Looking south: Exploring the opportunities of India’s FTA outreach in the Oceania region | OPINION

The signing of the India-New Zealand Free Trade Agreement (FTA) marks India’s expansion in the Australasia/Oceania region, with New Zealand being its second-largest trading partner after Australia. Building on the Economic Cooperation and Trade Agreement (ECTA) with Australia, the new agreement aims to enhance India’s influence in this socio-economically vital area, diversifying trade partnerships and fostering cultural ties with the Indian diaspora globally.

New Zealand’s role is significant in ensuring a free and open Indo-Pacific amidst China’s assertive policies, providing India with a strategic partner and a gateway to Oceania. This FTA seeks to leverage New Zealand’s expertise in dairy modernisation, horticulture, and sustainable agriculture to help India upgrade its food supply chains.

This inclusive partnership will support farmers, MSMEs, women, youth, and start-ups while balancing market access and domestic protection, ultimately strengthening India’s global trade footprint and increasing its FTAs to nine with 38 advanced economies representing about 65–70 per cent of global GDP.                  

India-New Zealand and India-Australia trade agreements     

First, under the FTA, New Zealand would remove duties on all exports from India, significantly benefiting labour-intensive industries such as MSMEs, textiles, leather, footwear, and gems, among others. Second, New Zealand has pledged to invest $20 Billion in India over the next 15 years.

Third, India has provided market access for 70 per cent of tariff lines, which encompasses 95 per cent of New Zealand’s bilateral trade with the country (approximately 30 per cent of tariff lines are categorised as exclusions to protect farmers and domestic industries, including sensitive sectors like dairy, sugar, and vegetable products such as onions and aluminium). Fourth, a comprehensive framework of Product Specific Rules of Origin (PSRs) has been established to effectively prevent the misuse of trade benefits.

Fifth, Student Mobility and Post Study Work Visa options are available for STEM graduates and skilled professionals, along with an annual allocation of 5,000 Temporary Employment Visas for skilled Indian workers. Sixth, for the first time, New Zealand has made provisions to acknowledge and promote trade in India’s traditional medicine systems, including Ayurveda and Yoga. Last, market access across 118 service sectors, with Most Favoured Nation (MFN) treatment extended to 139 sectors.

On the other hand, when it comes to market access and scope of the agreement, the India-Australia ECTA, signed in 2022, covers 100 per cent tariff lines, with 98.3 per cent becoming duty-free over time. The major focus is on coal, minerals, wines, and agricultural items like almonds and lentils from Australia, while India seeks to gain better access for its textiles, jewellery, and engineering goods.

In comparison, the India-New Zealand FTA provides 100 per cent duty-free access for Indian exports immediately, targeting sectors such as textiles, leather, processed foods, dairy, wool, timber, and fruits (sensitive). There are Specific Action Plans for kiwifruit, apples, and honey, and the same will enhance Indian farmers’ productivity through Centres of Excellence, paired with managed Tariff Rate Quotas (TRQ) to protect sensitive agricultural products.

India opens up 70 per cent of its tariff lines (or 95 per cent by trade value), with phased liberalisation to protect its sensitive domestic sectors. Australia is primarily dependent upon natural resources, critical minerals and industrial raw materials (e.g., coking coal) for the purpose of exports.

On the other hand, New Zealand focuses on agriculture-technology, digital trade, and investments in green energy. In addition, both agreements include provisions for easing work visa norms for professionals, with the India-New Zealand FTA providing specific, limited pathways (1,600 visas annually).

Both agreements are thus designed to balance liberalisation of trade with the protection of sensitive domestic industries, particularly in the agricultural sector.

The pact with New Zealand features a robust commitment to services, aimed at enhancing the movement of professionals and strengthening bilateral digital trade.

The pact with Australia focuses on service liberalisation, particularly in education, financial services, and IT.

On the other hand, the India-Australia trade agreement has significantly improved trade flows and industry connections, resulting in growth opportunities for businesses and employment in both nations.                         

Achievements of India-Australia ECTA     

Over the last four years, bilateral economic ties have been fortified, with India’s exports to Australia increasing from $4 billion in FY 2020–21 to $8.5 billion in FY 2024–25, contributing to a total bilateral trade of $24.1 billion in FY 2024–25. For FY 2025–26, trade reached $19.3 billion (up to February).

Under the ECTA, India provided preferential market access on 70.3 per cent of its tariff lines, while Australia did so on 100 per cent, allowing 98.3 per cent of Indian tariff lines to enter duty-free immediately. The Agreement has fostered growth in sectors such as textiles, pharmaceuticals, chemicals, and agriculture, while providing India vital imports of raw materials essential for manufacturing.

A significant advancement was the Mutual Recognition Arrangement (MRA) on Organic Products, signed on September 24, 2025, which streamlines organic trade between the two countries by recognising each other’s certification systems.

Benefits are expected in critical minerals as well, given Australia’s vast reserves of the same. The ECTA has become a cornerstone of bilateral relations, enhancing benefits for businesses, workers, and consumers while affirming both nations’ commitment to furthering their economic partnership.          

The India-New Zealand FTA          

The India-New Zealand free trade agreement is expected to benefit the domestic economy in a number of ways. First, a shift in focus from tariff issues to value chain integration in agri-tech, food processing, and cold-chain logistics, while leveraging the country’s Digital Public Infrastructure (UPI and Aadhaar) and operationalising $20 billion investment through fast-track mechanisms.

Second, deepening Indo-Pacific and Strategic Convergence through enhanced cooperation via Pacific Island outreach, Indo-Pacific Oceans Initiative (IPOI) participation, and Maritime Domain Awareness, aligning efforts on climate resilience, disaster relief, and regional stability.

Third, institutionalising security cooperation and strengthening ties via intelligence sharing and a bilateral counter-terrorism mechanism to address extremism and sovereignty concerns.

Last, building future-ready partnerships by promoting collaboration in space, green hydrogen, renewable energy, and clean-tech innovation, and helping create a long-term strategic and technological partnership.

A few region-wise projections could be listed here. States in the Northern region of India could benefit in agri-based exports, machinery goods, pharmaceuticals, chemicals, MSMEs, auto sectors; states in the Western region could benefit in textiles, petroleum products, chemicals, plastics, gems and jewellery, pharmaceuticals, auto components, processed food and chemicals, handicrafts; states in the Southern region could benefit in pharmaceuticals, chemicals, agri-based exports, electronics, machinery goods, textiles, apparel, leather; states in the Eastern and North-Eastern regions of the country could benefit in marine products, metals, tea, organic agriculture, engineering goods, machinery, agri-based exports, textiles, leather, footwear and handicrafts segments.                                     

Being part of the Five Eyes framework, New Zealand and Australia represent a strategic shift to strengthen ties with trusted partners like India and mutually boost their MSME sector. Moreover, these pacts are vital for securing energy and resource supply chains, thereby significantly expanding bilateral trade from their current levels. 

With their emphasis on diversifying trade, reducing tariffs on labour-intensive sectors, and securing supply chains, both agreements underpin the spirit of a new era of sensitive liberalisation, where India opens its market while securing key exclusions for its vulnerable domestic sectors. To conclude, both these trade agreements aim at embedding India into the global value chains, boosting manufacturing jobs and enabling sustainable development. It would help unlock new opportunities for the most vulnerable, yet significant sections of our society—farmers, artisans, youth, women, entrepreneurs and MSMEs—thereby assisting India in realising its dreams of becoming Viksit Bharat by 2047.

The author is Assistant Professor (Economics and Trade Policy), Indian Institute of Foreign Trade, New Delhi.           

The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.