In the financial year 2024–25, merchandise trade between India and New Zealand reached $1.3 billion — a sharp increase of nearly 49 per cent compared to the previous year.
India and New Zealand are set to resume talks today to finalise a Free Trade Agreement (FTA) in New Delhi. The third round of negotiations concluded on 19 September 2025 in Queenstown, with both sides expressing strong commitment to deepen economic cooperation and reach a balanced agreement that benefits businesses in both countries.
What’s on agenda?
The FTA discussions, formally launched on March 16, 2025, followed a high-level meeting between India’s Commerce and Industry Minister Piyush Goyal, and New Zealand’s Trade and Investment Minister Todd McClay. Since then, negotiators have worked to build a framework that enhances trade, supports investment and improves supply chain resilience.
In the financial year 2024–25, merchandise trade between India and New Zealand reached $1.3 billion — a sharp increase of nearly 49 per cent compared to the previous year. The proposed agreement is expected to further boost trade, create clearer rules for businesses and open up new opportunities in both economies.
Trade barriers
India–New Zealand trade relations remain limited, with talks stalled since 2015 over India’s protective tariffs and New Zealand’s push for dairy access, an issue sensitive to Indian small farmers. India exports pharmaceuticals and machinery and imports primarily wood and dairy products.
Sanitary and Phytosanitary (SPS) barriers hinder Indian agricultural exports, while the absence of Mutual Recognition Agreements (MRAs) complicates certification processes. Strategic misalignments, minimal defense cooperation and barriers for Indian students further limit deeper engagement between the two nations.
How dairy dispute stalls India–New Zealand FTA talks
Dairy has become a key sticking point in the India–New Zealand Free Trade Agreement (FTA) negotiations due to the conflicting interests of both countries. India’s dairy sector is one of the largest in the world, deeply intertwined with the rural economy and social fabric. It involves millions of small-scale farmers and landless laborers who rely on dairy for daily income and nutrition. Most of these are women and marginalised communities who use dairy as a low-investment, sustainable livelihood. Because of this, India has long maintained high tariffs on dairy imports to protect domestic producers from foreign competition.
On the other hand, New Zealand is one of the world’s leading dairy exporters, with a highly efficient dairy industry. Dairy industry is the foundation of New Zealand’s export economy, and gaining access to the massive Indian market is a major priority. As such, New Zealand sees dairy access as a non-negotiable part of any FTA. However, this demand directly conflicts with India’s protectionist stance, particularly in light of political sensitivities around agriculture. Indian policymakers are extremely cautious about any move that could be perceived as harming farmers, especially after recent nationwide farmer protests.
This fundamental clash of priorities—India’s desire to protect rural livelihoods versus New Zealand’s push for export access—has led to a deadlock in FTA negotiations. While both countries see value in strengthening trade ties, especially in areas like technology and services, the issue of dairy remains unresolved.
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