India, New Zealand seal free trade pact as both look to de risk supply chains

India and New Zealand have concluded negotiations on a free trade agreement, a deal both governments are pitching as a bet on diversification at a moment when global trade is getting rougher and more political. The pact is expected to be signed in the first half of 2026 after legal checks.

The agreement gives duty free access to 100% of Indian exports to New Zealand, while India will eliminate or reduce tariffs on 95% of New Zealand exports, New Delhi and Wellington said.

New Zealand said about 57% of its exports to India become duty free from day one, rising to 82% when fully implemented, with the remainder facing “sharp tariff cuts”.

For India, the deal is the latest in a string of trade pushes designed to widen markets for labor heavy exports and services. For New Zealand, it is framed as long sought access to a fast growing consumer base and a partial hedge against over reliance on a handful of large markets.

What changes for trade in goods

New Zealand highlighted immediate tariff elimination on sheep meat, wool, coal, and more than 95% of forestry and wood exports, plus staged liberalization for seafood, industrial goods, and metals over multi year timelines. It also pointed to large quota-based concessions for apples and kiwifruit, and tariff cuts for mānuka honey and wine from a starting point of very high Indian duties.

India, for its part, stressed the competitiveness boost for exports such as textiles and apparel, pharmaceuticals, leather and footwear, engineering goods, automobiles, gems and jewelry, handicrafts, and marine products, all under the umbrella of duty free access into New Zealand.

Both sides also underlined measures aimed at smoothing non tariff barriers through customs facilitation and regulatory cooperation. India’s commerce ministry specifically flagged faster pathways for pharmaceuticals and medical devices via acceptance of certain inspection reports from comparable regulators, a move it said should reduce duplicative checks and lower compliance costs.

What stays protected and why that matters

India drew a bright line around politically sensitive farm sectors. Its statement said market access excludes dairy and a range of products including coffee, milk and cream products, onions, sugar, spices, edible oils and rubber, describing the carve outs as protection for farmers and domestic industry.

The exclusion is notable because dairy has long been New Zealand’s “holy grail” ask in India talks. Even New Zealand’s government release framed the outcome as limited, pointing instead to narrower openings such as provisions tied to re export, bulk infant formula and certain high value dairy ingredients under quotas.

Services and mobility a second pillar

Services and talent mobility were packaged as a second pillar of the agreement, reflecting India’s priority on exporting skills and New Zealand’s need for workers in select areas.

India said New Zealand’s services commitments cover 118 services sectors and include Most Favored Nation commitments in about 139 sub sectors. New Delhi also said the pact boosts student mobility with post study work rights of up to three years for STEM bachelor’s and master’s graduates and up to four years for doctoral scholars, and it referenced a dedicated quota of 5,000 temporary employment entry visas for professionals and 1,000 work and holiday visas.

New Zealand described a process for an average of 1,667 skilled three year work visas per year focused on jobs where it has shortages, and separately said it would align its working holiday scheme with Australia’s India arrangement by offering up to 1,000 places each year.

Investment pledge and the strategic framing

One of the headline numbers is New Zealand’s commitment to facilitate $20 billion of investment into India over 15 years.

India cast the agreement as part of its broader Indo Pacific strategy and a “new generation” trade pact that mixes tariffs, productivity partnerships in agriculture, investment and mobility.

New Zealand pitched it as central to its export growth ambitions and said the agreement includes provisions on geographic indications and a review one year after entry into force.

Global context and the politics ahead

The timing matters. India has been leaning harder into trade deals as it tries to diversify export markets and cushion itself against the knock on effects of protectionism elsewhere.

India has now struck its third trade deal in 2025, after agreements with Oman and the UK, as New Delhi seeks to widen options amid rising tariff pressure from the US.

The deal’s durability will also be tested domestically, particularly in New Zealand’s coalition politics. Reuters reported uncertainty about parliamentary approval, noting opposition from NZ First over immigration concessions and dissatisfaction over dairy outcomes.