What is the India-New Zealand Free Trade Agreement?, Pg9

Key Highlights:

• India and New Zealand concluded a Free Trade Agreement (FTA) in December, with New Zealand offering zero duty on 100% of India’s exports.
• New Zealand commits to $20 billion in Foreign Direct Investment (FDI) in India by 2030, targeting 118 sectors.
• India will relax tariffs on 95% of imports from New Zealand, with 57% becoming duty-free immediately.
• The FTA facilitates trade in Ayurveda, yoga, and traditional medicine services between India and New Zealand.
• India has excluded dairy and agricultural products from the agreement to protect its farmers and industries.
• The deal aims to double the current bilateral merchandise trade of $1.3 billion over the next five years.
• This is India’s third FTA this year, following agreements with the U.K. and Oman.

Detailed Insights:

• The India-New Zealand FTA aims to diversify trade partners, reducing dependence on traditional markets like the EU, U.S., and China.
• New Zealand will create action plans to improve productivity and quality for fruit growers in India, focusing on exotic fruits like kiwifruit and apples.
• The agreement supports the mobility of Indian skilled workers, students, and professionals, offering opportunities to live and work in New Zealand.
• The FTA builds on MSMEs and employment in labor-intensive sectors like textiles, leather, gems, engineering goods, and processed foods.
• India has implemented safeguards to protect sensitive sectors like agriculture and dairy from New Zealand's exports.
• The Indian diaspora in New Zealand, comprising 5% of the population (300,000 people), enhances cultural exchange and soft power politics.
• The FTA is criticized in New Zealand for excluding dairy and agriculture, while in India, FTAs face criticism for widening trade deficits.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers, such as tariffs and quotas.
• Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.
• MSMEs: Micro, Small, and Medium Enterprises that form the backbone of many economies.