Source: Radio New Zealand
Prime Minister Christopher Luxon meets India’s Prime Minister Narendra Modi in New Delhi in March 2025. Piyal Bhattacharya / The Times of India via AFP
New Zealanders can expect to see a large impact on the economy over time thanks to the free-trade agreement with India, one economist says.
The government on Monday announced the deal which reduces tariffs on 95 percent of exports.
Almost 60 percent of New Zealand exports to India will be tariff-free when the deal takes effect, increasing to 82 percent over 10 years.
Brad Olsen, chief executive at Infometrics, said sheep meat would be one of the big beneficiaries. Its tariff will drop from 33 percent to zero immediately. “That fell quite considerably after the Australians got their free-trade agreement so for an industry like that there’s definitely upside and further price gains,” he said.
Forestry products would also benefit, as well as fruit, wine and manuka honey.
“Is a general member of the public going to notice it when they walk down the street? No, but no more than anyone notices the China FTA while walking down the street. It’s not necessarily directly apparent, but my goodness it does make a large impact on the economy over time.”
He said New Zealand’s trade with India was limited “in the scheme of things”.
Brad Olsen said tariffs on sheep meat would drop from 33 percent to zero immediately. RNZ / Samuel Rillstone
“We sent 1.7 percent of New Zealand’s total good exports to India over the 12 months to September 2025.
“Our biggest earner is actually travel, Indian nationals who travel to New Zealand and spend money here. After that it’s the likes of fruit and nuts, aluminium, iron and steel, wood, wool and some of those high-value dairy products.”
He said there would be gains in those areas over time because the Indian economy has room to grow. “The Indian economy hasn’t got cranking to the degree that China has in terms of development over time. It’s one of those changes where you won’t necessarily see it directly in the economy in the short term but longer-term this is an important strategic opportunity.
“If you saw over time Indian GDP per capita increase like you’ve seen as China’s developed, the market opportunity there for New Zealand is huge. Particularly when we know that China is already seeing a population decline. Our potential market there is shrinking over time whereas India is still only growing and will be for a considerable period.”
The agreement includes a right to negotiate for an upgrade if better access is granted in the future to other countries and includes preferential market access for apples and mānuka honey for the first time in an Indian trade deal.
New Zealand will provide for 1667 temporary three-year non-renewable work visas per year for Indian nationals in “priority jobs where New Zealand has skills shortages, including doctors, nurses, teachers, ICT and engineering… with all immigration screening and qualification/experience requirements remaining unaltered”. An additional 1000 places each year under the Working Holiday Scheme will be allocated for Indian nationals.
Olsen said that would probably displace other migration that might otherwise have happened.
“At the moment, net migration is fairly low and the economy doesn’t need as much talent. It does in some areas.
“When migration starts to get going…and needs a lot more talent these numbers become a fairly small part of the overall migration picture. So again we don’t see it as materially changing things, but there are, you know, opportunities for people to come in temporarily to work in New Zealand to gain some skills and then to go back to India.”
He said it was a win-win overall.
“It’s easy to talk about gains from a free-trade agreement when free trade is all the range,” Olsen said.
“Back 15, 20 years ago everyone was doing free trade. To achieve a free trade agreement like this when everyone is directly retreating from free trade is quite impressive.”
Sign up for Money with Susan Edmunds, a weekly newsletter covering all the things that affect how we make, spend and invest money
– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
