ExplainedTrade
India-New Zealand trade deal explained: what changes from today, and what was kept out
The free trade agreement signed by Piyush Goyal and Todd McClay in April comes into force on Tuesday. What each side has opened up, why dairy stayed out, and what it means for shoppers, farmers and exporters.
The short answer
The India-New Zealand free trade agreement, signed in New Delhi on 27 April 2026, takes effect on 20 October. New Zealand removes duties on all Indian exports from day one. India cuts or phases out duties on about 70% of its tariff lines, covering 95% of the value of trade between the two, with immediate removal on 30% of lines such as sheep meat, wool and wood. Milk, cheese, butter and other core dairy products, sugar, onions, chana and almonds are excluded, while apples, kiwi fruit and manuka honey come in only under quotas. The deal also offers Indian professionals 5,000 temporary work visas and carries a New Zealand commitment to facilitate $20 billion of investment.
What has been agreed?
A free trade agreement that lowers duties on most goods traded between India and New Zealand, and opens some doors for Indian workers and students.
Talks began in March 2025 and closed in December that year, quick by the standards of Indian trade negotiations. Commerce and Industry Minister Piyush Goyal and New Zealand’s Trade and Investment Minister Todd McClay signed the agreement in New Delhi on 27 April 2026, with Prime Minister Christopher Luxon in attendance. Luxon called it a “once-in-a-generation agreement”. Prime Minister Narendra Modi said it “strengthens economic ties between two vibrant democracies”.
New Zealand’s Parliament passed the law needed to put the deal into effect in September, over the opposition of NZ First, a party in Luxon’s own coalition, and of the Greens and Te Pāti Māori. Both governments then completed their procedures, and the agreement comes into force on Tuesday, 20 October.
What does India get?
Duty-free access for every Indian export to New Zealand, from the first day.
New Zealand’s tariffs are already low, but it charges up to 10% on goods such as ceramics, carpets, cars and car parts. Those duties go. Textiles, apparel, leather, footwear, engineering goods and processed foods are expected to gain most. The Ministry of Textiles said the deal brings “zero-duty access for apparel, home textiles and handlooms”.
New Zealand has also committed to facilitate $20 billion of investment in India and to open about 118 services sectors. Its regulators will accept good manufacturing and clinical practice inspection reports from comparable regulators, which should speed approvals for Indian medicines and medical devices.
And what does New Zealand get?
Lower duties on most of what it sells to India, but not all at once.
India is cutting duties on 70.03% of its tariff lines, which together cover about 95% of the value of bilateral trade. About 30% of lines become duty free immediately, including wood, wool, sheep meat and raw hides. Another 35.6% will be phased out over three to 10 years, and 4.37%, including wine, pharmaceuticals and some aluminium and steel articles, get reduced rather than zero duties. The first stage, notified by the Finance Ministry last week, makes fresh and frozen sheep meat duty free and sets a 15% duty on kiwi fruit priced at $2.50 a kilogram or more.
Goods trade between the two countries is small, at about $1.3 billion a year, so the effect on India’s overall trade balance will be modest.
Who opens what under the India-New Zealand FTA
Why was dairy kept out?
Because Indian dairy is a livelihood for millions of small farmers, and India has consistently kept it out of its trade deals.
Milk, cream, whey, yoghurt and cheese are all excluded, as are sugar, artificial honey, onions, chana, peas, corn and almonds. For New Zealand, dairy is a mainstay of its exports, and its Dairy Companies Association said it was disappointed that butter and cheese were left out. Some smaller items, such as bulk infant formula and milk albumins, get limited access under quotas.
The exclusion is also why NZ First leader Winston Peters opposed the deal, arguing it did too little for dairy while increasing Indian immigration.
Will apples and kiwi fruit get cheaper?
A little, and only within limits.
Apples, kiwi fruit and manuka honey enter under tariff-rate quotas: a fixed quantity pays a lower duty and anything beyond it pays the normal rate. Imports are also subject to minimum import prices and seasonal windows, tools meant to shield growers in Himachal Pradesh and Jammu and Kashmir. A safeguard clause lets either country restore duties if imports surge. The two governments have also agreed on a farm productivity partnership on kiwi fruit, apples and honey aimed at Indian growers’ yields and incomes.
What about jobs and visas?
There is a small but new route for Indian professionals.
New Zealand will offer up to 5,000 temporary employment visas to skilled Indians, for stays of up to three years, in fields such as IT, engineering, healthcare and education. It will also give 1,000 young Indians working holiday visas each year and better work rights for students. The provisions drew fierce criticism from NZ First’s deputy leader Shane Jones, who said “immigration has been snuck into the free trade deal”. Indian community leaders in New Zealand condemned his remarks.
What happens next?
Importers now have to match each consignment to the exact tariff line in the Finance Ministry notification and prove that the goods originate in New Zealand to claim the lower rate. The phased cuts will follow over the next decade. For India, the deal’s bigger value may lie elsewhere: it shows that a trade agreement with a major farm exporter can be done while keeping dairy off the table, a template negotiators will carry into talks with larger partners.