The India-New Zealand FTA — unlocking growth

The proposed Free Trade Agreement (FTA) between India and New Zealand signifies a crucial development in India's evolving trade diplomacy and strategic economic positioning. This initiative reflects a mutual desire to enhance bilateral trade and investment, unlocking new avenues for growth for both nations. From India's perspective, it underscores its growing confidence and resilience as a global trade player, actively seeking to diversify its economic partnerships and integrate further into global supply chains.

**Background Context and Historical Trajectory:**

India's engagement with Free Trade Agreements has seen a significant shift over the past two decades. Initially, India pursued a cautious approach, but with economic liberalization, it began to actively seek FTAs to boost exports and attract investments. Notable examples include the India-ASEAN FTA (signed in 2009), India-Japan CEPA (2011), and more recently, the India-UAE CEPA (2022) and India-Australia ECTA (2022). However, India also famously withdrew from the Regional Comprehensive Economic Partnership (RCEP) in November 2019, primarily due to concerns over potential adverse impacts on its domestic industries, particularly the dairy and agricultural sectors, from large-scale imports. This withdrawal highlighted India's commitment to protecting its strategic sectors while still pursuing trade liberalization through bilateral agreements.

New Zealand, a relatively smaller but highly developed economy, is a significant player in global agriculture, particularly dairy, meat, and horticulture. It has a strong interest in expanding its export markets, especially in large, growing economies like India. New Zealand also seeks to diversify its trade relationships beyond traditional partners and strengthen its presence in the Indo-Pacific region.

**What is Happening and Key Stakeholders:**

The article discusses the *proposed* India-New Zealand FTA, indicating that both nations are exploring or are in advanced discussions to formalize a trade agreement. This isn't a signed deal yet, but the intent is clear. The primary stakeholders involved are the governments of India and New Zealand, specifically their respective Ministries of Commerce and Trade. In India, the Ministry of Commerce and Industry, led by the Union Minister, plays a pivotal role in negotiating and finalizing such agreements. Other key stakeholders include various industry associations (e.g., FICCI, CII, ASSOCHAM in India), agricultural lobbies, specific sector-based businesses (e.g., IT services, pharmaceuticals from India; dairy, wood products from New Zealand), and ultimately, consumers in both countries who stand to benefit from wider product choices and potentially lower prices. Academia and think tanks also contribute to policy formulation and impact assessments.

**Significance for India:**

An FTA with New Zealand carries multi-faceted significance for India. Economically, it offers increased market access for Indian goods and services, particularly in sectors like IT, pharmaceuticals, textiles, and light engineering. India can also benefit from New Zealand's advanced agricultural technologies, particularly in food processing, cold chain management, and sustainable farming practices. Conversely, New Zealand's dairy and agricultural products could find a significant market in India, though this remains a sensitive area for India's domestic dairy sector. Strategically, strengthening ties with New Zealand aligns with India's 'Act East' policy and its broader engagement in the Indo-Pacific region, fostering closer diplomatic and economic cooperation with like-minded democracies. It enhances India's image as a reliable and resilient economic partner, attracting further foreign direct investment and bolstering its position in global trade architecture. Politically, such an agreement can deepen bilateral relations, fostering greater understanding and cooperation on regional and global issues.

**Constitutional and Policy Framework:**

The power to enter into international treaties and agreements, including FTAs, rests with the Executive branch of the Indian government. **Article 253 of the Indian Constitution** empowers 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. While the Executive negotiates and signs these agreements, parliamentary approval (often through legislation like the Foreign Trade (Development and Regulation) Act, 1992, or specific amendments to existing laws) may be required for their domestic implementation, especially if they involve changes to tariffs or other domestic regulations. The **Foreign Trade (Development and Regulation) Act, 1992**, provides the legal framework for the development and regulation of foreign trade in India and for matters connected therewith or incidental thereto. India's broader trade policy framework, outlined periodically by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry, guides the objectives and strategies for such agreements.

**Future Implications:**

The successful conclusion of an India-New Zealand FTA could lead to a significant boost in bilateral trade, which currently stands at around US$ 2.3 billion (as of 2022-23). It could diversify India's export basket and reduce its reliance on a few key markets. For New Zealand, it offers access to India's vast and growing consumer market. However, challenges remain, particularly regarding market access for New Zealand's dairy products, which could face resistance from India's politically sensitive dairy sector. Negotiations would need to address these sensitivities through tariff concessions, quotas, or other mechanisms. Over time, such an agreement could lead to increased foreign direct investment (FDI) flows, technology transfer, and enhanced people-to-people connections. It would also signal India's continued commitment to open trade and its role in shaping a resilient global economic order, particularly amidst increasing geopolitical uncertainties and supply chain disruptions.