Negotiations for a New Zealand India trade deal are set to begin, but the New Zealand Government can already claim a win. The trio of Trade Minister Todd McClay, Foreign Minister Winston Peters, and Prime Minister Christopher Luxon have spent the first half of this term working their proverbials off all around the globe to improve our international relationships and secure trade deals.
Add Defence Minister Judith Collins to the mix and we have a highly skilled and experienced team working on overseas matters. If Fantasy Cabinet (a la Fantasy Football) was a thing, McClay, Peters, and Collins would be favourites for each of their roles. Even with historic ministers to choose from they would be front runners.
The significance of a trade deal with India should not be downplayed. New Zealand’s over-reliance on the Chinese market is much opined and, with a population of 1.4 billion people, India is an excellent market for expanding our businesses in.
It is also significant because of the long road it has taken to get here. At the end of the last National Government moves to establish a deal were grinding along, but the subsequent Ardern Government made it clear that such a deal was not a priority. In fact, then Foreign Minister Nanaia Mahuta said as much to the media with the Indian Foreign Minister right next to her.1 This kind of unforced error resulted in an eroded New Zealand-India relationship.
Chris Hipkins (aided by the New Zealand media) has tried to claim that Labour had some role in laying foundations for the trade deal, but this is laughable. Even the Times of India disagrees with his cheeky attempt to salvage an appalling trade and foreign affairs record.
Back home in New Zealand, The Indian Weekender echoes this saying: “Labour leaders would like to believe they kept the plate hot for future trade talks.”2
Christopher Luxon has been careful to temper expectations around what the final agreement will look like. This is likely because the matter of the inclusion or exclusion of dairy has been an obstacle historically and is a key sector for New Zealand. The Prime Minister says he is looking for a “good” deal, not a “perfect” one. This cautious language is wise, but has been framed negatively by New Zealand media who seek to portray the Prime Minister as “under pressure” and have pointed to how he has “shifted his language in recent days.”3 Radio New Zealand’s reluctance to report positively or even neutrally on this Government is apparent in their couching of the widespread excitement about the deal as “mild optimism”.
On the other hand, geopolitical analyst Geoffrey Miller told me:
“The India trip is fundamentally a good news story. The FTA negotiations are formally restarting and Luxon is getting the red carpet treatment in terms of face time with Modi and the invitation as the keynote speaker to the Raisina Dialogue.”
Prime Minister Luxon had the honour of being “Chief Guest” and delivering the inaugural address at the Raisina Dialogue which is India’s defence and security conference.4 This is a very big deal as he is the first non-European leader to do so.
Former National Party MP Kanwaljit Singh Bakshi is accompanying Luxon on the trip bringing with him his experience accompanying John Key on multiple similar engagements in India. Bakshi considers Luxon’s honour at the Raisina Dialogue "a significant moment" for Indian and New Zealand relations.5
So what is likely, or possible, to be included in a trade deal between the two countries?
One place we can look to for an indication of what the famously conservative negotiators in India might agree to is the Economic Cooperation and Trade Agreement (ECTA) signed by Australia and India in 2022.6 This deal was to “swiftly liberalise and deepen bilateral trade in goods and services, and to then use this foundation to resume negotiations on the more ambitious CECA.”7
The Australian Department of Foreign Affairs and Trade say the ECTA means:
“over 85 per cent of Australian goods exports by value to India are now tariff free, rising to 90 per cent by 1 January 2026, and high tariffs have been reduced on some further agricultural products. In addition, 96 per cent of imports from India are now tariff free, rising to 100 per cent by 1 January 2026.”
For a summary of the benefits Australia achieves through the agreement click here.
The Australian Government claims that the benefits “are commercially significant for up to $14.8 billion worth of Australia’s current merchandise trade destined for India each year.”8
Goods that are duty free thanks to the agreement include sheep meat, wool, barley, oats, LNG, metallic ores, such as manganese, copper and zirconium, coal, alumina, cosmetics and railway equipment. Other goods are subject to specific tariff reductions, for example, wine tariffs are reduced from 150 per cent to 50 per cent over 9 years for bottles valued over US$5 and tariffs reduced from 150 per cent to 25 per cent over 9 years for bottles valued over US$15.
Beyond tangible material goods, Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors, including higher education and adult education, business services (tax, medical and dental, architectural and urban planning), research and development, communication, construction and engineering, insurance, banking, hospital, audiovisual and tourism and travel.
What do New Zealanders think about the potential trade deal?
Online reactions to the potential New Zealand-India deal have been muted on the Left (must focus on school lunches!!!!) and while there has been plenty of positivity from the Government supporters, there have been a lot of questions around migration. Much of this likely comes as a result of global tensions around mass migration. There is anxiety throughout the West about how mass immigration from non-Western countries to the USA, Britain, and Europe is causing a myriad of problems.
