India and New Zealand Finalize Major Free-Trade Agreement with $20 Billion Investment Commitment

India and New Zealand have reached a free-trade agreement that removes or reduces tariffs on most New Zealand exports to India and gives India tariff-free access to New Zealand. New Zealand will invest $20 billion (€17 billion) in India over 15 years. The deal benefits sectors like forestry, agriculture, pharmaceuticals, clothing, and engineering, while India retains some dairy and agricultural restrictions. It is India’s third major trade deal this year and is expected to be signed in early 2026, though New Zealand faces potential parliamentary opposition.

India and New Zealand have successfully concluded a comprehensive free-trade agreement aimed at strengthening economic ties and boosting bilateral trade. The agreement will eliminate or reduce tariffs on around 95% of New Zealand’s exports to India while granting India tariff-free access to New Zealand’s markets. Additionally, New Zealand has committed to investing $20 billion (€17 billion) in India over the next 15 years, signaling a long-term economic partnership between the two nations.
New Zealand Prime Minister Christopher Luxon highlighted India’s significance as the world’s most populous country and the fastest-growing major economy, noting that the agreement creates opportunities for jobs, exports, and economic growth for New Zealand. He described the benefits as “wide-ranging and significant,” reflecting the potential impact on trade and investment between the countries.
In 2024, trade between India and New Zealand reached $1.8 billion (€1.5 billion), with Indian pharmaceuticals and New Zealand’s forestry and agricultural products forming the bulk of the trade. The deal was finalized in just nine months, a pace that demonstrates the strong commitment from both governments. Indian Prime Minister Narendra Modi praised the agreement as a “historic milestone” on social media, emphasizing its importance for India’s international trade strategy.
For New Zealand exporters, the agreement provides improved access for products such as wood, coal, sheep wool, and other goods. Indian businesses will benefit from easier market access for clothing, footwear, leather products, engineering goods, and marine products. However, India will maintain protective measures on certain dairy and agricultural products, including milk, cream, whey, yoghurt, cheese, goat meat, onions, and almonds, to safeguard domestic producers.
New Zealand Trade Minister Todd McClay highlighted unique advantages achieved through the deal, noting that New Zealand is the first country to gain any access for apples and honey into India under a free-trade agreement and has secured the best access for kiwifruit compared to any other country. These measures are significant for New Zealand’s agricultural exporters seeking to expand in India’s market.
India’s trade minister emphasized that the deal reflects the country’s strategy to strengthen trade with partners whose economies complement rather than compete with India’s. This agreement is the third major trade deal India has signed in 2025 amid challenges posed by 50% US tariffs on its exports. Previous deals were concluded with Oman and the United Kingdom, while India continues to seek agreements with the European Union, Chile, and Canada.
New Zealand expects both countries to sign the agreement in the first half of 2026. However, political hurdles remain, as the government must secure support from coalition partners, including the far-right populist party NZ First. Party leader Winston Peters has pledged that his eight representatives will oppose the deal in the 123-seat parliament, arguing that it “gives too much away, especially on immigration, and does not provide sufficient returns for New Zealanders, particularly in the dairy sector.”
The agreement is anticipated to reshape bilateral trade relations, enhancing economic cooperation and investment while balancing domestic interests in both countries. It reflects India’s growing focus on trade partnerships that complement its economy, while New Zealand aims to leverage opportunities arising from India’s rapid economic growth.