With conflicting signals emerging around inking the New Zealand-India Free Trade Agreement (FTA), political concerns are overshadowing the economic merits of the deal.
New Zealand Trade Minister Todd McClay and India’s Commerce and Industry Minister Piyush Goyal do not appear to be in lockstep on the timetable for signing the agreement.
McClay was unforthcoming on whether the deal would be formalised this month, as indicated by his Indian counterpart, telling local media that India and New Zealand are “working towards legal verification of the text and have been discussing what would be an appropriate time to sign.”
That discordant note comes in the lead-up to a proposed first visit by Indian Prime Minister Narendra Modi to New Zealand later this year.
Negotiations for the trade deal concluded on 22 December 2025.
But before the FTA enters into force, both countries must pass enabling legislation through their respective parliaments.
While India is poised to undertake its due legislative process, the trade deal is dogged by political uncertainty in New Zealand.
With coalition partner New Zealand First withholding support to the deal under the “agree to disagree” clause of the coalition agreement, the National-led government requires bipartisan support to pass enabling legislation in parliament.
This puts the onus on the opposition Labour Party to take the deal across the finish line. While New Zealand boasts a political tradition of forging consensus in areas critical to national interest, such as trade, the FTA has emerged as a politically divisive, hot button issue.
Its strategic significance to an exporting nation, such as New Zealand, cannot be downplayed, with benefits for exporters in horticulture, forestry, seafood and industrial goods, while consumers and manufacturers will benefit from full tariff elimination.
However, the exclusion of dairy has fuelled political uncertainty on the New Zealand side, which Labour may find itself hard pressed to navigate.
Given the current labour market conditions, with unemployment at a 10-year-high of around 5.3 per cent and flagging demand, Temporary Employment Entry (TEE) visas (though capped at 5000 holders) may attract scrutiny.
That, coupled with NZ First’s xenophobic strategy of whipping up fears of a Third World influx into Aotearoa with its implications to maintaining demographic balance, has contributed to a build-up of adverse sentiment around the FTA.
For now, Labour is proceeding along predictable lines, calling for stronger protections for migrant workers against workplace exploitation resulting from an increase in migrant inflows, clarity on the proposed NZD 33 billion private investment in India over the next 15 years, protection for key NZ products such as apples, honey and kiwifruit from unilateral penalty regimes imposed by India.
A formal, specific bill to ratify the trade agreement has not been introduced to the New Zealand Parliament as yet. The legal verification process (referenced by Trade Minister McClay) will be followed by the signing of the FTA and a “national interest analysis” before the enabling legislation is introduced.
That process will involve amendments to existing trade laws to reflect the new tariffs and customs commitments, as per data from the New Zealand Ministry of Foreign Affairs and Trade (MFAT).
Trade Minister McClay addressed a gathering of business stakeholders in Christchurch in February, the first of a series of roadshows to promote the NZ-India FTA.
But it will take the full weight of India’s leverage as the fastest growing economy in the G20, and projected to be the third largest in the world by 2030, to counter the political headwinds facing the India-NZ FTA in New Zealand.
Whether the opposition Labour Party opts for a strategy of kicking the political can down the street to see out the general election due in seven months remains to be seen.