Why in News?
India and New Zealand have signed a Free Trade Agreement (FTA), marking a significant step in strengthening bilateral economic ties. The FTA is being described as one of India’s fastest concluded bilateral trade deals.
The agreement will require ratification by both countries. India is expected to complete the process through executive approval, while New Zealand will require parliamentary clearance for the agreement to come into force.
| UPSC Relevance: GS-2 International Relations: Trade Agreements; Bilateral Trade Prelims: India-New Zealand Free Trade Agreement (Key Facts) |
What is Free Trade Agreement?
- FTA is an economic arrangement between two or more countries or trading blocs to eliminate or substantially reduce tariff and non-tariff barriers on substantial trade between them.
- FTAs cover trade in goods (agricultural, pharma, industrial products) or trade in services (banking, construction, trading, etc.). FTAs can also cover other areas such as intellectual property rights (IPRs), cross-border investment, government procurement and competition policy, etc.

India-New Zealand Free Trade Agreement: Key Highlights
The bilateral trade between India and New Zealand is valued at around $2.4 billion, which includes both goods and services.
1. Trade in Goods:
- The FTA will cut or eliminate tariffs on 95% of New Zealand’s exports to India.
- The FTA eliminates duty on 100% of Indian exports to New Zealand, covering sectors like textiles, leather, engineering goods and manufacturing products.
- India has kept several sensitive sectors, including dairy, onions, sugar, spices and edible oils, outside the agreement to safeguard domestic farmers and industry interests.
2. Investment and Trade Expansion:
- New Zealand has committed to invest ~$20 billion in India over the next 15 years while easing trade barriers and simplifying regulatory standards.
- The FTA sets an ambitious target of doubling bilateral trade to around 5 billion dollars over the next five years.
3. Services and Labour Mobility:
- The FTA lays out a detailed services framework, where New Zealand commits market access across around 118 sectors, including IT, finance, education, telecom, tourism and professional services.
- It establishes a Temporary Employment Entry (TEE) Visa pathway, with a quota of 5,000 visas for skilled Indian nationals, allowing a stay of up to 3 years. The sectors of interest to India include AYUSH practitioners, Yoga Instructors, Indian Chefs, and Music Teachers, as well as IT, Engineering, Healthcare, Education, and Construction.
4. Addressing Non-Tariff Barriers:
- Product Specific Rules of Origin (PSRs): FTA provides for a balanced and robust framework of PSRs to effectively prevent circumvention, misuse, or falsification of Rules of Origin criteria.
- Sanitary and Phytosanitary (SPS) and Technical Barriers: Advances fast-tracking of market access applications on a reciprocal basis, simplifying certification and import permit procedures, and provides for electronic SPS certification.
5. Intellectual Property Rights:
- Binding commitment by New Zealand to amend its laws within 18 months to provide EU-level protection for India’s Geographical Indications (GIs).

Once the FTA comes into force, Indian sectors are expected to see expanded market access, including textiles and apparel, engineering goods, leather and footwear, and marine products. New Zealand is likely to register increased exports in horticulture, timber, coal, wool and meat.
UPSC PYQ 2020
Q. With reference to the international trade of India at present, which of the following statements is/are correct?
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 only
(d) 1, 3 and 4 only
Answer: (d)
UPSC PYQ 2020
Q. Consider the following statements:
1. The value of Indo-Sri Lanka trade has consistently increased in the last decade.
2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh.
3. In the last five years, Nepal has been the largest trading partner of India in South Asia.
Which of the statements given above is/are correct?
(a) 1 and 2 only
(b) 2 only
(c) 3 only
(d) 1, 2 and 3
Answer: (b)



