Editorial: Trading with India, eyes wide open

Monday, 13 July 2026

EDITORIAL: The one-day visit to Auckland by the Prime Minister of India, Narendra Modi, passed without incident, capping the signature first-term policy achievement of the Prime Minister, Christopher Luxon. When, during a leaders' debate in 2023, Mr Luxon promised to conclude a free trade agreement with India within a single term, the political establishment scoffed. The assumption was simple: this political newbie simply did not understand how difficult such negotiations were.

Instead, Mr Luxon and his Trade Minister, Todd McClay, showed that sustained political focus on a major objective can produce results. The agreement opens India's vast market to most New Zealand exports, with dairy remaining the notable exception, and promises a freer flow of people between the two countries. It is that latter point, however, that has generated controversy.

As The Post reported last week, questions remain over how many visas will be available to Indian nationals and whether that matches expectations the Government did little to temper. Winston Peters, the Minister of Foreign Affairs and NZ First Leader, who opposed the agreement on both immigration grounds and because he believes it does not deliver sufficient access for New Zealand exporters, has seized on the issue. In Parliament he argued the very Government he is part of had implied the deal would lead to 'open-slather immigration from India' while planning to impose restrictions in the fine print. The irony is obvious. Mr Peters has spent decades using immigration as one of his favoured political weapons, often with greater intensity in election years.

Yet politics and policy can occasionally align. Mr Peters has long favoured lower immigration and benefits politically from attacking National on the issue. As Minister of Foreign Affairs, however, he can also argue that New Zealand should act in good faith and either be upfront about any immigration limits or avoid singling India out for what he describes as “special, discriminatory, targeted restrictions“.

The full picture will emerge in the months ahead. The India Free Trade Agreement Legislation Amendment Bill has passed its first reading and is now before Parliament's Defence and Trade Committee, which is receiving public submissions. Whatever the outcome of that debate, both the agreement and Mr Modi's visit mark a significant shift in the relationship between New Zealand and India.

Following Saturday's bilateral meeting, the countries elevated their relationship to a Strategic Partnership, signalling closer cooperation on trade, security and transnational crime.That is in New Zealand's interests. India is one of the world's emerging powers. Its economy continues to grow rapidly, driven by a strong corporate sector and a generally pro-business central government, despite agricultural protectionism and price supports. Unlike China, India will avoid the severe demographic crunch over the coming century created by Beijing's former one-child policy. And, it will, over time, likely become another strategic bulwark and counterweight against China's geo-strategic ambitions.

Nevertheless, New Zealand should also be realistic about the country with which it is deepening ties. India is a democracy, but under Mr Modi it has become a less liberal one. Press freedom has deteriorated, political opposition has come under increasing pressure, and power has become more concentrated around Mr Modi’s ruling Bharatiya Janata Party. Corruption may have declined, but transparency has not obviously improved.

Those realities were evident during this visit. Mr Modi took no questions from journalists, while New Zealand reporters were warned by Mr Luxon’s office that they would be excluded from later events if they attempted to question his high-profile visitor. Every host nation must strike a diplomatic balance, but New Zealand should not lose sight of the increasingly managed nature of India's democracy. Nor should it ignore the tensions surrounding Hindutva, the Hindu nationalist ideology promoted by Modi's supporters, including at rallies held during his visit.

India's remarkable economic liberalisation since the 1990s has lifted hundreds of millions out of poverty. It has not, however, been accompanied by a comparable strengthening of liberal democratic institutions. That is a reality New Zealand policymakers must continue to acknowledge. There is nothing wrong with doing trade deals with different political systems of course. But India presents opportunity and complexity.

None of this detracts from the importance of the agreement itself. Securing a trade deal with India has eluded successive governments. Mr Luxon, Mr McClay, the Government and our outstanding negotiators at the Ministry of Foreign Affairs and Trade deserve significant credit for achieving it. The challenge now is to build this important new relationship while remaining honest about immigration, and clear-eyed about the changing character of one of New Zealand's most consequential new strategic partners.