What's Happening?
India and New Zealand have announced the finalization of a free trade agreement aimed at deepening economic ties and fostering growth amidst global trade uncertainties. The agreement, which took nine months to negotiate, is set to be formally signed in the first
quarter of the next year. It aims to lower tariffs, ease regulatory barriers, and expand cooperation across goods, services, and investments. India will gain zero-duty-export access for its goods to New Zealand, while New Zealand will receive duty concessions and market access for about 70% of India's tariff lines. The agreement excludes certain dairy imports and other products due to domestic sensitivities. New Zealand has committed to investing $20 billion in India over 15 years as part of the deal.
Why It's Important?
This agreement is significant as it represents India's strategic move to diversify its trade partnerships beyond traditional markets, especially in light of rising global protectionism and geopolitical tensions. The deal is expected to boost bilateral trade, which currently stands at $2.4 billion, with hopes to double it in five years. For New Zealand, the agreement opens up new markets for its exports, potentially increasing its exports to India by $1.1 billion to $1.3 billion annually over the next two decades. This partnership is part of India's broader strategy to cushion against external economic shocks and enhance its export capabilities.
What's Next?
The formal signing of the agreement is expected in the first quarter of the next year after legal scrubbing of the negotiated text. Both countries will likely focus on implementing the terms of the agreement and exploring further areas of cooperation. The deal may also influence India's ongoing trade negotiations with other countries, including the European Union and Canada, as it seeks to expand its network of trade agreements.
