NZ Committee Backs India Trade Pact Citing Huge Export Growth

A parliamentary select committee has strongly endorsed New Zealand’s prospective free trade agreement with India, describing the long-term economic rewards as highly substantial. The cross-party panel confirmed that the bilateral pact would deliver definitive commercial advantages, outperforming conservative baseline economic projections.

The Parliament Select Committee on Foreign Affairs, Defence and Trade on Monday called the potential benefits of New Zealand entering a trade deal with India “significant”.

“In our examination we have taken a ‘big picture’ view of the agreement in its entirety, assessing the potential long-term benefits, concessions and risks,” the committee said in a report ahead of legislation to implement the free trade agreement with India being tabled in Parliament.

“We have asked ourselves whether, on balance, New Zealand will be better off with the agreement, or without it. It is clear to us that the potential benefits are significant.”

The international treaty examination of New Zealand-India free trade agreement was referred to the committee on 28 April.

It submitted its final report on Monday after receiving 1780 submissions from organisations and individuals, and hearing oral evidence from 52 submitters.

Tim van de Molen from the National Party was committee chair, while other members included Tim Costley (National), Laura McClure (ACT), Damien O’Connor and Vanushi Walters from the Labour Party, and Teanau Tuiono (Greens).

Dana Kirkpatrick and Shane Reti – both from the National Party – served on the committee until 12 May and 13 May, respectively. Green MP Lawrence Xu-Nan also participated in deliberations.

The committee in its report said the free trade agreement would eliminate and reduce tariffs on 95% of New Zealand’s current goods trade into India.

“On entry into force of the agreement, 57% of exports will be able to enter tariff-free, and this will increase to 82% over time,” the committee said. “The remaining 13% will have tariffs significantly reduced.”

The committee said the agreement made a commitment to promote investment from New Zealand, with the aim of increasing investment by $34 billion within 15 years from the agreement’s entry into force.

“New Zealand also agrees to cooperation and technical assistance commitments, including through an agricultural productivity partnership,” the committee said.

The committee detailed the benefits the agreement could bring to the economy.

“Minister for Trade and Investment Todd McClay said early estimates suggested the agreement would generate an additional $1 billion in exports annually over the next 20 years,” the committee said.

“The minister likened the scale of the opportunity it presented to New Zealand’s free trade agreement with China.

The Ministry of Foreign Affairs and Trade national interest analysis shows the agreement adding an increasing amount each year to New Zealand’s real gross domestic product, with the annual increase reaching 0.1% of real GDP (or $657.7 million) by 2050.”

When the committee asked MFAT whether these numbers represented “a good deal for New Zealand”, the ministry said the modelling in the national interest analysis used existing data and was conservative, almost certainly understating potential benefits.

McClay also said he expected growth in exports to India to exceed MFAT’s modelling, as has been the case with trade agreements with the European Union, the United Kingdom and the United Arab Emirates – which have all “significantly outperformed projected estimates”.

The committee heard concerns mainly centred around agricultural cooperation provisions, increased immigration from India and the clause related to $34 billion investment in India.

While many submitters expressed concern the agricultural cooperation provisions put New Zealand’s competitive advantage at risk, industry representatives supported these arrangements to help grow the bilateral relationship in addition to welcoming reductions in tariffs.

The committee said the kiwifruit industry described the opportunity the agreement presented as “immense”.

As per the trade terms, the current 33% tariff on kiwifruit is eliminated for 6250 tonnes from day one, growing to 15,000 tonnes over six years.

In addition, there will be a 50% tariff reduction on kiwifruit exports exceeding the quota to 16.5% as soon as the trade agreement is in place.

A kiwifruit industry representative said that the deal provided an opportunity to work alongside the Indian industry as a trusted partner, the committee said.

“We asked whether the cooperation envisaged in the kiwifruit action plan under Article 14A.3.4 of the agreement presents any risks to protection of intellectual property,” the committee said.

“We heard that because the action plan only relates to green kiwifruit and, considering that India’s climate and growing conditions are very different from New Zealand’s, the risks were low.”

Zespri International said the agreement protected and supported New Zealand growers, and that it was the “best” trade agreement outcome achieved for kiwifruit to date.

Apples and pears

The apple and pear sector told the committee that the agreement’s cooperation commitments in Chapter 14 were industry-driven and reflected decades of work.

The current 50% tariff on New Zealand apples exported to India will reduce to 25% for 32,500 tonnes from day one, growing to 45,000 tonnes over six years.

“Contrary to concerns raised by some submitters about loss of competitive advantage, sector representatives have no concerns that India’s productivity would eclipse New Zealand,” the committee said.

