India–New Zealand FTA: What each side stands to gain

The recent conclusion of a Free Trade Agreement (FTA) between India and New Zealand marks a significant milestone in their bilateral economic relations, promising to unlock substantial trade and investment opportunities. This pact, granting 100% zero-duty access for Indian exports to the New Zealand market, is a testament to India's evolving foreign trade strategy and its commitment to strengthening economic ties with key partners in the Indo-Pacific.

**Background Context and What Happened:**

India and New Zealand have historically maintained cordial relations, but their trade potential has largely remained underutilized. While both nations share democratic values and Commonwealth ties, trade negotiations, particularly concerning FTAs, have faced complexities, especially around agricultural products like dairy, where New Zealand holds a competitive edge. India's previous cautious approach to multilateral trade agreements, exemplified by its withdrawal from the Regional Comprehensive Economic Partnership (RCEP) in 2019 due to concerns over potential adverse impacts on its domestic industries, particularly agriculture and dairy, underscored its preference for carefully calibrated bilateral agreements. The current FTA with New Zealand signifies a renewed push by India to diversify its export markets and integrate more deeply into global supply chains through targeted bilateral pacts, following successful agreements with the UAE and Australia.

The core of this newly concluded FTA is the provision of 100% zero-duty access for Indian exports to New Zealand. This means that a wide range of Indian goods will no longer face tariffs when entering the New Zealand market, making them more competitive. This move is strategically designed to boost India's exports across various sectors and foster greater economic engagement between the two countries.

**Key Stakeholders Involved:**

Several key stakeholders stand to gain from this agreement. On the Indian side, the **Government of India**, particularly the Ministry of Commerce and Industry and the Ministry of External Affairs, has been instrumental in negotiating and finalizing this pact. The primary beneficiaries within India are its **farmers**, who can now access a new market for their agricultural produce and processed foods; **Micro, Small, and Medium Enterprises (MSMEs)**, which form the backbone of the Indian economy and will find new avenues for their goods, ranging from textiles and handicrafts to light engineering products; and **artisans**, whose unique traditional products can reach a broader international audience. Crucially, the agreement also specifically targets **youth and women-led enterprises**, aligning with India's inclusive growth agenda to empower these demographic groups through enhanced economic opportunities. On the New Zealand side, **importers and consumers** will benefit from a wider array of competitively priced Indian goods, while the New Zealand government seeks to deepen its economic ties with a rapidly growing major economy.

**Significance for India:**

This FTA holds multi-faceted significance for India. **Economically**, it promises a significant boost to India's export growth, contributing to the 'Make in India' and 'Atmanirbhar Bharat' initiatives by providing crucial market access for domestically produced goods. Increased exports can lead to job creation, higher foreign exchange earnings, and diversification of India's export basket, reducing reliance on traditional markets. **Strategically**, the agreement strengthens India's presence and influence in the Indo-Pacific region, aligning with its 'Act East' policy and its broader vision for a free, open, and inclusive Indo-Pacific. It positions India as a reliable economic partner for countries in Oceania, complementing its engagement with multilateral forums. **Socially**, by specifically benefiting MSMEs, women-led enterprises, and youth, the FTA supports inclusive economic development, providing opportunities for segments of the population that are vital for sustained growth.

**Historical Context and Broader Themes:**

India's journey towards trade liberalization began in earnest with the economic reforms of 1991. Since then, it has actively pursued various bilateral and regional trade agreements. The current FTA with New Zealand reflects a maturation of India's trade policy, moving from a protective stance (as seen with RCEP) to a more proactive engagement through tailored bilateral agreements that safeguard domestic interests while promoting export growth. This FTA also connects to the broader themes of global governance and economic diplomacy, where trade agreements serve not just economic but also strategic and geopolitical objectives, fostering closer relations and regional stability.

**Future Implications and Constitutional References:**

The successful implementation of the India-New Zealand FTA is expected to lead to increased bilateral trade volume and investment flows. It could pave the way for further cooperation in areas such as education, tourism, and technology transfer. However, the true success will depend on how effectively Indian businesses leverage this zero-duty access and how both countries address any potential non-tariff barriers. This agreement could also serve as a template for India's future trade negotiations with other nations, demonstrating its commitment to forging mutually beneficial partnerships.

From a constitutional perspective, the power to enter into and implement international treaties and agreements, like this FTA, primarily rests with the Executive. However, **Article 253 of the Indian Constitution** empowers the Parliament 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 ensures that international commitments are harmonized with domestic legal frameworks. Furthermore, the FTA aligns with the objectives of India's **Foreign Trade Policy**, which is periodically updated by the Ministry of Commerce and Industry to provide a framework for increasing exports and facilitating trade. Policies like the **MSME Development Act, 2006**, also become relevant as the FTA is designed to specifically benefit these enterprises, providing a supportive ecosystem for their international expansion.