NZ-India free trade negotiations cross halfway mark

Thursday, 2 October 2025

Economist Abhijit Mukhopadhyay says the US is using its trade weight to pressure India with high tariffs, calling for export market diversification in response.

Free trade negotiations with New Delhi have crossed the halfway mark, Trade Minister Todd McClay says.

But the tougher issues, including improving market access for New Zealand exports, are yet to be settled by the negotiating teams.

“I would say over 50% of the deal is concluded. But of course, always, the challenging stuff comes towards the end,” McClay said.

New Zealand and Indian trade negotiators met in Queenstown last month for a third round of formal negotiations for a free trade agreement, and McClay said a fourth round was now scheduled to occur in India in the coming weeks.

The Government has pursued an India free trade deal with urgency as New Zealand loses market share to Australia, which has an agreement. Prime Minister Christopher Luxon had promised to close a deal within this three-year parliamentary term -- a deadline widely considered ambitious until formal negotiations got under way in March.

Indian Prime Minister Narendra Modi, right, hugs visiting New Zealand Prime Minister Christopher Luxon after the signing of memorandum of understanding and delivering their respective press statements in New Delhi on March, 17.

India has also been announcing deals and ramping up negotiations, McClay said, partly because they were seeing opportunities possibly less obvious to them before, and because of their trade tensions with the US - which has placed an up to 50% tariff on Indian imports.

“[It] doesn't make the negotiation any easier, but it is driving us to meet more frequently than, you know, rounds [that] can be six months apart,” McClay said.

While not wanting to get into the detail of the negotiations, McClay confirmed it remained New Zealand’s position that a free trade agreement with India needed to have better market access than the “early harvest”, or preliminary, deal Australia obtained in 2022.

“It would need to be better than that for us to conclude … if you take wine as an example, right? 150% tariff for us, 75% for Australian wine; 75% is still very, very high.

“Lambs are a 30% tariff. There's not much New Zealand lamb goes up there. Australia got it to zero. They are selling a lot there.”

Though, he said, the deal would not be a “one-off hit”, giving the example of the 2008 free trade agreement with China, which had a 20-year transition between entry into force and full trade liberalisation.

“There are very few deals we get everything in all at once,” he said.

India’s Ministry of Commerce & Industry last month issued a statement declaring the third round of negotiations a success as several “chapters”, or aspects of the agreement, had been concluded.

“The discussions reaffirmed the shared commitment of both nations to strengthen economic ties and work towards the early conclusion of a balanced and mutually beneficial agreement,” the statement read.

The next round of formal negotiations would be held in New Delhi on October 13.

The Indian High Commission in Wellington was contacted for comment.