New Delhi: Commerce and industry minister Piyush Goyal on Monday said India's labour-intensive sectors, including textiles and apparel, leather and footwear, gems and jewellery, will be the major beneficiaries of the country's free trade agreement (FTA) with New Zealand that will come into force on Tuesday.
The deal promises duty-free access for all Indian goods to New Zealand, India’s second-largest export destination in Oceania, a region that also includes Australia, Papua New Guinea and several smaller Pacific island nations. Indian goods from labour-intensive sectors and several others currently attract import duties of up to 10% in New Zealand.
The agreement is part of India's efforts to strike bilateral deals to push exports at a time when geopolitical conflicts have intensified and global supply-chains are getting realigned.
The FTA will also catalyse investments of $20 billion into India in the coming years, Goyal said at an event in the national capital to announce the adoption of the FTA from Tuesday, with his New Zealand counterpart Todd McClay attending virtually.
New Zealand will have preferential access to the Indian market for 70% of products, with India keeping sensitive sectors, such as dairy, out of the pact’s purview and offering limited farm sector access. About 30% of these products will have zero duty access from day 1.
Doubling trade
Goyal has set a target of more than doubling bilateral trade in goods and services to about $7 billion by 2030.
In addition to the labour-intensive sectors, the pact will benefit a wide range of sectors, such as engineering goods, processed foods, ceramics, automobiles and auto components, Goyal said.
“For our farmers, the agreement combines new opportunities with appropriate safeguards,” Goyal said.
Sensitive Indian products, such as dairy, most animal meat except sheep meat, sugar, edible oils, onions, chickpeas, almonds and artificial honey will be kept outside tariff concessions.
Apples, kiwi and honey will enter only through tariff-rate quotas, minimum import prices and seasonal windows. An Agriculture Productivity Partnership has been proposed, bringing New Zealand technology in orchard management, post-harvest handling and sustainable beekeeping to India.
The FTA opens “significant new opportunities for our exporters, particularly MSMEs, artisans, farmers, and women entrepreneurs”, Goyal said.
India’s farm and food processing sectors can expand exports of fruits and vegetables, coffee, spices, cereals, and processed foods, which are not sufficiently available in New Zealand, Goyal said.
Gaining from regulation
India’s pharma and medical device industries will benefit from streamlined regulatory processes, facilitating greater market access.
Commerce secretary Rajesh Agrawal said the FTA aims to build a long-term economic partnership beyond tariff reductions and market access. Every economy, however small, has its own unique strength, and New Zealand comes with its own value, he said.
The agreement, signed in New Delhi in April by Goyal and McClay, has been ratified by the New Zealand Parliament.
Indian manufacturers will also receive tariff-free access to critical inputs from New Zealand such as wooden logs, coking coal and metal scrap, lowering production costs at home.
The Indian commerce ministry has said the FTA opens about 118 services sectors for Indian firms, including IT, professional services, audio-visual, construction and tourism, with most-favoured-nation treatment locked in across 139 sub-sectors.
Moreover, New Zealand has offered a dedicated quota of 5,000 temporary employment entry visas annually for skilled Indians, including those in IT, engineering and healthcare, and multiple entry visas over 12 months for 1,000 youth to live and work, uncapped student mobility with post-study work rights of up to three years for science, technology, engineering, and mathematics (STEM) graduates and four years for doctoral scholars.