India and New Zealand Trade Relations: A Comprehensive Overview

India and New Zealand have maintained diplomatic and economic relations for many years. Both nations share historical ties and have cooperated in various sectors, including trade, education, and defense. However, trade negotiations between the two countries have faced significant challenges over the past decade. While initial discussions for a trade agreement began in 2010, they eventually stalled in 2015 due to disagreements on key issues. Recently, both countries have decided to restart talks, recognizing the mutual benefits of a trade partnership.

In this article, we will explore the history of India-New Zealand trade, the reasons why trade negotiations were halted, and the factors that have led to the revival of discussions.

History of India-New Zealand Trade Relations

Trade between India and New Zealand has been growing steadily over the years. Both countries export and import a variety of goods and services that benefit their economies. India primarily exports pharmaceuticals, textiles, machinery, and IT services to New Zealand. In return, India imports dairy products, fruits, wood, and mineral fuels from New Zealand.

In 2010, India and New Zealand began negotiations for a Comprehensive Economic Cooperation Agreement (CECA), which was expected to increase trade and investment between the two countries. The goal was to reduce trade barriers, lower tariffs, and create new opportunities for businesses in both nations. However, despite multiple rounds of talks, the negotiations did not lead to a final agreement.

Why Did Trade Talks Stop?

The primary reasons for the breakdown of trade negotiations between India and New Zealand were disagreements on key economic sectors.

1. Dairy Industry Conflicts

New Zealand is one of the world’s largest exporters of milk, cheese, and other dairy products. It sought greater access to the Indian market, aiming to export large quantities of dairy products to India. However, India’s dairy industry is dominated by small farmers who rely on domestic sales for their livelihoods. The Indian government was concerned that allowing duty-free imports of New Zealand’s dairy products would harm local dairy farmers, who might not be able to compete with New Zealand’s large-scale dairy producers.

2. Agricultural and Wine Trade Issues

New Zealand also wanted to export more agricultural products and wine to India. However, India imposes high import duties on these products to protect its local farmers and industries. The Indian government was reluctant to reduce tariffs on foreign agricultural goods, fearing that cheaper imports could hurt domestic producers.

3. Work Visas and IT Sector

India, on the other hand, wanted better opportunities for its IT professionals and service sector workers in New Zealand. India requested easier visa policies for skilled workers, but New Zealand was cautious about making significant changes to its immigration policies. This disagreement further slowed down the trade talks.

4. Lack of Political Push

Despite several rounds of negotiations, there was no strong political push from either side to finalize the deal. Other global trade priorities took precedence, and the discussions gradually lost momentum.

Due to these unresolved issues, trade negotiations were officially halted in 2015 after nine rounds of discussions.

Why Is Trade Restarting Now?

After nearly a decade, India and New Zealand have decided to resume trade discussions. Several factors have influenced this decision, making it the right time for both countries to reconsider a trade agreement.

1. Changing Global Trade Dynamics

The global trade environment has changed significantly in recent years. Countries worldwide are forming new trade agreements to reduce dependency on specific markets and strengthen their economies. India and New Zealand recognize the need to diversify their trade partnerships, making a renewed agreement beneficial for both.

2. India’s Growing Market

India’s economy has expanded rapidly over the past decade. With a population of over 1.4 billion people, India represents a massive consumer base for New Zealand’s exports. New Zealand businesses see India as a valuable market for dairy, agricultural products, and processed foods.

3. Strengthening Economic Cooperation

New Zealand is looking to strengthen its ties with India beyond trade, including cooperation in education, technology, and defense. Restarting trade talks is a step toward building a broader partnership that benefits both nations.

4. India’s Strategy to Expand Trade Agreements

India has been actively signing trade agreements with multiple countries, including Australia, the UAE, and the European Union. Restarting negotiations with New Zealand aligns with India’s goal of expanding its global trade footprint.

5. Geopolitical Factors and Supply Chain Issues

Recent global disruptions, including the COVID-19 pandemic and geopolitical tensions, have highlighted the importance of reliable trade partnerships. India and New Zealand see this agreement as a way to improve supply chain resilience and reduce risks associated with relying too much on any single trading partner.

Current Trade Between India and New Zealand

Even though trade talks were halted, economic exchanges between India and New Zealand have continued.

In 2023-24, the total trade between the two countries was $1.7 billion.
India’s Exports to New Zealand: Pharmaceuticals, textiles, machinery, and IT services.
India’s Imports from New Zealand: Dairy products, fruits, wood, and mineral fuels.

Both countries believe that a new trade agreement can increase these numbers significantly by removing trade barriers and creating new business opportunities.

Challenges in Restarting Trade Talks

While restarting trade talks is a positive step, several challenges remain:

India’s Dairy Industry Concerns – Indian farmers are still worried about competing with New Zealand’s large dairy companies.
Tariff Negotiations – New Zealand wants lower tariffs on its exports, but India is cautious about reducing taxes on foreign agricultural products.
Work Visa Policies – India will likely push for better work opportunities for its professionals, which could be a sensitive topic for New Zealand.
Political and Economic Stability – Both countries need strong political will and stable economic conditions to finalize the deal.

What’s Next?

Both India and New Zealand have expressed interest in finding a balanced trade agreement that benefits both sides. Negotiators from both countries will meet to discuss solutions to past disagreements and explore new areas of cooperation.

Key areas of focus will include:

Finding a fair solution for dairy trade that protects Indian farmers while allowing some access to New Zealand’s products.
Reducing trade barriers on key exports without harming local industries.
Creating better work visa opportunities for Indian professionals.
Strengthening cooperation in technology, education, and supply chains.

If successful, a new trade agreement could boost economic growth, create jobs, and provide better opportunities for businesses in both nations.

Conclusion

India and New Zealand have had a complex trade relationship, with negotiations stopping in 2015 due to disagreements over dairy imports, agricultural products, and work visas. However, changing global trade dynamics, India’s growing economy, and the need for stronger economic ties have led to a revival of trade discussions.

While challenges remain, both countries recognize the benefits of working together. A new trade agreement could significantly improve economic relations and create a stronger partnership for the future. The coming months will be crucial in determining how both nations move forward in finalizing a trade deal that works for both sides.