India and New Zealand have concluded a free-trade agreement, marking the third such pact New Delhi has signed this year as it seeks to lower trade barriers and counter growing pressure on its exporters.
The deal comes even as negotiations with larger partners such as the United States and the European Union continue to drag on.
New Zealand’s trade minister described the agreement as “historic,” saying it will make 95% of the country’s current exports to India either tariff-free or subject to sharply reduced duties.
More than half of these products will be duty-free from the first day the pact takes effect.
The agreement also removes levies on Indian exports to New Zealand and eases mobility rules for Indian students and workers, according to a statement released on Monday.
Third trade deal in a year
The agreement underscores India’s recent push to shed a long-standing protectionist image by lowering both tariff and non-tariff barriers that have often drawn criticism from global investors.
India has already concluded free-trade agreements with the UK in May and with Oman last week, highlighting a renewed focus on bilateral trade deals.
This push has gained urgency after US President Donald Trump imposed tariffs of 50% on Indian goods, the highest levied on any Asian economy.
The move has weighed heavily on Indian exporters, particularly in labour-intensive sectors.
While officials in New Delhi and Washington have said talks toward a potential deal are progressing, there is still no clarity on when an agreement to reduce tariffs with the US might be signed.
Limited trade volumes, strategic signal
Despite the political and symbolic significance of the India–New Zealand pact, economists say its immediate economic impact is likely to be modest.
Total trade between the two countries stood at $1.3 billion in the 2024–25 financial year. India exported goods worth $711 million to New Zealand, while imports from New Zealand amounted to $587 million.
Given these relatively small volumes, the agreement is unlikely to deliver a major boost to India’s overall export performance.
However, it does provide New Zealand exporters with improved access to the world’s most populous country and a rapidly expanding consumer base.
The New Zealand government said the pact would help its exporters tap into India’s growing middle class and an economy forecast to be worth NZ$12 trillion ($7 trillion) by 2030.
Broader economic footprint
For India, the deal fits into a broader strategy of expanding its global economic footprint through targeted bilateral agreements, even as progress with larger trading partners remains slow.
Officials have argued that such pacts help integrate the country more deeply into global supply chains and send a signal of openness to foreign investors.
The agreement with New Zealand also highlights India’s willingness to negotiate trade liberalisation beyond its traditional partners.
While the near-term gains may be limited, analysts say the cumulative effect of multiple trade deals could help diversify India’s export markets and reduce reliance on any single trading partner.
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