Prime Minister Luxon is at last making his visit to India with a large business and community delegation.  We wish them well in expanding and deepening the relationship with India.  The reasons for doing so we have explained previously. Our Government’s enthusiasm for developing bilateral ties is highly commendable.   But an FTA with India is a path we have been down before. Both Governments now appear to be keen on renewing the relationship, but where that might take us remains to be seen.

It’s not just about dairy

Dairy is often said to be the main blockage to the dream of an FTA with India.  It’s true that India has not previously concluded trade agreements which include dairy.  And New Zealand has not done FTAs which exclude dairy completely – the reality however is that several agreements including CPTPP and the NZ/EU FTA do not include complete tariff elimination for dairy.  For New Zealand to agree to the a priori exclusion of our largest and most competitive sector would be a big call, particularly at a time when the world is turning its back on trade and several markets are looking shaky. 

India also holds reservations about other products in our export mix including apples (not included in the interim agreement India signed with Australia) and sheepmeat (which was included).   The problem with not including key exports in the scope of negotiations is that the resulting FTA will not deliver the “growth, growth, growth” we are seeking. For that you need numbers – it’s why today we export $700 million of goods to India and $18.6 billion to China. 

What does India want from us?

Trade agreements are not just one way traffic. India may not expect to gain much from an FTA with New Zealand and more needs to be done to set out a compelling value proposition. During the trade mission to India in August 2023 a senior advisor to Prime Minister Modi said: “We want to get out of homilies about the Commonwealth and cricket … we want technology, fintech, space, global standards.”  New Zealand has some of those things to offer India, including in space (think Rocketlab or Rakon), but also importantly in agri-tech – this is the place to start in developing co-operation in agriculture and horticulture.

India also wants skills and opportunities for its people.  That means visas and immigration, particularly for business visitors and skilled workers, for which the New Zealand Government will need to show itself as a consistent and reliable partner.  Widening the scope of visa-free entry and improving the speed and cost of obtaining visas will help encourage the direct air connection which is critical for boosting two-way tourism and other people-to-people links.

Art of the possible

There is no lack of opportunity for New Zealand in India.  We need to start with the relationship first.  Australia has shown us what needs to be done to use all the levers including business, academic, cultural, scientific and sister city linkages, backed up by targets out to 2035.  The India NZ Business Council has made a number of proposals.  Yet NZ Inc is not yet at the point of having a fully developed, costed and implementable strategy.  High-level visits are invaluable, but they are not the last word. 

This post was prepared by Stephen Jacobi, Executive Director of NZIBF.