India-New Zealand FTA Takes Effect: Full Duty-Free Access, $20 Billion Investment Aim

The India-New Zealand Free Trade Agreement (FTA) came into force on October 20, becoming the seventh trade agreement to take effect in India in the last five years. The deal covers trade in goods, an investment commitment and new provisions on the movement of students and professionals, making it one of the broader agreements India has signed in recent years.

What India gains in trade

Under the agreement, India receives duty-free access to 100% of New Zealand's tariff lines. This sets the deal apart from most others India has concluded. While several agreements offer partial or substantial duty-free access — the United Kingdom, for instance, offers more than 99% of its tariff lines duty-free — a full trade deal covering 100% of tariff lines had not previously been reached. The India–Australia Economic Cooperation and Trade Agreement (ECTA) does provide duty-free access on 100% of tariff lines, but it remains an interim, limited-scope agreement, which the two countries are working to expand into a Comprehensive Economic Cooperation Agreement (CECA).

Before the deal took effect, New Zealand levied a 10% tariff on Indian imports of textiles and apparel, leather and footwear, engineering goods, plastics and rubber, and electronics. Each of these is a sector where India has substantial export capacity, and all stand to benefit from the removal of duties. For pharmaceuticals, agriculture and allied services, marine products and chemicals, duties have fallen from 5% to zero.

The investment commitment

According to the official text, New Zealand "shall promote foreign direct investment (FDI) from investors of New Zealand into India with the aim to increase such investment by U.S. dollars 20 billion within 15 years" of the agreement coming into force.

This commitment carries some conditions. The agreement records that both sides recognise India's economic development over the past two decades has been accompanied by a rise in FDI, and that New Zealand's aim to strengthen its investment presence in India is based on this observation, along with India's estimated nominal GDP growth over the next 15 years in line with past growth rates. Implicitly, if India's growth does not continue at past rates, New Zealand is not obliged to keep pursuing the investment target in the same way.

The text also sets rules on what counts as New Zealand investment. Investments made by New Zealand investors are counted, but funds routed through New Zealand by foreign investors who are not established there, or who are established there without substantial New Zealand business activity, will not be treated as New Zealand investment into India.

Gains for students and workers

The agreement introduces two new Temporary Employment Entry (TEE) visa categories, one for highly skilled occupations and another for a small number of professions considered iconic to India. Up to 5,000 TEE visa holders can be in New Zealand at any given time. These visas are valid for three years and do not offer a pathway to residence.

From November 16, 2026, Indian graduates holding New Zealand PhDs will be eligible for post-study work visas of up to four years, up from the current three years. The agreement also contains commitments on the work rights of Indian students during their period of study, along with a new working holiday scheme.

The provisions add to a growing set of agreements India has concluded in recent years, with the benefits depending on how exporters, investors and students make use of the terms set out in the official text.