India-New Zealand FTA Talks Back on Schedule

July 22, 2014 Posted by India Briefing Reading Time: 3 minutes

DELHI – Negotiations for a free trade agreement (FTA) between India and New Zealand appear set to resume after an informal meeting between trade ministers last week.

Currently New Zealand’s 15^th largest bilateral trading partner, India imports around US$600 million in goods and services from New Zealand annually and total trade between the two countries stood at almost US$1 billion last year. These totals represent a significant increase from only around US$300 million in New Zealand exports to India just five years ago.

The India-New Zealand FTA has been under negotiation since January 2010 and nine rounds of negotiations have been held thus far, most recently in July 2013.

Since Narendra Modi’s election in May, New Zealand officials have reportedly been engaged in “some preliminary and friendly conversations with the new Indian government” regarding the continuation of FTA negotiations, according to New Zealand Trade Minister Tim Groser.

“[New Zealand] can chart a pathway through the agricultural political minefield to conclude an FTA with India that includes agriculture. We are optimistic that India’s political leadership will ultimately give the green light for its negotiators to conclude the FTA with New Zealand. Our chief negotiators will go to New Delhi later this month and I am already looking forward with my enthusiasm to my own first opportunity to have informal discussions with the new Commerce Minister on this important negotiation for New Zealand and the Indian economy,” Groser said at an event marking the 25^th anniversary of the India New Zealand Business Council (INZBC) earlier this month.

Groser added that obstacles remain, however. “Important industry still needs to better understand the benefits of FTAs and their link to economic growth. There is also an internal review of trade policy taking place in New Delhi that needs to be completed.”

Despite his optimism, Groser emphasized that the ball was firmly in India’s court regarding if and when negotiations would continue.

“We are all in full listening mode. Depending on what answers we receive from New Delhi – and no one is expecting clarity soon – New Zealand, and countries far more important than us in international affairs, will maintain or recalibrate their own agendas and negotiating positions. New Zealand is committed to rapidly progressing the FTA negotiation to its conclusion if the Indian government desires,” Groser said.

New Zealand’s Trade Commissioner for North and East India, Richard White, stressed that New Zealand companies should not expect the FTA to miraculously demystify India’s complex regulatory environment, however.

“It’s not going to be a silver bullet. We can’t simply rely on [the] FTA to solve the issues of getting our companies into India. We have to get on the front foot and do what we need to do with the current regulatory environment,” White said.

According to some analysts, whether or not the India-New Zealand FTA ultimately comes to fruition may partly depend on the results of a Ministry of Commerce review of India’s free trade agreements and their impact on the country’s economy.

Whatever the future may hold for India-New Zealand trade relations, both countries are anticipating sustained growth in bilateral trade and political engagement through the next decade. According to recent estimates, trade in services between the two countries is expected to grow by an average of 20 percent per year and the value of New Zealand exports to India is projected to reach US$1.7 million by the end of 2015.

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