India gives duty-free access to 54.11% of New Zealand exports from day one of FTA

India's recent finalization of a Free Trade Agreement (FTA) with New Zealand marks a significant step in its evolving trade diplomacy and economic strategy. This agreement, which will grant duty-free access to 54.11% of New Zealand's exports to India from day one of its implementation, is not just a commercial pact; it's a statement about India's commitment to deeper economic integration and its strategic positioning in the Indo-Pacific region. The expected implementation within 7-8 months underscores the momentum behind this bilateral initiative.

Historically, India's trade policy has undergone a transformative journey. From an inward-looking, protectionist regime post-independence, India began liberalizing its economy in the early 1990s, opening up to global trade and investment. This shift led to greater engagement with multilateral bodies like the World Trade Organization (WTO) and a gradual embrace of bilateral and regional trade agreements. While India has been a proponent of multilateralism, the slow progress in WTO negotiations has prompted many nations, including India, to pursue FTAs as a quicker pathway to market access and economic growth. India's approach to FTAs has been cautious, especially after its withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019, primarily due to concerns over potential adverse impacts on domestic industries, particularly agriculture and dairy, from countries like Australia and New Zealand. However, subsequent successful FTAs with Australia (ECTA) and the UAE (CEPA) signal a renewed, more calibrated strategy.

This specific FTA with New Zealand is crucial. Key items such as sheep meat and wool, essential raw materials for India's textile and food processing industries, are expected to become cheaper. This could benefit Indian manufacturers by reducing input costs, potentially making their end products more competitive globally. Furthermore, agricultural products like apples and kiwifruit will see duty reductions, albeit with specific limits, which is a nuanced approach to balance consumer access with protection for domestic growers. The 'specific limits' often refer to Tariff Rate Quotas (TRQs), where a certain volume of imports receives preferential duty, and beyond that, a higher duty applies. This mechanism is designed to mitigate the immediate shock to domestic producers.

Several key stakeholders are involved in this agreement. On the Indian side, the **Government of India**, particularly the Ministry of Commerce and Industry, has been the primary negotiator, aiming to boost India's manufacturing sector and diversify its import basket. **Indian consumers** stand to benefit from a wider array of products at potentially lower prices. **Indian industries**, especially those using imported raw materials like wool, will see reduced costs. However, domestic producers of agricultural goods, such as apple growers in Himachal Pradesh or Kashmir, might face increased competition, necessitating government support and policy adjustments to enhance their competitiveness. On the New Zealand side, their **government** and its powerful **agricultural and horticultural sectors** (dairy, meat, fruit) are major beneficiaries, gaining enhanced access to India's vast market of 1.4 billion people. This agreement is particularly significant for New Zealand, a country heavily reliant on agricultural exports.

For India, this FTA holds significant implications. Economically, it can help diversify supply chains, reduce dependence on traditional markets, and foster greater trade resilience. Politically, strengthening economic ties with New Zealand, a fellow democratic nation in the Indo-Pacific, aligns with India's broader 'Act East' policy and its efforts to build a network of like-minded partners. It contributes to regional stability and counters the growing influence of other major powers. Socially, it enriches consumer choices and could indirectly contribute to improving living standards.

From a constitutional perspective, international agreements like FTAs fall under the executive power of the Union government. However, for such agreements to be implemented and to have the force of law within India, **Article 253** of the Indian Constitution grants Parliament the power to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This often necessitates amendments to existing laws, such as the **Customs Act, 1962**, to reflect the new duty structures, and the framework provided by the **Foreign Trade (Development and Regulation) Act, 1992**, which empowers the government to formulate and implement the foreign trade policy. The overarching **Foreign Trade Policy** of India guides these negotiations, aiming to integrate India into the global value chain.

Looking ahead, this FTA could be a template for India's engagements with other developed economies. It signals India's readiness to engage in strategic trade partnerships while carefully safeguarding domestic interests through mechanisms like TRQs. The success of this FTA will depend on effective implementation, robust dispute resolution mechanisms, and continuous monitoring of its impact on various sectors. It could pave the way for deeper collaboration in services, investment, and technology transfer, further solidifying India's position as a key player in the global economic landscape.