What is the story about?
Picture Delhi, a city of some 20 million people—four times the entire population of New Zealand—that devours 300,000 kilos of mutton a day, reams of textiles, and enough pharma to medicate a country or two. Now contrast that with New Zealand, a speck of 5.2 million people on two main islands, where the economy orbits around grass-fed sheep (outnumbering humans eight to one) and vineyards that produce more sauvignon blanc than the mind can quaff. A double asymmetry is demographic and economic. India’s GDP, at $3.9 trillion, dwarfs New Zealand’s $253 billion.
Yet these improbable partners unveiled a free-trade agreement (FTA) after a decade of desultory talks, aiming to double their puny $2.4 billion bilateral trade (goods and services) to $6 billion within five years. For Kiwis, it is a foothold in Asia’s growth engine; for the Tigers, a nod to labour-heavy exports and skilled mobility. But beneath the handshakes lies a tale of guarded concessions, rural red lines, and dogged diplomacy.
The pact, inked virtually by PMs Narendra Modi and Christopher Luxon, is India’s fourth FTA this year, following deals with the European Union, the UK and Oman. It caps negotiations that have stuttered since 2010, derailed repeatedly by New Zealand’s insistence on dairy access—a sacred cow for both sides, though for starkly different reasons. India, home to 80 per cent of the world’s water buffalo milk producers and a $130 billion dairy industry that sustains 80 million rural households, has long signalled to suitors from Canberra to Brussels that its white-gold reserves are off-limits.
“Dairy is non-negotiable,” a commerce ministry official reiterated last month, echoing PM Modi’s atmanirbhar mantra. New Zealand, where Fonterra alone, with cheese and powder exports, rakes in $20 billion annually, had hoped for a crumb. Instead, the deal carves out milk, cream, cheese, yoghurt, whey, caseins, coffee, onions, sugar, spices, edible oils, and rubber—protecting India’s farmers from a flood of subsidised imports that could upend village economies.
Yet India is not slamming every door. The agreement grants zero-duty market access for 100 per cent of its exports to New Zealand, a cornucopia for Indian shippers of gems, jewellery, pharmaceuticals, and textiles—sectors that already made up two-thirds of the $711 million in goods sent south last year. In return, India offers tariff liberalisation on 70 per cent of tariff lines, encompassing 95 per cent of bilateral trade value, with phased reductions over a decade.
This includes duty-free inputs vital for India’s manufacturing muscle: wooden logs for furniture and plywood (this protects Indian forests, by the way), coking coal for steel mills, and metal scrap for auto recyclers. Such carve-outs could shave 5–10 per cent off production costs in hubs like Gujarat and Tamil Nadu, bolstering the “Make in India” drive amid a global supply-chain shuffle.
For New Zealand, the prize is access to a market of 1.4 billion consumers, where urbanisation and rising incomes are spawning a middle class ravenous for premium proteins and wood. Kiwi exporters stand to gain mightily in wool (already $50 million annually to India), commercial timber ($100 million potential, given India’s $20 billion wood-import bill), and above all, lamb.
India, the world’s largest mutton consumer at 1 million tonnes yearly, imports just 5 per cent of its needs and likes its meat fresh but craves high-value, hormone-free cuts for its elite and their wedding banquets. The FTA slashes duties from 30–100 per cent to zero on sheepmeat, unlocking an estimated $1 billion market for New Zealand over the next decade—equivalent to a quarter of its current red-meat exports to China. Such niches underscore the deal’s pragmatism: India yields on luxury proteins while fortifying staples.
The agreement’s ambitions extend beyond tariffs. A $20 billion investment pledge over 15 years targets Kiwi funds in Indian renewables, tech parks, and agritech—sectors where New Zealand’s engineering prowess could mesh with India’s scale. Mobility provisions sweeten the pot: uncapped post-study work visas of three years for Stem graduates and four for PhDs could guide 10,000 Indian students annually to New Zealand campuses, injecting $500 million into universities already hungry for fee-paying foreigners. Quotas of 5,000 temporary work visas and 1,000 working-holiday slots ease talent flows for IT professionals and nurses, addressing New Zealand’s needs.
