India free trade deal by year's end 'aspirational', Todd McClay says

Friday, 25 July 2025

Trade Minister Todd McClay says he believes a free trade deal with India is possible before the next election, but New Delhi’s promise of the end of the year is “aspirational”.

“They've set a timeline on it, and that's not a bad thing … but we have to make sure it is commercially meaningful for New Zealand. Indications from them are it will be, but negotiations are ongoing,” McClay said, in an interview with The Post.

A second, 10-day round of negotiations had concluded earlier this month, McClay said, and progress was being made.

But “negotiations are hard”, so he appeared unconvinced a deal could be reached as soon as India was suggesting.

After the first round of formal negotiations wrapped up in May, India’s Ministry of Commerce and Industry issued a statement saying “both countries reaffirmed their common vision and mutual understanding to work towards a future ready framework and conclude the FTA this year”.

McClay said the promise of a deal this year “sounds as aspirational as and insightful as the prime minister was before the election [when he] said, ‘We'll do it this term’. Sounds like India is joining us in that”.

“I remain committed and believe we'll get it done this term. Exactly when, we'll see.”

A trade deal with India, often described as the world’s largest democracy with its 1.4 billion people, would be a major prize for the Government.

Prime Minister Christopher Luxon had campaigned on obtaining a free trade deal within a term of government, a target which many thought unrealistic given the difficulty.

India protects it vast agriculture sector, making the prospect of obtaining a deal which provides meaningful access to New Zealand’s primary sector exports challenging. Prior negotiations, begun in April 2010, were fruitless and ended in 2015 after 10 rounds.

However, India in 2022 signed a free trade agreement with Australia and now appears enthusiastic about a New Zealand deal, among others.

“I'm pleased with the progress, but it is always heavy going in trade negotiation, particularly when one is much larger than the other,” McClay said.

“They've concluded with the UK, although I don't know, we've seen a lot of detail, they are negotiating with the European Union. They've got quite a bit going on.

“It was a milestone to be able to launch the negotiation. That we also had two rounds whilst they are negotiating with so many others, including working through a negotiation which must be challenging with the US, I think speaks to their desire to do a deal with New Zealand.”

That New Zealand lacks a deal with India has meant it has lost ground to Australian exports, since their deal came into effect in 2024.

Trade officials in December told MPs at Parliament that New Zealand was the largest sheep meat exporter to India, until Australia’s tariff dropped to zero and their exports increased 163%.

Other examples included wood exports, which had a modest tariff for India of 5%, which Australia has increased by 202%.

For kiwifruit, which attracts a 30% tariff, New Zealand’s main competitor Chile had obtained a reduced tariff of 15%.