The historic Free Trade Agreement (FTA) between New Zealand and India, signed on Monday, April 27, promises to reduce trade barriers, with duty-free access for 100 per cent of India's exports and lower tariffs for 95 per cent of New Zealand's imports.
Agneshwar Sen, the Trade Policy leader from EY India, says, "The India–New Zealand Free Trade Agreement represents a significant win for India, both for our exporters as well as the broader economy. Crucially, India has secured this without compromising its most sensitive sectors. Dairy, edible oils, sugar, spices, onions, and key agricultural commodities are explicitly excluded from India’s concession list, protecting domestic farmers and industry”.
Other sensitive products, such as apples, kiwis, and Manuka Honey, while not excluded, are protected through Tariff Quote Ratios (TQR). TQR sets limits on the amount of product that can be exported and applies additional tariffs once those limits are exceeded.
However, over 54 per cent of New Zealand products, such as wood, wool, and sheep meat, are duty-free from day one, raising questions about the FTA's impact on domestic suppliers, especially softwood producers.
With low domestic softwood production, India relies on imports, importing around 85 per cent of its softwood. New Zealand is one of the primary exporters of softwood in India, especially the radiata pine. According to the Ministry of Commerce, in 2019, the NZ pinewood import market was valued at around $521 million. This dropped to $381 million in 2020 due to the pandemic, leading to a decline in imports till 2024. As of 2024-25, imports have increased to around $587 million. This is expected to be further amplified by the FTA, especially given the duty-free status of wood products from the start of the agreement.
India’s softwood market is growing at 11 per cent and is projected to reach $1.06 billion by 2032, prompting more imports. This surge is driven by rapid urbanisation, construction requirements and furniture manufacturing.
Used frequently in plywood, softwood is a cost-effective choice for many plywood producers. However, plywood producers in many parts of south India say they primarily use native hardwoods such as Rubber and Gurjan for plywood production.
“We barely use softwood for manufacturing our plywood. We get rubberwood from various regions in Kerala and Karnataka, so we do not use imported softwood. That’s the usual practice," says Mirsaj from Western Plywoods, Perumbavoor.
According to online marketplaces IndiaMart and TradeIndia, the current price of Indian softwood, varying by type of wood, ranges from around ₹150 to ₹1,200 per cubic foot. NZ Radiata Pinewood start from around ₹500.
Prior to the FTA, most softwood imports from New Zealand faced duties of around 5.5 per cent to 11 per cent, leading to these prices. Given the FTA, further price declines are expected for imported pinewood, making the sector even more price-competitive.
Even if the shift is not immediate, the potential drop in imported softwood prices could gradually influence how manufacturers source materials, leading to altered market dynamics.