On the farm front, centres for excellence for apples, kiwifruit, and honey—funded jointly—promise to transplant Kiwi horticultural wizardry to Himachal Pradesh orchards, potentially lifting Indian yields by 20–30 per cent. Restricted market access for these fruits ensures no backlash from domestic growers, a deft touch.
Not everyone is toasting with Marlborough pinot noir. In New Zealand, dairy farmers—the bedrockof the rural vote—are howling betrayal. Federated Farmers, the lobby for 20,000 milk producers, decried the exclusions as “a slap from the elephant’s trunk”. Labour’s trade spokeswoman, Camilla Dean, called it “a half-loaf at best”—well, let’s say that’s the better half. New Zealand will get used to it; polls suggest public support: 62 per cent back deeper India ties.
Leather artisans in Agra and Kanpur—clusters employing 4m in Uttar Pradesh alone—cheer the zero-duty gateway to New Zealand’s $1 billion footwear market, eyeing 20 per ent export growth for MSMEs. Tamil Nadu’s tanneries in Vellore and Ambur, hubs for $5 billion in annual leather goods, stand to create 100,000 jobs via Kiwi contracts. Bilateral trade currently sits at just $1.3 billion in goods—wool off the sheep’s back. India sends basmati and auto parts; New Zealand ships wool and wine.
The FTA could add $3 billion to flows by 2030, per government models, but non-tariff barriers—India’s labyrinthine standards and New Zealand’s biosecurity zeal—may snag some of the gains. Services, where India excels, get a cursory nod, with mutual recognition for qualifications in nursing and engineering. Investment rules ease too, and that is a big win in the small print via a bilateral investment treaty.
Zoom out, and the deal fits a broader reconfiguration. India has inked 15 FTAs since 2020, pivoting from vaccine diplomacy to trade realpolitik. For New Zealand, adrift post-China slowdown (its $30 billion surplus halved since 2022), India offers ballast: a democratic counterweight in a region where autocrats hold sway. It evokes Shaun the nimble animated sheep, woolly and wary, nosing its way into an elephant’s vast pavilion—not to challenge the beast, but to graze on its feast, fattening both for leaner globalised times ahead.
From dairy and meat to IT and start-ups, opportunities abound and could help reshape global supply chains. If nurtured, it could herald a thicker weave in the Indo-Pacific tapestry, where size yields to savvy. For now, though, it is a start—modest, but primed for growth. Stocking around this could be fun.
(The writer is a senior journalist with expertise in defence. Views expressed are personal and do not necessarily reflect those of Firstpost.)
Yet these improbable partners unveiled a free-trade agreement (FTA) after a decade of desultory talks, aiming to double their puny $2.4 billion bilateral trade (goods and services) to $6 billion within five years. For Kiwis, it is a foothold in Asia’s growth engine; for the Tigers, a nod to labour-heavy exports and skilled mobility. But beneath the handshakes lies a tale of guarded concessions, rural red lines, and dogged diplomacy.
The pact, inked virtually by PMs Narendra Modi and Christopher Luxon, is India’s fourth FTA this year, following deals with the European Union, the UK and Oman. It caps negotiations that have stuttered since 2010, derailed repeatedly by New Zealand’s insistence on dairy access—a sacred cow for both sides, though for starkly different reasons. India, home to 80 per cent of the world’s water buffalo milk producers and a $130 billion dairy industry that sustains 80 million rural households, has long signalled to suitors from Canberra to Brussels that its white-gold reserves are off-limits.
“Dairy is non-negotiable,” a commerce ministry official reiterated last month, echoing PM Modi’s atmanirbhar mantra. New Zealand, where Fonterra alone, with cheese and powder exports, rakes in $20 billion annually, had hoped for a crumb. Instead, the deal carves out milk, cream, cheese, yoghurt, whey, caseins, coffee, onions, sugar, spices, edible oils, and rubber—protecting India’s farmers from a flood of subsidised imports that could upend village economies.
Yet India is not slamming every door. The agreement grants zero-duty market access for 100 per cent of its exports to New Zealand, a cornucopia for Indian shippers of gems, jewellery, pharmaceuticals, and textiles—sectors that already made up two-thirds of the $711 million in goods sent south last year. In return, India offers tariff liberalisation on 70 per cent of tariff lines, encompassing 95 per cent of bilateral trade value, with phased reductions over a decade.
