Context:
- India and New Zealand have concluded negotiations on a Free Trade Agreement (FTA) after several rounds of talks.
- The agreement aims to double bilateral trade within five years, from around $1.3 billion (2024–25).
- The deal is positioned as part of India’s broader strategy of trade diversification amid global economic uncertainty.
Key Highlights:
Trade Deal Framework
- The FTA follows a tariff-asymmetry model, reflecting differing levels of economic development.
- India’s average import tariff: ~5.8%
- New Zealand’s average import tariff: ~2.3%
- New Zealand already provides wide market access to Indian goods.
Tariff & Market Access Provisions
- Zero-duty market access on:
- 70% of tariff lines immediately
- 95% of tariff lines over time
- Sensitive sectors excluded by India:
- Dairy products (major export sector for New Zealand)
- Non-tariff barriers addressed through:
- Regulatory cooperation
- Transparency measures
- Sanitary and Phyto-Sanitary (SPS) standards
Investment & Economic Cooperation
- New Zealand commitment: $20 billion investment in India over 15 years
- Cooperation areas:
- Trade, investment
- AYUSH, fisheries, culture, tourism
- Traditional knowledge systems
Services & Mobility Provisions
- Quota-based visa pathway:
- 5,000 visas for Indian professionals in skilled occupations
- 1,000 working holiday visas
- Extended post-study work visas:
- Up to 3 years for STEM graduates
- Up to 4 years for Doctorate holders
- Benefits sectors like:
- IT, healthcare, engineering, education, construction, hospitality
Trade Performance Snapshot
- India–NZ trade surplus remains in India’s favour.
- Indian exports include:
- Pharmaceuticals, textiles, engineering goods, IT services.
Relevant Prelims Points:
- Issue: Conclusion of India–New Zealand FTA negotiations.
- Causes:
- Need to diversify export markets
- Reduce dependency on limited trade partners.
- Government Initiative:
- India’s post-2020 FTA push (Australia, UAE, UK negotiations).
- Benefits:
- Expanded market access for Indian goods & services.
- Boost to labour-intensive sectors.
- Enhanced professional mobility.
- Challenges:
- Limited trade volumes despite agreement.
- Sensitive sectors like dairy protection.
- Impact:
- Strengthens India’s Indo-Pacific trade footprint.
- Supports export-led growth strategy.
Relevant Mains Points:
- Facts & Provisions:
- FTAs aim to reduce tariffs, address NTBs, and promote services trade.
- Investment commitments enhance long-term economic ties.
- Conceptual Clarity:
- Tariff asymmetry: Lower concessions by developing countries to protect domestic sectors.
- Role of FTAs in global value chain integration.
- Keywords:
- Trade diversification, SPS measures, Market access, Services mobility.
- Way Forward:
- Ensure effective implementation of tariff concessions.
- Support MSMEs to leverage export opportunities.
- Periodic review of sensitive sector exclusions.
- Complement FTAs with domestic competitiveness reforms.
UPSC Relevance (GS-wise):
- GS II: International relations, strategic partnerships.
- GS III: Economy – trade policy, exports, investments.
- GS IV: Ethical governance – fair trade practices, inclusive growth.