New Zealand’s vast watery borders mean we do not have the same issues as those in the Northern Hemisphere, however, we have engaged in population management strategies via immigration. In order to plug workforce holes and make up for languishing birthrates, New Zealand has open its doors to a large number of immigrants in recent decades. This strategy is not a longterm solution and we need to think about how we manage our ageing population better.
However, it is my opinion that a lot of the anxiety about immigration in connection to a potential trade deal is a result of absorbing the panic about much more dire situations elsewhere. Unlike others, we have the ability to control immigration because we don’t have land borders. Our settings are a matter for immigration policy primarily in any case.
I expressed this on X and received lots of replies pointing out that trade deals often include elements of immigration and working visa policies. This is correct, but they tend to be mutually beneficial and limited to business travel.
The above tweet is an example of the conspiracy-thinking that has taken hold online. The primary goal of a trade deal is economic. It isn’t a smokescreen for ushering in open borders. It also isn’t an option for us not to engage in international trade lest immigrants be allowed to come to New Zealand. The graphs shared also don’t mirror each other which undermines the idea that export activity has a causal relationship with the number of Indian New Zealand residents.
What kinds of immigration concessions will New Zealand have to make?
Because of the level of anxiety being expressed about this, I am going to dedicate some time here to explain how clauses about visas and travel might look for New Zealand in a trade agreement with India.
The Australian-Indian Economic Cooperation and Trade Agreement (ECTA) provides insight into how immigration and visas might shape up in our own agreement. The Aussies and Indians agreement includes articles on regulating professional services, temporary movement of natural persons, and youth work and holiday visas.
Article 8C relates to professional services and seeks to:
“encourage the development of systems for the recognition of professional qualifications and experience, registration and licensing of professionals, including through mutual recognition or similar arrangements, to better facilitate trade in professional services between the Parties”9
This means that cooperation is established between equivalent regulatory bodies in each country to make moving between countries for work in fields that are heavily regulated easier. Article 8C.7 allows for protections against the risk of a mismatch of qualifications as well as location, language, or cultural specific needs:
Professional standards and criteria may include the following matters:
(a) education;
(b) examinations;
(c) experience;
(d) conduct and ethics;
(e) professional development and re-certification;
(f) scope of practice;
(g) local knowledge; and
(h) consumer protection.
In Article 9, they agree to special travel conditions for work purposes. The conditions and specifications are extensive in the Australian appendix, the Indian one is more simple. They are common sense adjustments to business travel settings that allow for ease of doing business. They are heavily regulated on the Australian side, for example:
Australia’s commitments in this Appendix shall only apply to natural persons of India seeking to enter Australia with trade, technical or professional skills and experience who are assessed as having the necessary qualifications, skills and work experience accepted as meeting the domestic standard in Australia for their specified occupation, and who are:
(a) employees of an enterprise of India that has concluded a contract for the supply of a service within Australia and that does not have a commercial presence within Australia; or
(b) engaged by an enterprise lawfully and actively operating in Australia in order to supply a service under a contract within Australia.10
The youth work and holiday visas are similar to standard visas that already exist between cooperative nations. Australia has agreed to make available 1000 special 12-month work and holiday visas for Indian young people each year. There are a number of criteria including:
(v) intend primarily to holiday in Australia for a period of up to twelve calendar months;
(vi) are at least eighteen years of age but have not turned thirty-one at the time of application for a visa;
(vii) will not be accompanied by dependent children;
(viii) hold an onward ticket or sufficient funds to purchase such a ticket;
(x) meet health and character requirements as specified by Australian Law;
(xii) have successfully completed at least two years of post-secondary study; and
(xiii) have a level of proficiency in English which is assessed as at least functional.11
These are the kinds of visa-related matters New Zealand might expect to find in our agreement. They are not the type of agreements that will usher in waves of additional permanent immigrants. They are business specific or have the intention of building positive connections for the young people of each country. The benefits of a comprehensive trade deal that lowers or erases tariffs is certainly not outweighed by these other aspects of the agreement.
The most concern seems to be around “mobility” clauses. In relation to the ECTA, the Australian Government characterises the these as “mobility outcomes that will foster people-to-people links, support trade and business and contribute to cultural exchange between Australia and India.”12
The ECTA allows for:
access for a range of Australian and Indian skilled service providers, investors, and business visitors, facilitating investment and providing business with greater certainty.
Although the Government is at pains to make the limitations of this clear:
Australia's commitments to India on mobility maintain the integrity of our visa system and are consistent with existing visa settings and our previous free trade agreements. This includes equivalent commitments on categories of entrant, length of stay, spouses and dependents.
