‘Once in a generation agreement’: Details of NZ’s FTA with India revealed
Monday, 22 December 2025
New Zealand has concluded a free trade deal with India which, when complete, will mean tariff abolition or reductions on about 95% of New Zealand exports to India.
The Post yesterday reported the deal had been finalised, but it was officially announced by Trade Minister Todd McClay and Prime Minister Christopher Luxon on Monday evening.
The agreement will either eliminate or reduce tariffs on 95% of New Zealand’s exports with almost 57% being duty-free from day one, increasing to 82% when fully implemented.The remaining 13% will also be subject to tariff cuts.
While ACT Trade spokesperson Parmjeet Parmar welcomed the agreement saying it was a “massive moment” for the country, New Zealand First’s Winston Peters said the deal was “neither free nor fair,” arguing it gave too much away on immigration and won too little for exporters.
The deal, which was agreed on Friday December 12 but had to go to a special cabinet meeting called by Indian prime minister Narendra Modi, puts New Zealand exporters on an equal or better footing to competitors across a range of sectors, and opens the door to India’s rapidly expanding middle class, according to Trade Minister Todd McClay.
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“This once-in-a-generation agreement creates opportunities New Zealand exporters have never had in India. This deal is in New Zealand’s best interest and will deliver thousands of jobs and billions in additional exports,” McClay says.
“The Indian economy is forecast to grow to NZ$12 trillion by 2030. The India-NZ Free Trade Agreement unleashes huge potential for our world-class exporters to the world’s largest country and will significantly accelerate progress towards New Zealand’s ambitious goal of doubling the value of exports over 10 years.”
The deal will see India abolish tariffs on sheep meat, wool, coal and most forestry and wood products immediately when it comes into force.
It is expected to be signed in the first half of 2026 and typically such deals come into force six to eight months later, once they have been ratified by the Parliament of each administration.
The kiwifruit quota will be set at four times current export volumes and all quota will be tariff free, while out of quota export will be taxed at 50%.
Wine, which currently attracts a 150% tariff, will be slashed to 25% or 50% depending on the price of the wine.
What about dairy?
Dairy, which has been considered a crunch point in negotiations, has been liberalised, but the liberalisation is mostly limited to high end value-added products and ingredients for export products.
In particular, any dairy and food ingredients exported to India to go into India-made products and then re-exported from India, will be tariff-free from day one.
Bulk infant formula, high value preparations, will be duty-free after seven years. Milk albumins will get a 50% tariff cut, with a quota set at current export levels.
General milk powder and commodity milk product have not had tariff cuts.
The deal also covers services, which is likely to be an area of significant growth in coming decades.
“The FTA has broad services coverage and builds significantly on India’s WTO commitments with a focus on financial services, e-payments and FinTech, and includes an MFN (most-favoured-nation) clause to future-proof our services trade,” McClay said.
“To protect specialist and iconic New Zealand product names in each other’s markets, we have agreed to establish Geographical Indication rules comparable to those we have with the EU.”
Visas and immigration
Another key touchpoint for the negotiations - and one that could have caused domestic problems - was an expansion of Indian work visas and migration.
In the end, New Zealand will allow 1667 Indians here on three-year, skilled visas per year. Currently, about 10,000 come in annually via this route so the new commitment is much smaller than the current reality.
“Sectors will be drawn from the New Zealand skills shortage ‘Green List’ with all immigration screening and qualification/experience requirements remaining unaltered. We have retained the ability to change the Green List to match skills shortages in the economy,” McClay said.
Highly skilled graduates will also be allowed to stay in New Zealand and work longer.
The working holiday scheme has been aligned with Australia’s free trade deal which allows 100 such visas to be issued per year.
The deal comes less than nine months after the governments of New Zealand and India announced they would be resuming negotiations after a 10 year hiatus.
‘Landmark’ deal for NZ
Prime Minister Christopher Luxon said the conclusion of the negotiations were a “landmark moment” for New Zealand.
“I am delighted that, just nine months after Prime Minister Modi and I launched negotiations on this deal during my visit to India, Trade Minister Todd McClay and his counterpart Piyush Goyal have delivered.
“We made a campaign commitment to New Zealanders to secure a Free Trade Agreement with India in our first term, and our countries have pursued this with determination…
“This is an incredibly exciting opportunity for New Zealand exporters, with tariffs immediately removed on more than half of New Zealand’s current exports to India from day one. The gains are wide-ranging and significant.
