India and New Zealand have moved a step closer to sealing their long-discussed free trade agreement (FTA), but political tensions in Wellington have turned what should have been a straightforward diplomatic success into a heated domestic debate.
While the Indian government has pitched the pact as a balanced, “win–win” partnership, New Zealand’s Foreign Minister and New Zealand First leader Winston Peters has publicly come out against it, calling the deal “neither free nor fair”.
He has pointed out that the FTA would be New Zealand’s first trade deal to exclude core dairy products such as milk, cheese and butter, even though dairy accounts for about 30 per cent of the country’s goods exports.
However, it is unlikely that Peters will get his way, given that the Narendra Modi-led NDA government had previously assured the nation about the importance of dairy and agriculture in the country. India is also a major dairy-producing economy, and it was also among the sour points that led to the trade talks falling apart with the United States earlier this year.
In fact, a recent explainer by the Centre on the FTA stated: “Certain products are kept in exclusion such as Dairy (milk, cream, whey, yoghurt, cheese etc.), animal products (other than sheep meat)...”
According to the Union commerce ministry, negotiations for the India–New Zealand FTA were launched in March 2025 and rapidly advanced through multiple rounds, including a fourth round in Auckland in early November. Both sides announced the conclusion of talks in December, with the agreement expected to be formally signed and brought into force in 2026, subject to legal vetting and ratification in New Zealand’s Parliament.
New Delhi highlighted the improved market access for Indian goods and services, and said the pact will help Indian companies tap into the wider Oceania and Pacific markets, in a PIB statement.
The agreement comes at a time when India is placing greater emphasis on services, including professional mobility and mutual recognition of qualifications under its newer trade deals.
At a recent “Chintan Shivir” in New Delhi, Commerce Secretary Rajesh Agrawal underlined the importance of locking in legally binding commitments on professional services in FTAs to open global opportunities for Indian accountants, nurses, architects and other professionals.
However, in New Zealand, the agreement is facing sharp criticism from Peters, whose New Zealand First party is part of the governing coalition. In a strongly worded post on X, Peters said his party was “regrettably opposed” to the deal, arguing that it gives away too much on immigration and work visas for Indian citizens while securing only limited gains for New Zealand’s crucial dairy sector.
Peters has warned that, unless changes are made, New Zealand First will vote against the implementing legislation, forcing Prime Minister Christopher Luxon to rely on support from opposition parties to get the FTA through Parliament.