Namaste, Kia Ora – Luxon Seizes The Moment

After decades of meandering and missed opportunities, New Zealand is finally taking concrete steps toward building a meaningful and lasting relationship with India. Prime Minister Christopher Luxon’s meeting with Narendra Modi in Laos during the East Asia Summit marks a pivotal moment in the bilateral engagement that has long been neglected. The high-level interaction has been widely hailed as a diplomatic win, but it also signals something more significant—a political will that had been conspicuously absent from New Zealand’s approach to India.

For too long, New Zealand’s strategy toward India seemed non-existent, characterised by sporadic attempts to initiate meaningful dialogue that fizzled out without resolution. John Key’s visit to India in 2016 offered hope for progress, but it wasn’t followed by the necessary long-term commitment.

Subsequent governments, caught up in other priorities, allowed this vital relationship to languish. A free trade agreement (FTA) with India, discussed for years, seemed elusive. Now, under Luxon’s leadership, a renewed focus is emerging, and the political momentum needed to push through barriers to trade and engagement seems to be building at last.

Luxon’s meeting with Modi is noteworthy for several reasons. Not only was it their first in-person encounter, but the symbolic warmth shown by Modi—who greeted Luxon in Hindi—underscores the importance India places on deepening ties with New Zealand. This reflects the broader interest both countries now have in each other, driven by mutual economic and geopolitical imperatives. Luxon’s comments following the meeting indicate that he understands the need to build a strong foundation for this relationship before delving into more transactional elements like trade and security agreements. This contrasts sharply with previous approaches that often started with trade negotiations and faltered when results weren’t immediately forthcoming, not to mention NZ’s displeasure at India’s refusal to sign up to RCEP.

Trade Minister Todd McClay’s active engagement over the past year further illustrates New Zealand’s serious intent. He has made five trips to India in 2024 alone, meeting Indian Minister Piyush Goyal multiple times, which is an unprecedented level of engagement in recent years. McClay’s efforts culminated in his recognition with the inaugural Indian Weekender Kiwi Indian Hall of Fame ‘Friend of India’ award last week. His recognition speaks volumes about New Zealand’s commitment to turning words into action and forging a more collaborative future with India.

McClay’s repeated visits and Luxon’s determined stance indicate that the political landscape in Wellington has shifted dramatically. The previous lack of ambition, exemplified by former foreign minister Nanaia Mahuta’s declaration that an FTA with India was not a priority, has been replaced by a concerted effort to engage constructively with one of the world’s fastest-growing economies.

India, with its booming economy and youthful population, represents a massive opportunity for New Zealand. The Indian economy is projected to become the world’s third-largest by 2027, and its expanding middle class presents enormous potential for exporters. For a small, trade-dependent nation like New Zealand, whose over-reliance on traditional partners like China creates vulnerabilities, diversifying into the Indian market is essential. However, there are significant challenges.

India’s protectionist policies, particularly in agriculture, have long posed obstacles in trade negotiations. A potential FTA would likely face hurdles over market access for New Zealand dairy products, a sensitive issue in India. But where previous governments may have seen these challenges as insurmountable, Luxon’s government seems intent on engaging constructively to find solutions. The political will to overcome these obstacles, so often absent in the past, now seems more robust than ever.

Luxon’s recognition that relationship-building must precede transactional negotiations is crucial. Trust and goodwill are necessary foundations for any trade agreement. His government’s approach contrasts with the short-sighted strategies of the past, where the lack of progress in trade talks often led to diplomatic disengagement. As Luxon has pointed out, “we haven’t built relationships in India as we should have,” but his administration appears determined to change that.

The challenges of pursuing an FTA with India remain significant, but the potential rewards far outweigh the risks. In fact an FTA might not even be a viable prospect. A bespoke closer economic partnership may be far more practicable. Beyond trade, India is a strategic partner for New Zealand in sectors such as education, tourism, and technology. The Indian diaspora in New Zealand, now the third largest ethnic group, forms a vital bridge between the two nations, enhancing people-to-people links and fostering deeper business and cultural exchanges.

Modi’s focus on innovation, education, and economic cooperation, mentioned in his remarks after the Laos meeting, reflects areas where both nations can find common ground. Additionally, India’s ambitious push toward becoming a leader in green technologies aligns well with New Zealand’s sustainability goals. By identifying these synergies, New Zealand can create a framework for cooperation that benefits both economies and societies.

The most critical change in this burgeoning relationship is the political will that now seems to be driving it. Previous reluctance to engage meaningfully with India has been replaced by a proactive stance. The high level of interaction between ministers, the diplomatic warmth in the Luxon-Modi meeting, and McClay’s recognition in India all signal that New Zealand is no longer content to let this relationship drift.

Luxon’s long-anticipated visit to India, whenever it happens, will be another step in what must be a sustained effort to engage with India. While the challenges are significant, the groundwork is finally being laid for a strategic partnership that benefits both countries. The buzz in Wellington is real, and with Luxon’s bullish approach, New Zealand may finally secure the deep, strategic relationship with India that has long eluded it.