“India is the world’s most populous country and is the fastest-growing big economy – and that creates opportunities for jobs for Kiwis, exports and growth.”
Since the election, McClay had visited India seven times and Foreign Minister Winston Peters had visited India twice. Earlier this year, Luxon led a trade delegation to India, and New Zealand had hosted India’s president and two ministerial visits.
“The result is a high-quality trade agreement with a trusted partner that will deliver deep and lasting benefits for New Zealand.
“I have just spoken to Prime Minister Modi, who shares our excitement to further cement the strong relationship between New Zealand and India.”
Luxon promised during the 2023 election campaign to get a free trade deal with India in his first term of Government, something considered highly unlikely at the time.
India has a population of 1.4 billion people and rapidly growing middle class. Greater access to India markets for goods and service exporters - as well as imports over time could provide a bedrock for New Zealand’s next growth phase, policy-makers think.
New Zealand First
In a statement leader Winston Peters said the party opposed the FTA, arguing it gave away too much on immigration while securing too little for exporters, especially dairy.
Peters said National rushed a low‑quality deal without majority support and opened New Zealand’s market while India kept high dairy tariffs, excluding key products worth billions.
He also criticised new migration and student‑work concessions, saying they risked jobs and constrained future governments. Peters stressed NZ First’s commitment to strong India–NZ relations but said this agreement failed to deliver a good deal.
Act
ACT Trade spokesperson Parmjeet Parmar welcomed the agreement sayiing it was a “massive moment” for the country, calling it long‑overdue progress with one of the world’s fastest‑growing economies.
The deal had the potential to significantly expand the current $3b in two‑way trade by reducing barriers and making it easier for businesses to sell and invest.
Parmar said improved access to Indian markets would give exporters greater certainty and deliver more choice for consumers.
Industry welcomes 'strategically significant' deal
The red meat sector has welcomed the deal, which will eliminate the 30% tariff on New Zealand sheepmeat when it comes into force.
'This is a strategically significant milestone for New Zealand's red meat sector,' said Nathan Guy, independent chair of the Meat Industry Association. 'In a global environment marked by rising protectionism, uncertainty and volatility, this agreement provides a foundation for the sector to realise opportunities in a market that has great prospects in the future.'
Beef + Lamb New Zealand chair Kate Acland said the deal put New Zealand on a level playing field with Australia, which concluded an FTA with India several years ago.
'Although the impact on farm-gate returns may not be significant in the short-term, this is an important step for future resilience and profitability in the sector,' she said.
ExportNZ executive director Joshua Tan said the agreement would help exporters navigate global trade uncertainty by reducing friction at the border and improving their ability to compete fairly.
'The problem is that prohibitive tariff barriers, often 30% to 60%, and up to 150% for wine, have limited what businesses can realistically do in India,' Tan said. 'This new agreement begins to bring those barriers down, gives exporters more certainty and more options.'
John McWhirter, chief executive of Wools of New Zealand, said the deal would strengthen relationships with Indian manufacturers and help make wool products more cost-effective.
'A Free Trade Agreement will pave the way for India to play a greater role as a key manufacturing and value-adding partner for New Zealand wool,' he said.
The key points
Tariff elimination or reduction on 95% of our exports.
Duty-free access on almost 57% of New Zealand’s exports from day one, increasing to 82% when fully implemented, with the remaining 13% being subject to sharp tariff cuts.
Immediate tariff elimination on sheep meat, wool, coal and over 95% of forestry and wood exports.
Duty-free access on most seafood exports, including mussels and salmon, over seven years.
Duty-free access on most iron, steel and scrap aluminium, over 10 years or less.
Duty-free access for most industrial products, over five to 10 years
50% tariff cut for large quota of apples – nearly double recent average exports.
Duty-free access for kiwifruit within a quota almost four times our recent average exports, and tariff halved for exports outside of quota.
Duty-free access for cherries, avocados, persimmons and blueberries, over 10 years.
Tariffs on wine reduced from 150% to either 25 or 50% (depending on the value of the wine) over 10 years, plus Most Favoured Nations (MFN) commitment.
Tariffs on mānuka honey cut from 66% to 16.5% over five years.
MFN status and liberalisation across services exports.
Duty-free access for dairy and other food ingredients for re-export from day one.
Duty-free access for bulk infant formula and other high-value dairy preparations over seven years.
50% tariff cut for high value milk albumins within a NZ-specific quota equal to current export volumes.