India-New Zealand FTA: Compounding gains and strategic diversification of trade
The India-New Zealand Free Trade Agreement (FTA), though seemingly small due to New Zealand's economy size, is strategically significant as it's one of eight recent trade deals. India aims to diversify supply chains and export destinations, moving away from reliance on China and mitigating risks from volatile markets like the US. The FTA's strengths include New Zealand immediately removing all goods tariffs and India avoiding concessions on sensitive sectors like dairy. New Zealand also committed to facilitating $20 billion in investments in India over 15 years, similar to the EFTA pact's $100 billion commitment. This deal supports India's goals of increasing exports, creating jobs, and bolstering its capital account.
Key Points
- The India-New Zealand FTA is part of India's broader strategy to diversify trade relations and reduce dependence on specific markets.
- New Zealand will immediately remove all goods tariffs upon the agreement's execution, benefiting Indian exporters.
- India successfully avoided providing concessions on sensitive sectors, notably dairy, which New Zealand was keen to include.
- New Zealand committed to facilitating $20 billion in investments in India over 15 years, mirroring similar provisions in the EFTA trade pact.
- The FTA aims to help India achieve multiple goals including weaning off China, increasing exports, creating jobs, and bolstering the capital account.
Exam Facts
- The India-New Zealand FTA is one of eight trade agreements signed or negotiated by India in the last three and a half years.
- New Zealand's economy is one-sixteenth the size of India's.
- New Zealand committed to facilitate $20 billion of investments in India over 15 years.
- The EFTA trade pact includes a commitment to facilitate $100 billion of investments in India over 15 years from four EFTA countries.
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