India–New Zealand FTA: Zero Duty Access for Indian Exports, Dairy Sector Ring‑Fenced

India and New Zealand have concluded a comprehensive Free Trade Agreement (FTA) under which New Zealand will eliminate tariffs on 100 per cent of its tariff lines, giving Indian exports zero‑duty access across the board, while India has refused to offer any duty concessions on dairy and other politically sensitive sectors.

The deal aims to double bilateral trade within a few years by boosting exports of labour‑intensive Indian products such as textiles, apparel, leather, marine goods, gems and jewellery, engineering items and automobiles. At the same time, Delhi has used exclusion lists and calibrated tariff‑rate quotas to shield farmers, small producers and the domestic dairy cooperative ecosystem from a surge of cheap imports.

What the trade deal offers

According to official and industry briefings, New Zealand has agreed to completely eliminate tariffs on all its 8,000‑plus tariff lines for Indian exports, a first for any partner and a major boost for India’s competitiveness in that market. India, in turn, has extended tariff liberalisation on around 70 per cent of its tariff lines, covering about 95 per cent of current two‑way trade, while carefully ring‑fencing sensitive categories.

Two‑way trade between the countries is currently a little over USD 3 billion, and policymakers expect the new agreement to unlock fresh opportunities in merchandise trade, services, agriculture technology and investment over the next 10–15 years. The pact also embeds chapters on customs facilitation, technical barriers to trade, sanitary and phytosanitary standards and sustainable development to smoothen future commerce.

Big winners: textiles, leather, marine, gems and engineering

Labour‑intensive sectors that employ millions of workers are the clear winners, with garments, home textiles, fashion accessories and technical textiles getting duty‑free access where they earlier faced tariffs of up to 10–15 per cent. Leather goods and footwear, dominated by MSME clusters in cities like Kanpur and Chennai, will also enter New Zealand at zero duty, improving margins and price competitiveness.

Marine products, including shrimps and processed fish, and high‑value items such as gems and jewellery, handicrafts and engineering components are similarly expected to benefit from the elimination of tariffs and streamlined border procedures. Industry bodies say the deal can help Indian exporters diversify away from a few traditional markets and integrate more deeply into global and Indo‑Pacific value chains.

Sector	FTA Benefit	Expected Impact
Textiles & Apparel	Complete removal of tariffs on Indian yarn, fabrics, garments and home textiles in New Zealand.	Higher export volumes and better margins for Indian manufacturers facing past tariff disadvantages.
Leather & Footwear	Zero duty entry for leather shoes, bags, belts and other accessories from India.	Boost for MSME‑dominated clusters in North and South India that rely on export orders.
Marine Products	Tariff‑free access for a wide range of marine goods, including shrimps and processed seafood.	Improved realisations for exporters in coastal states and greater product diversification.
Gems & Jewellery	Full tariff elimination on gems, jewellery and select handicrafts.	Scope to capture a larger share of New Zealand’s premium and niche consumer segments.
Engineering Goods & Auto	Reduced to zero tariffs on engineering components, machinery and certain automobiles.	Support for India’s medium and high‑value manufacturing export push.

How dairy and other sensitive sectors are protected

In line with long‑stated red lines, India has categorically kept dairy products such as milk, cream, yoghurt, cheese, whey and casein outside the ambit of tariff concessions under the FTA. Other sensitive items, including several vegetables and pulses (like onions, chana, peas and corn), sugar, artificial honey, edible oils, rubber, arms and ammunition, as well as many copper and aluminium products, also remain in the exclusion list.

Commerce and Industry Minister Piyush Goyal had repeatedly underlined that India would “never compromise” on the interests of its dairy sector, farmers and MSMEs, and the final blueprint reflects that stance. Officials argue this approach allows India to reap export benefits in non‑sensitive sectors while preserving livelihoods in agriculture and allied activities that are vulnerable to import shocks.

Tariff rate quotas, minimum import prices and farm safeguards

For a limited set of high‑value agri items such as Manuka honey, kiwifruit, apples and milk albumin, India has agreed to carefully capped tariff rate quotas (TRQs) linked with minimum import prices. For example, duty concessions are restricted to around 200 tonnes per year for some products with a minimum import price of USD 20 per kilogram, rising to USD 30 per kilogram for volumes beyond the quota, ensuring only premium‑priced imports are viable.

These quotas are complemented by cooperation pacts on agri‑technology, post‑harvest management and food safety standards, overseen by a joint agriculture productivity council to help Indian farmers upgrade productivity. Policy experts say the combination of tight quotas, high minimum import prices and long phase‑out periods makes the FTA’s agricultural blueprint a notable “win” for Indian farmers.

Services, mobility and students

Beyond goods, New Zealand has offered its most ambitious package on services and mobility in any FTA so far, covering 118 services sectors with most‑favoured‑nation treatment in 139 sub‑sectors. This includes enhanced access for Indian IT and business services, financial and professional services, education, tourism, construction and telecom firms.

The agreement also creates dedicated mobility pathways: up to 5,000 temporary employment entry visas for skilled Indian professionals annually and 1,000 work‑and‑holiday visas. Indian students will face no numerical caps and will enjoy at least 20 hours per week work rights, with post‑study work visas of up to three years for STEM graduates and up to four years for PhD holders.

Implementation timeline and next steps

Negotiations have been formally concluded and both governments are now moving towards legal scrubbing, formal signature and ratification through their respective parliamentary processes. The FTA is expected to come into force sometime next year, after which most tariff cuts and market access commitments will roll out in phases under a pre‑agreed schedule.

For Indian exporters, trade bodies are advising early market research, buyer outreach and product certification so that they can start using duty‑free access as soon as the agreement takes effect. The government, meanwhile, is likely to follow up with awareness campaigns and sector‑specific hand‑holding to ensure MSMEs, farmer‑producer organisations and service providers can fully tap the new opportunities.