On Sunday, India and New Zealand finally announced the relaunch of FTA (free trade agreement) talks after a 10-year break. The announcement came on the eve of the meeting between Narendra Modi and New Zealand PM Christopher Luxon, who is on a four-day tour of India.
The final announcement was made after a meeting between the commerce minister, Piyush Goal, and Todd McClay, New Zealand’s minister of trade and investment.
In the statement, the commerce ministry said, the India-New Zealand FTA negotiations aim to obtain balanced results that improve supply chain integration and enhance market access.
This is the second attempt by both nations to sign an FTA. The first one was from 2010 to 2015. During that period, 10 rounds of discussion were done. One of the main sticking issues is New Zealand’s demand to access the Indian dairy markets. Dairy and agriculture are the most sensitive areas for negotiations. In no FTA that India has signed so far, has it agreed to open the door for the dairy market.
At present, India’s dairy imports from New Zealand are minimal; it is around $0.57. While India may think of limiting the value-added dairy products, it is against allowing raw dairy imports.
Another issue, as shared by Srivastava, was India’s demand for easier movements of its skilled professionals and better access for its IT and service sectors. India wanted New Zealand to grant career opportunities similar to those given to China and Australia, but New Zealand did not agree.
A significant hurdle in the renewed talk is the disparity in tariff structures. New Zealand’s average import tariff is just 2.3%. Over half of its tariff lines are duty-free. This means Indian goods already have significant access to the New Zealand market While India’s average tariff is around 17.8%. It means India will make a major reduction that makes traditional FTA less attractive for India.