“New Zealand Apples and Pears told us market diversity is critical to the success of the industry. We asked whether there were risks to intellectual property with reference to the apple action plan at Article 14A.3.5, and heard that the action plans are about knowledge transfer, not transfer of genetics or varieties. Volumes had already lifted following announcement of the agreement and increases in demand would lead to more jobs and growth.”

Honey and bee product producers said the agreement was the “first” in the world to secure preferential tariff access for honey in India.

The current 66% tariff on mānuka honey exports to India will be cut by 75% over five years to 16.5%.

“The FTA eliminates the current 66% tariff and secures preferential access for certified New Zealand mānuka honey, positioning India to become a significant export market for New Zealand,” the report said.

“Honey and bee product producers said they saw potential for cooperation to lead to commercial opportunities.”

New Zealand wine exporters said they currently faced a tariff of 150%, resulting in minimal exports to India.

According to the trade deal, tariffs on wine exports will be reduced by 66-83% over 10 years from the date the agreement comes into force, ultimately ending on a tariff of 25-50% and levelling the playing field with India’s existing FTA partners.

“A significant benefit was agreement of a side letter according New Zealand most-favoured treatment on wine,” the committee said.

“This means that should India offer better terms to another country, New Zealand will automatically also receive those terms. The wine sector noted the creation of a working group to support ongoing partnership.”

The Meat Industry Association had earlier described the deal as a “strategically significant milestone” for the country’s red meat sector.

The committee noted the meat industry in its submissions welcomed the 33% tariff reductions as proposed in the trade deal, which “had made it commercially impossible to compete in India”.

“The agreement also opens the door to other products, such as pet food, and trade related to blood products and pharmaceuticals,” the committee said.

“The meat industry specifically welcomed the creation of a practical pathway to address non-tariff barriers.”

Representatives from the forestry and wood processing industries strongly supported the agreement and saw significant opportunities for the sector in India.

“They said that Indian businesses are focused on ‘decarbonising’ their packaging and construction sectors, and this creates an opportunity for New Zealand products,” the committee said.

“We heard that work is under way seeking recognition of New Zealand pine in Indian building standards, and the sector is committed to working collaboratively to develop the market.”

The New Zealand-India trade deal has eliminated tariffs from almost all forestry products, which currently range between 5.5% and 11%.

Immigration concerns dismissed

The committee rejected concerns expressed by some submitters that visa commitments in the deal would lead to an increase in immigration flows.

“The student visa and post-study work visa commitments broadly reflect, or are less than, immigration settings already in effect,” the committee said.

“We do not consider that these visa commitments will lead to an increase in immigration flows, or effects on the labour market and availability of course places, in the way that some submitters were concerned about.”

MFAT confirmed there was currently no limit on the numbers of student visas for students from any country to study in New Zealand.

So, as mentioned in Article 2 of Annex 8F of the free trade agreement, India and New Zealand have agreed not to impose numerical limits on admission and entry of students to recognised education institutions, subject to eligibility conditions, which is “not a new commitment”, the committee said.

Moreover, under the agreement, New Zealand has committed to allow Indian student visa holders to work for at least 20 hours a week.

“Currently, student visa holders from any country may work for up to 25 hours a week while in New Zealand. In practical terms, the current limit of 25 hours is unchanged,” the committee said.

The committee members said New Zealand had committed to post-study work visa rights of up to four years for doctoral graduates, three years for master’s graduates and STEM fields.

Future Outlook

The endorsement from the Select Committee clears a major legislative hurdle, moving New Zealand closer to formalising its trade relations with India. Trade officials anticipate that the bilateral partnership will mirror the transformative growth trajectory seen in New Zealand’s previous trade agreements with China and the United Kingdom. Over the next two decades, the focus will shift toward executing the industry-specific action plans, aggressively reducing non-tariff barriers, and locking in the targeted $34 billion investment framework to maximize economic integration.

FAQs

What percentage of tariffs will be reduced under the New Zealand-India trade agreement?

The agreement will eliminate or lower tariffs on 95% of New Zealand’s current goods entering India. Upon the initial implementation of the trade deal, 57% of these exports will become entirely tariff-free, expanding to 82% over time.

How will the new trade pact affect New Zealand’s kiwifruit and apple exports?

The current 33% tariff on kiwifruit will drop to 0% for an initial 6250 tonnes, growing to 15,000 tonnes over six years, alongside a 50% tariff cut on out-of-quota volumes. Apple tariffs will drop from 50% to 25% for a quota starting at 32,500 tonnes and rising to 45,000 tonnes within six years.

Will the trade agreement cause an inflation of immigration numbers from India?

No. The parliamentary committee officially dismissed immigration concerns, noting that the student and post-study visa frameworks match or are more restrictive than existing baseline policies. The pact does not introduce any new numerical caps on inbound international students.