India and New Zealand have resumed FTA negotiations after ten years, aiming to improve economic ties. The previous discussions from 2010 to 2015 struggled with sensitive issues such as dairy market access. Both countries face challenges from differing tariff structures and demands for skilled professional mobility.

After approximately a decade, India and New Zealand have reinitiated discussions regarding a proposed free trade agreement (FTA) aimed at enhancing their economic relationship. This announcement coincided with the visit of New Zealand Prime Minister Christopher Luxon to India, where he met with Indian Prime Minister Narendra Modi and Indian Commerce Minister Piyush Goyal. The objective of the FTA negotiations is to achieve outcomes that improve supply chain integration and widen market access.

The prior effort to establish an FTA between these nations spanned from 2010 to 2015, during which ten rounds of talks were conducted. A major issue in negotiations remains New Zealand’s request for access to Indian dairy markets, a sector that India has historically safeguarded in its trade agreements. Ajay Srivastava of the Global Trade Research Initiative noted that India is unlikely to permit raw dairy imports while considering limited imports of value-added dairy products.

Negotiations are further challenged by India’s hesitance to lower tariffs on New Zealand’s meat and wine exports, compounded by external pressures from the United States regarding dairy and agriculture sector openings. Furthermore, India seeks improved mobility for its skilled professionals and greater market access in the IT and services sector, akin to conditions granted to Australia and China, which New Zealand has resisted.

The discussions are further complicated by the disparities in tariff structures. New Zealand maintains a low average import tariff of 2.3%, with significant portions of its tariff lines duty-free, allowing Indian goods relatively easy market access. Conversely, India’s average tariff is considerably higher at 17.8%, necessitating substantial tariff reductions, which diminishes the attractiveness of a traditional FTA for India. In FY24, bilateral trade between India and New Zealand reached $1.54 billion, with India’s exports at $538.3 million and New Zealand’s at $335.1 million, indicating a need for improved economic ties.

In summation, the resumption of FTA negotiations between India and New Zealand represents a significant step towards enhancing their economic partnership. Despite prior attempts facing challenges, both nations appear committed to addressing sensitive trade areas, such as dairy and market access. Successful outcomes in these discussions could lead to expanded trade opportunities, positively impacting the economies of both countries, despite the underlying tariff disparities and sector sensitivities.

Original Source: www.financialexpress.com

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