New Zealand’s FTA with India - who gets the benefits?

Friday, 13 February 2026

Indian Prime Minister Narendra Modi gets cosy with visiting New Zealand Prime Minister Christopher Luxon in New Delhi in March last year. A Free Trade Agreement was signed in December.

Martin van Beynen is a Press journalist and regular opinion contributor.

OPINION: The ink has yet to dry on New Zealand’s Free Trade Agreement (FTA) with India and I won’t pretend I have any strong opinions on its merits.

For a start not many people have seen a full text of the agreement although various bits have leaked out. As with most complex treaties, the devil is in the detail and only time will tell if things work out. Labour has yet to back the agreement but will no doubt do so after some disapproving noises.

The Indian government doesn’t want details of the agreement made public because it’s currently negotiating with other countries and doesn’t want to show its hand. That’s probably fair enough and also suits our coalition Government because it reduces the flow of oxygen to the debate and postpones some headline-grabbing from opponents of the deal like Winston Peters.

Trade deals are two-a-penny these days and many are with India, which is overcoming its protectionist zeal due to being squeezed by China and the United States.

In December, when Prime Minister Christopher Luxon triumphantly announced the pact, India, a country of 1.4 billion, signed an FTA with Oman. Weeks later the EU and India signed a much more important agreement described as the “mother of all deals”. In July last year Britain and India finalised a comprehensive trade agreement. Brazil and Canada are next on the list.

With the proliferation of such deals, partly because countries are seeking alternative alliances and treaties to reduce dependence on the unreliable US and manufacturing titan China, New Zealand has no choice but to keep up with the play so it can compete.

Australia signed an FTA with India in April 2022 and for several years has enjoyed preferential market access, making Australian exports like lamb, wool and wood more competitive.

Objections to the NZ-India agreement appear to revolve around two main areas. The first is that new immigration rules will bring in a flood of Indian workers who will take New Zealand jobs and put more pressure on housing, education and health services.

The numbers mentioned don’t suggest New Zealand being swamped. The pact allows 1667 people from India to enter New Zealand under a three-year temporary employment visa. The number must not exceed 5000 at any one time and they must have skills specified in a (green) list. Like other migrants who entered to fill skill shortages, they can apply to bring their spouse and children.

However, after three years they must go home. India is keen for its workers to get experience overseas, then return to contribute to the Indian economy. According to the Economist magazine, 84 million Indian youngsters flood into the workforce over the next decade and 30% of its graduates are jobless.

New Zealand may be a useful way of gaining experience but given their skills are in demand internationally I can’t see that many talented Indian workers returning home. But that is not our problem.

The other issue for those worried about an inundation is students. New Zealand has a sorry history with international students. In the last decade important-sounding but worthless institutes were set up mainly so overseas students could gain entry, work and perhaps eventually get residency.

Under the FTA, the number of Indian students allowed to come to New Zealand is uncapped. They are allowed to work 20 hours a week, a right which remains unchanged if the Government decides to limit the work hours of international students in general to below 20.

Authorities here will need to tightly monitor student numbers and particularly the schools or academies they attend.

The second area of contention is investment. The FTA requires New Zealand to promote investment in India of $US20 billion over 15 years. India is entitled to take certain actions if the investment doesn’t materialise. This sounds a lot, especially when New Zealand is constantly courting overseas investment itself. But a number of joint ventures in agriculture and manufacturing could reach the investment target. Numbers can be quite plastic when required.

The Indian government’s reluctance to have details of the FTA with New Zealand made public takes some oxygen away from opponents like NZ First leader Winston Peters, Martin van Beynen says. (File photo)

There is no doubt some New Zealand exporters will profit from the FTA and diversifying our markets is obviously prudent. However, the potential market in India’s 500m-strong middle class has been trumpeted over many years but without huge gains for New Zealand traders.

Trade between the two countries in the year to June 2025 reached about $3.7b, a minuscule amount compared to that with our main trade partners - China ($41b) and Australia ($32b).

The FTA with China signed in 2008 gives us some grounds for optimism. Trade in goods grew from about $2.5b to over $30b since it came into effect, far above the growth in our exports in general. But nearly all New Zealand’s exports to China are tariff-free, including dairy products which are still subject to tariffs under the India FTA.

We must keep working hard to promote exports and FTAs play a vital part. But a strange thing has happened in New Zealand as it has in China. Exports from both countries are booming with total New Zealand exports totalling $80.7b (dairy being the major contributor) in the year to December, the first time exports have exceeded that number.

But, like China, our domestic economy remains sluggish and patchy. With living costs ever rising and employment flat, many will be wondering when ordinary folks will feel the gains.