NZ-India FTA a disappointment for Kiwi dairy exporters still facing tariffs of 30% to 60%
Tuesday, 23 December 2025
For India, it is a free trade deal. For New Zealand it is a “freer” trade deal. And for the dairy industry, it’s a disappointment.
Most export sectors are happy with the announced details of the New Zealand India Free Trade Agreement (FTA), even though the text of the deal has not yet been published.
But New Zealand’s largest industry feels it’s got a raw deal.
It appears that from day one of the deal, all Indian exports to New Zealand will be tariff free. The same cannot be said for New Zealand’s exports, especially dairy, where on most export lines India will continue to charge tariffs of 30% to 60%.
Labour’s Damien O’Connor said: “It’s disappointing that dairy, our biggest export, has been largely left out of this deal.
“While we acknowledge this is a start point, the priority must be securing meaningful access for our dairy sector in any deal with India.”
Labour feels the Government’s pledge to get an FTA signed with India before the end of its first term had weakened its bargaining power.
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O’Connor said: “The UK took three and half years to negotiate its FTA with India. These agreements cannot be rushed and it was naïve of Christopher Luxon to treat this as an election promise.”
His criticism on Tuesday added to that of the Dairy Companies Association of New Zealand. Its members, including Fonterra, Goodman Fielder, A2 and Synlait, said they were disappointed negotiations with India had been unable to secure a bigger step towards dairy trade liberalisation
The association called for a fresh strategy to address the trade challenges faced by New Zealand’s largest export sector, and not just with India.
The first critical voice on the New Zealand-India FTA was NZ First leader Winston Peters, who called it a “bad deal”, and “neither free nor fair”.
“The India FTA would be New Zealand’s first trade deal to exclude our major dairy products - including milk, cheese and butter,” Peters said.
However, Kimberly Crewther, executive director of the association, said there remained “unfinished business” in many of New Zealand’s FTAs with major economies, including the European Union, Japan, South Korea and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between New Zealand and 11 other economies in the Asia-Pacific region (Mexico, Japan, Singapore, Australia, Canada, the United Kingdom, Vietnam, Peru, Malaysia, Chile and Brunei Darussalam).
“That reflects that dairy has a high level of protectionism which major markets are struggling to move past,” Crewther said.
O’Connor said India’s “paranoia” over dairy was centred in then tens of millions of Indian farmers’ sensitivity to milk prices.
He contrasted the dairy access improvements in the New Zealand-EU FTA, which the last government put in place in 2023, with the New Zealand-India FTA.
“We negotiated a hell of a lot better access than this agreement,” “O’Connor said.
And, he said, National criticised the EU FTA from the opposition benches, and that now looked “a bit rich” considering the lack of dairy access improvements in the deal the Government had struck with India.
There were several dairy victories in New Zealand’s FTA with India, but they were not considered significant by dairy exporters.
They are the phasing out of tariffs on bulk infant formula and other dairy-based preparations, and peptones (a dairy-based product) over seven years, and a halving of tariffs for albumins (a milk protein product) from 22% to 11%, but only for a limited quota.
New Zealand’s two-way trade with India amounts to $3.68 billion annually, but around $1b of that is travel between the countries. The 2023 Census showed 292,092 people who identified as being ethnically Indian living in New Zealand, half of whom had been born overseas.
New Zealand exports a variety of goods to India, including wool, iron and steel, aluminium, timber, and fruits and nuts, while it imports pharmaceuticals, machinery, precious metals and stones, textiles, vehicles, and clothing.
Sectors pleased with the FTA deal are those where there is a meaningful, albeit small amount of current trade.
That includes wool. In the 12 months to the end of June, New Zealand exported $76m of wool to India’s manufacturers. Tariffs on wool will immediately go to zero under the FTA. India’s Parliament buildings are carpeted in New Zealand wool.
It also includes the horticulture industry with apples worth $79m, and kiwifruit worth $36m, exported to India in the 12 months to the end of June.
It also includes forestry and forestry products, of which New Zealand exported $134m to India, including $77m of logs.