Paper: GS – II, Subject: International Relations, Topic: India’s Relation with Other Nations, Issue: India – New Zealand Relations.
Context:
India and New Zealand have concluded negotiations on a Free Trade Agreement (FTA) aimed at doubling bilateral trade to $5 billion in five years.
Key Takeaways:
India-New Zealand FTA Highlights:
What is a Free Trade Agreement (FTA)?
Definition: An FTA is a trade pact between two or more countries that aims to reduce or eliminate trade barriers, such as tariffs, import/export restrictions, and non-tariff barriers.
Key Features: Covers trade in goods (agriculture & industry) and services (banking, IT, construction, etc.).
- Advanced FTAs also include investment, intellectual property rights (IPRs), government procurement, and competition policies.
Key Features of the FTA:
- Tariff Liberalisation:
- New Zealand to remove tariffs on 100% of Indian exports.
- India to reduce or eliminate tariffs on 95% of New Zealand exports.
- Sensitive Sector Protection:
- India has excluded dairy, rice, wheat, sugar, onions, edible oils and rubber, safeguarding farmers and politically sensitive sectors.
No concessions in the dairy sector, a major concern given New Zealand’s global competitiveness.
Strategic Significance:
- Export Diversification: Reduces overdependence on traditional markets like the US and EU.
- Complementary Economies: India’s strengths: pharmaceuticals, textiles, IT services.
- New Zealand’s strengths: forestry, horticulture, niche agri-products.
- Indo-Pacific Outreach: Strengthens India’s economic engagement in the Pacific region.
- Labour Mobility: Supports India’s strategy of leveraging its skilled human capital globally.
Challenges:
- Ensuring actual utilisation of FTA benefits by Indian MSMEs.
- Monitoring import pressures in horticulture and processed food segments.
- Translating long-term investment promises into on-ground outcomes
The India–New Zealand FTA reflects India’s new-generation trade policy strategic, calibrated, and farmer-sensitive aimed at boosting exports, attracting investment, and deepening Indo-Pacific economic partnerships.
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