New Zealand’s trade pact with India removes tariffs on 57% of its exports

New Zealand’s free trade agreement with India took effect on Tuesday, immediately removing Indian tariffs on 57% of New Zealand exports to that market and beginning a phased reduction of steep duties on products such as wine, honey and infant formula.

New Zealand’s Ministry of Foreign Affairs and Trade said the agreement entered into force on October 20, one month after Trade and Investment Minister Todd McClay and India’s High Commissioner to New Zealand, Muanpuii Saiawi, exchanged ratification documents at Parliament. The deal was signed in New Delhi on April 27 by McClay and Indian Commerce Minister Piyush Goyal after negotiations that began in March 2025 and concluded in December of that year.

The agreement marks one of New Zealand’s fastest trade negotiations with India. McClay told Radio New Zealand that the share of New Zealand exports entering India duty-free will rise to 82% as the pact is phased in, with the next round of tariff cuts scheduled for January 1, 2027. He said the two countries finished the talks in nine months, which he described as a record for India on a comprehensive trade agreement.

The products receiving immediate tariff-free treatment include sheepmeat, wool and coal. The Ministry’s outcomes summary says India’s 33% tariff on sheepmeat was removed on day one, while more than 95% of New Zealand forestry and wood exports now enter India duty-free. Tariffs of 33% on key fish and seafood lines will be phased out over seven years, and most industrial products will become tariff-free within 10 years. Once the agreement is fully implemented, the ministry says the average tariff applied to New Zealand’s current exports to India will fall to 3%.

Agricultural access is uneven across sectors. Horticulture gains quota-based access rather than full liberalization. New Zealand became the first country to secure preferential access for apples in an Indian trade agreement. India’s 50% tariff on apples will be cut in half within a quota that McClay said in July starts at 32,500 tonnes and rises to 45,000 tonnes by year six. Kiwifruit will receive a duty-free quota starting at 6,250 tonnes and rising to 15,000 tonnes, while the 33% tariff will be cut in half for shipments above that level.

Those quotas were set above recent trade volumes. McClay said in July that apple shipments to India were up 63% from the 2024 season and that India had risen from New Zealand’s seventh-largest apple market to its fourth-largest in two years.

Wine faces a slower path. India’s 150% tariff on New Zealand wine will be reduced over 10 years, with the final rate falling to either 25% or 50% depending on the price band. The first cut took effect Tuesday. The agreement also includes a most-favored-nation provision for wine, meaning any better deal India gives another wine-producing country will automatically apply to New Zealand. That matters because the European Union has already negotiated a lower rate with India.

For the beverage industry, the tariff phase-down opens a market that has been largely closed to New Zealand wine because of price barriers. The change could lead New Zealand wineries, distributors and importers to reassess pricing and brand positioning in India against Australian and European competitors as duties fall over time, although the pace of change will depend on how quickly tariffs come down and how producers build distribution.

New Zealand Winegrowers Chief Executive Philip Gregan said in April that India represented “a significant long-term opportunity” for the country’s wine sector. The industry body said wine exports to India were slightly below NZ$300,000 in 2025, reflecting the effect of the tariff wall.

Honey exporters also gained a limited opening. The 66% tariff on manuka honey will fall by three quarters to 16.5% over five years for honey certified by New Zealand’s Ministry for Primary Industries and priced at or above US$30 a kilogram. The ministry said this is the first time India has granted preferential access for honey to any country. Recent exports averaged only 7 tonnes a year.

Dairy, which became a central political issue during the debate over the agreement, remains mostly outside the deal. New Zealand did not secure new access for milk, cheese or butter. It did obtain a seven-year phaseout of India’s 33% tariff on bulk infant formula and other dairy-based food preparations, plus a new 3,000-tonne quota for albumins with the tariff halved to 11%. The agreement also includes a fast-track arrangement that allows Indian manufacturers to import New Zealand ingredients duty-free for products they later export.

India also agreed to consult New Zealand if it offers dairy access in the future to another comparable country, and both governments will review the entire agreement one year after it entered into force.

Meat industry groups welcomed the agreement when it was signed, while warning that gains would not be immediate. Meat Industry Association Chair Nathan Guy said in April that India was a market with “significant long-term potential” but that the agreement would not bring quick results. Beef + Lamb New Zealand Chair Kate Acland said rising incomes in India were likely to increase demand for higher-quality protein.

On New Zealand’s side, the agreement eliminates tariffs on 100% of Indian goods from Tuesday. Those tariffs had been as high as 10%. The ministry said consumers and businesses in New Zealand should see lower prices on some imports from India, including textiles, fabric, machinery and electrical goods.

The deal also includes mobility and investment provisions that have drawn political scrutiny. It provides up to 1,667 temporary three-year employment entry visas a year for Indian workers, with a cap of 5,000 holders at any one time. Of those annual places, 1,467 are tied to 13 skill-shortage occupations on New Zealand’s Green List, while 200 are reserved for chefs, yoga instructors, music teachers and Ayurveda practitioners. A separate working holiday scheme will allow up to 1,000 Indians ages 18 to 30 to travel and work in New Zealand each year.

New Zealand has also committed to promote US$20 billion in private investment into India over 15 years, while India will create a New Zealand Investment Desk to support those investors. The agreement does not include investor-state dispute settlement.

Those migration and investment terms helped shape the domestic political debate in New Zealand. Parliament passed the implementing legislation in September by 93 votes to 29. New Zealand First voted against it. Foreign Minister Winston Peters, whose party opposed the legislation, called the agreement “a bad deal for New Zealand” when negotiations concluded last December, arguing that it gave too much away on immigration while delivering too little on dairy. Labour supported the legislation but raised concerns about the migration and investment chapters.

The review built into the agreement will take place after New Zealand’s election on November 7, leaving the next government to assess how the pact is working in practice.

Trade between the two countries remains modest by New Zealand’s standards. The ministry said two-way trade totaled NZ$3.68 billion in the year to June 2025. New Zealand exported NZ$1.79 billion in goods and services to India and imported NZ$1.88 billion. India was New Zealand’s 12th-largest export market and accounted for just over 1.5% of its total exports.

The largest single New Zealand export to India was not a farm product but travel services, worth NZ$948 million, which reflects spending by Indian students and visitors in New Zealand. Forestry contributed NZ$134 million, horticulture NZ$118 million, iron and steel NZ$84 million, and wool NZ$76 million.

McClay has framed the agreement as part of the government’s goal of doubling the value of New Zealand’s exports within 10 years. He told RNZ that the pact’s entry into force was “a big step” toward that target and argued that early access matters as India’s economy expands.