ECTA does not include a waiver of labour market testing, so a potential employer in Australia will still need to provide evidence they have tested the local labour market where necessary.
What are the potential drawbacks or things for New Zealand to be wary of?
I spoke to geopolitical analyst Geoffrey Millar about the fish hooks to keep an eye on and he warns that:
The corollary is that New Zealand needs to be aware that the quid pro quo for India will be far less about trade (given New Zealand's small size) and more about securing Wellington's support for New Delhi's wider geopolitical aims. That means things like closer cooperation on areas such as defence. Of course, all states have interests and there is nothing inherently wrong with doing deals.
Given New Zealand has strong interests in urging more engagement from India in the Indo-Pacific region, this isn’t much of a drawback. The real risk is the same risk that plagues New Zealand everywhere: upsetting China. Whether we are talking to the United States or maintaining our relationships with smaller Pacific neighbours, China is the spectre looming large. Miller expands:
Luxon should keep China's potential reaction to any wider agreements in mind. China remains New Zealand's biggest trading partner by some margin, buying $20 billion (NZD) of New Zealand exports every year, especially dairy. With growing protectionism around the world, it's a market New Zealand can ill afford to lose. It will be crucial for the New Zealand Prime Minister to conduct a similarly large scale visit to China this year.
What next?
Negotiations are set to begin next month and the big question will be around the inclusion or exclusion of dairy. Previously, it has been a hard “no” from India and is not included in the Australian ECTA. Regardless, if Luxon and his team are able to get Modi to sign on the dotted line New Zealand should be very happy. Even without dairy this deal could represent massive opportunity for New Zealand businesses and in any case, we can revisit the matter of our dairy products at a later date. Whereas dairy was always included in our trade deal with China, tariffs were lessened step-by-step over several years.
Christopher Luxon has faced a great deal of criticism in recent weeks and there have been pointed questions asked about his leadership. This India trip should earn him many brownie points and positive media write ups. He is in his element at these kinds of diplomatic events. New Zealand’s relationship with India is back on track and that is something to celebrate.
www.parliament.nz/en/pb/hansard-debates/rhr/document/HansS_20250311_054300000/12-question-no-12-trade-and-investment
www.indianweekender.co.nz/columns/india-nz-free-trade-talks-what-to-expect
www.rnz.co.nz/news/political/544879/deal-or-no-deal-christopher-luxon-s-india-trip-puts-trade-promise-to-the-test
www.timesofindia.indiatimes.com/india/new-zealand-pm-arrives-in-delhi-for-raisina-dialogue-to-meet-pm-modi-and-president-murmu/articleshow/119074365.cms
www.rnz.co.nz/news/indonz/544567/indian-community-awaits-major-announcements-during-luxon-s-india-trip
Australian service suppliers will benefit from full or partial access across more than 85 Indian services sectors and subsectors/australia-india-ecta-official-text
CECA = Comprehensive Economic Cooperation Agreement
www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/outcomes/australia-india-ecta-benefits-australia-overview
www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/australia-india-ecta-official-text/annex-8c-professional-services
www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/australia-india-ecta-official-text/annex-9a-australias-schedule-specific-commitments-temporary-movement-natural-persons
www.dfat.gov.au/sites/default/files/aiecta-side-letter-work-and-holiday-visas-india-to-australia.pdf
www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta/outcomes/australia-india-ecta-benefits-australia-overview
I'm not as politically savvy as you, but even I could see that despite what could be considered some drawbacks, unless they're truly not negotiable, we can't afford to let them completely scupper a trade deal with India.
I enjoy your political commentary, Ani, more than anyone else's - not that I'm across them all, of course :-)
Hi Ani. You’re absolutely right to underline the geopolitical significance here. Given current global uncertainties, especially those emanating from shifting US policies and trade tensions, diversifying our markets isn’t just smart—it’s essential. Overreliance on a single trade partner, notably China, leaves New Zealand vulnerable to political whims beyond our control.
It’s also worth stepping into India’s shoes for a moment on the dairy sticking point. Dairy isn’t just another commodity for millions of Indian farmers; it’s their livelihood, their security, their survival. A flood of competitive New Zealand dairy products could genuinely threaten the fragile economic stability of countless families reliant on small-scale dairy farming. This reality explains India’s historical resistance to including dairy in trade agreements.
Recognising these sensitivities doesn’t diminish the importance of securing a deal. Instead, it helps frame negotiations realistically and respectfully. A “good” deal, as Prime Minister Luxon describes, understands and accommodates such complexities, benefiting both sides in the long term.