This includes duty-free inputs vital for India’s manufacturing muscle: wooden logs for furniture and plywood (this protects Indian forests, by the way), coking coal for steel mills, and metal scrap for auto recyclers. Such carve-outs could shave 5–10 per cent off production costs in hubs like Gujarat and Tamil Nadu, bolstering the “Make in India” drive amid a global supply-chain shuffle.
For New Zealand, the prize is access to a market of 1.4 billion consumers, where urbanisation and rising incomes are spawning a middle class ravenous for premium proteins and wood. Kiwi exporters stand to gain mightily in wool (already $50 million annually to India), commercial timber ($100 million potential, given India’s $20 billion wood-import bill), and above all, lamb.
India, the world’s largest mutton consumer at 1 million tonnes yearly, imports just 5 per cent of its needs and likes its meat fresh but craves high-value, hormone-free cuts for its elite and their wedding banquets. The FTA slashes duties from 30–100 per cent to zero on sheepmeat, unlocking an estimated $1 billion market for New Zealand over the next decade—equivalent to a quarter of its current red-meat exports to China. Such niches underscore the deal’s pragmatism: India yields on luxury proteins while fortifying staples.
The agreement’s ambitions extend beyond tariffs. A $20 billion investment pledge over 15 years targets Kiwi funds in Indian renewables, tech parks, and agritech—sectors where New Zealand’s engineering prowess could mesh with India’s scale. Mobility provisions sweeten the pot: uncapped post-study work visas of three years for Stem graduates and four for PhDs could guide 10,000 Indian students annually to New Zealand campuses, injecting $500 million into universities already hungry for fee-paying foreigners. Quotas of 5,000 temporary work visas and 1,000 working-holiday slots ease talent flows for IT professionals and nurses, addressing New Zealand’s needs.
On the farm front, centres for excellence for apples, kiwifruit, and honey—funded jointly—promise to transplant Kiwi horticultural wizardry to Himachal Pradesh orchards, potentially lifting Indian yields by 20–30 per cent. Restricted market access for these fruits ensures no backlash from domestic growers, a deft touch.
Not everyone is toasting with Marlborough pinot noir. In New Zealand, dairy farmers—the bedrockof the rural vote—are howling betrayal. Federated Farmers, the lobby for 20,000 milk producers, decried the exclusions as “a slap from the elephant’s trunk”. Labour’s trade spokeswoman, Camilla Dean, called it “a half-loaf at best”—well, let’s say that’s the better half. New Zealand will get used to it; polls suggest public support: 62 per cent back deeper India ties.
Leather artisans in Agra and Kanpur—clusters employing 4m in Uttar Pradesh alone—cheer the zero-duty gateway to New Zealand’s $1 billion footwear market, eyeing 20 per ent export growth for MSMEs. Tamil Nadu’s tanneries in Vellore and Ambur, hubs for $5 billion in annual leather goods, stand to create 100,000 jobs via Kiwi contracts. Bilateral trade currently sits at just $1.3 billion in goods—wool off the sheep’s back. India sends basmati and auto parts; New Zealand ships wool and wine.
The FTA could add $3 billion to flows by 2030, per government models, but non-tariff barriers—India’s labyrinthine standards and New Zealand’s biosecurity zeal—may snag some of the gains. Services, where India excels, get a cursory nod, with mutual recognition for qualifications in nursing and engineering. Investment rules ease too, and that is a big win in the small print via a bilateral investment treaty.
Zoom out, and the deal fits a broader reconfiguration. India has inked 15 FTAs since 2020, pivoting from vaccine diplomacy to trade realpolitik. For New Zealand, adrift post-China slowdown (its $30 billion surplus halved since 2022), India offers ballast: a democratic counterweight in a region where autocrats hold sway. It evokes Shaun the nimble animated sheep, woolly and wary, nosing its way into an elephant’s vast pavilion—not to challenge the beast, but to graze on its feast, fattening both for leaner globalised times ahead.
From dairy and meat to IT and start-ups, opportunities abound and could help reshape global supply chains. If nurtured, it could herald a thicker weave in the Indo-Pacific tapestry, where size yields to savvy. For now, though, it is a start—modest, but primed for growth. Stocking around this could be fun.
(The writer is a senior journalist with expertise in defence. Views expressed are personal and do not necessarily reflect those of Firstpost.)
