For services, the FTA creates substantial opportunities across IT, business services, education, healthcare, professional services, and tourism. Enhanced mobility provisions, including student work rights (20 hours/week) and post-study work pathways, strengthen people-to-people connections while addressing skill requirements in both economies.
The agreement's focus on sustainable economic cooperation, technology transfer, and capacity building ensures that benefits extend beyond immediate market access. Organic certification recognition, agricultural technology collaboration, and global value chain integration directly support MSMEs and farmers in competing effectively in international markets. The USD 20 billion FDI framework targeting manufacturing, infrastructure, and innovation provides a predictable investment climate for long-term business planning.
With current bilateral trade at USD 2.4 billion showing strong growth momentum (merchandise trade up 49% YoY, exports up 32% YoY), and an ambitious target to double trade in 5 years, the FTA provides concrete pathways for sustained expansion. The comprehensive tariff elimination across all product categories, combined with services liberalization and enhanced mobility, creates a foundation for transformative economic engagement.
Key Achievements:
- Record 9-month negotiation timeline demonstrating commitment to fast-track quality agreements
- 100% duty-free access on all tariff lines—one of India's most comprehensive market openings
- First-ever comprehensive AYUSH & Traditional Medicine annex in a bilateral FTA
- USD 20 billion FDI commitment over 15 years for manufacturing, infrastructure, and innovation
- 5,000 skilled visas annually with enhanced student work rights and post-study pathways
- 118 services sectors opened creating opportunities across high-value professional sectors
- 6 winning sectors with 4,000+ tariff lines duty-free supporting employment and exports
- Targeted support for MSMEs, farmers, and artisans through certification recognition and technology transfer
- Sustainable development focus with cooperation on climate change, renewable energy, and environmental protection
- Strong implementation framework with joint committees, sectoral working groups, and capacity building programs
As the agreement moves toward domestic ratification in 2026, both governments are actively engaging with stakeholders to ensure businesses are prepared to maximize FTA benefits. The establishment of cooperation mechanisms, business facilitation platforms, and capacity building programs will support smooth implementation and effective utilization.
The India-New Zealand FTA stands as a testament to what can be achieved when two democracies with shared values and complementary strengths commit to deepening economic partnership. It represents not just a trade agreement, but a strategic partnership for shared prosperity, sustainable development, and stronger Indo-Pacific cooperation. This FTA sets a new benchmark for comprehensive, inclusive, and forward-looking trade agreements that address 21st-century economic challenges while creating opportunities for all stakeholders.