New Zealand wants a quality, meaningful FTA with India
New Zealand is under no illusion that the rounds of negotiations for the proposed free trade agreement with India will be smooth sailing, despite India’s apparent eagerness to sign free trade agreements with a slew of nations and blocs over the past two years.
In January this year New Zealand and India jointly announced that all approvals were in place for the negotiations to begin. An inaugural round of talks followed in Wellington in April.
But it would be at least a couple of years before the final shape of the FTA begins to emerge. “Realistically, we expect it to take about three years,” Rupert Holborow, the New Delhi-based New Zealand High Commissioner to India told the National Business Review in Auckland. “We would rather not set a deadline but work toward putting in place a quality agreement.”
India is one of New Zealand’s fastest growing export markets, having nearly doubled exports from $350 million to $700 million in just about two years, which makes it the ninth largest market (from 19th two years ago). Student numbers have also grown impressively – from 400 to 9000 in five years – as have the numbers of tourists now at 26,000 a year – still a tiny speck of the 7 million Indians who holiday overseas each year.
New Zealand businesses need to change their perceptions about India, Mr Holborow said. “India is changing fast and all those old jokes about the snail-paced ‘Hindu rate of growth’ are long gone. India is adding an economy the size of Vietnam to itself every year, buying up global icons like Jaguar and Rover and providing the IT and R&D backbone to over 100 of the world’s corporate giants. It is set to overtake the US economy in a decade.”
Though formal negotiations began this year, the stage for a possible FTA has been set for a few years now. Mr Holborow describes the progress as now being “in the third gear,” after former prime minister Helen Clark helped put the process “in first gear.” The opening of the trade office in India’s commercial capital Mumbai last year was when the process was accelerated to the “second gear.”
Dispelling perception in business circles here that the negotiations were progressing too slowly more recently, Mr Holborow said though Mr Groser and his former Indian counterpart Kamal Nath had built a strong relationship, Mr Nath’s successor, Commerce Minister Anand Sharma, was equally keen on proceeding with the negotiations. The slight delay last year was because of the elections in India, he said.
Mr Holborow is focused on taking the process “into the fourth gear.” He sees negotiating on tariffs as the major issue. Studies show that tariffs on certain items particularly such as wines are as high as 40%, mainly a legacy of the age old “licence and permit raj” with multiple taxation levels at the national, state and local levels. Indian exporters on their part would like New Zealand to bring down tariffs on items such as machinery, light engineering goods and textiles which stand at between 7 and 12%.
India being predominantly an agrarian nation, concerns about New Zealand’s entry into the agriculture and dairy sector still remain high. Mr Holborow said addressing those concerns was his big responsibility. But he said perceptions were changing. The realisation that New Zealand has an economy just 10% the size of India and that it does not compete in several major Indian agricultural products such as rice and wheat, but instead had apples and kiwifruit – both sought after in India – was starting to change those concerns.
“New Zealand has just a 2% share of global milk production and because most of its exports are in solid form and India is overwhelmingly a liquid milk market it’s hardly a threat,” he said.
Where New Zealand could contribute most is in India’s “second green revolution” that its political leaders, economists and the Indian Planning Commission are trying to implement. This is a programme to increase agricultural productivity and reduce waste to meet the increasing needs of a growing population that is also becoming wealthier with bigger demands on food supply thanks to sustained near double-digit growth.
Statistics show over 40% of farm and horticultural produce is lost because of poor harvesting techniques and post-harvest preservation processes and technologies. This is where New Zealand companies can enter in a big way, Mr Holborow said. Almost 90% of India’s fresh water is used for agriculture. Technology for water saving processes was another area that Indian farmers need help. A couple of New Zealand companies had already begun working on projects in the sector, he said.
India was also looking at an FTA with Australia, which Mr Holborow said would benefit New Zealand. Indian investment in Australia particularly in the IT and services sector would have a positive effect on New Zealand.
Meanwhile major Indian IT companies were already considering setting up operations here, he said.
Mr Holborow also sees possibilities of collaboration between the world’s biggest film production market – Bollywood – and New Zealand’s famed animation and post-production houses. “Relationships are emerging and there’s considerable potential,” he said.
“With its successful FTAs with the Asean and South Korea and a few more on the cards like Japan, Australia and New Zealand, India’s look east policy would certainly benefit business in this part of the world.”
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A version of this article by the author also appeared in the National Business Review (NBR).
New Zealand is under no illusion that the rounds of negotiations for the proposed free trade agreement with India will be smooth sailing, despite India’s apparent eagerness to sign free trade agreements with a slew of nations and blocs over the past two years.
In January this year New Zealand and...
New Zealand is under no illusion that the rounds of negotiations for the proposed free trade agreement with India will be smooth sailing, despite India’s apparent eagerness to sign free trade agreements with a slew of nations and blocs over the past two years.
In January this year New Zealand and India jointly announced that all approvals were in place for the negotiations to begin. An inaugural round of talks followed in Wellington in April.
But it would be at least a couple of years before the final shape of the FTA begins to emerge. “Realistically, we expect it to take about three years,” Rupert Holborow, the New Delhi-based New Zealand High Commissioner to India told the National Business Review in Auckland. “We would rather not set a deadline but work toward putting in place a quality agreement.”
India is one of New Zealand’s fastest growing export markets, having nearly doubled exports from $350 million to $700 million in just about two years, which makes it the ninth largest market (from 19th two years ago). Student numbers have also grown impressively – from 400 to 9000 in five years – as have the numbers of tourists now at 26,000 a year – still a tiny speck of the 7 million Indians who holiday overseas each year.
New Zealand businesses need to change their perceptions about India, Mr Holborow said. “India is changing fast and all those old jokes about the snail-paced ‘Hindu rate of growth’ are long gone. India is adding an economy the size of Vietnam to itself every year, buying up global icons like Jaguar and Rover and providing the IT and R&D backbone to over 100 of the world’s corporate giants. It is set to overtake the US economy in a decade.”
Though formal negotiations began this year, the stage for a possible FTA has been set for a few years now. Mr Holborow describes the progress as now being “in the third gear,” after former prime minister Helen Clark helped put the process “in first gear.” The opening of the trade office in India’s commercial capital Mumbai last year was when the process was accelerated to the “second gear.”
Dispelling perception in business circles here that the negotiations were progressing too slowly more recently, Mr Holborow said though Mr Groser and his former Indian counterpart Kamal Nath had built a strong relationship, Mr Nath’s successor, Commerce Minister Anand Sharma, was equally keen on proceeding with the negotiations. The slight delay last year was because of the elections in India, he said.
Mr Holborow is focused on taking the process “into the fourth gear.” He sees negotiating on tariffs as the major issue. Studies show that tariffs on certain items particularly such as wines are as high as 40%, mainly a legacy of the age old “licence and permit raj” with multiple taxation levels at the national, state and local levels. Indian exporters on their part would like New Zealand to bring down tariffs on items such as machinery, light engineering goods and textiles which stand at between 7 and 12%.
India being predominantly an agrarian nation, concerns about New Zealand’s entry into the agriculture and dairy sector still remain high. Mr Holborow said addressing those concerns was his big responsibility. But he said perceptions were changing. The realisation that New Zealand has an economy just 10% the size of India and that it does not compete in several major Indian agricultural products such as rice and wheat, but instead had apples and kiwifruit – both sought after in India – was starting to change those concerns.
“New Zealand has just a 2% share of global milk production and because most of its exports are in solid form and India is overwhelmingly a liquid milk market it’s hardly a threat,” he said.
Where New Zealand could contribute most is in India’s “second green revolution” that its political leaders, economists and the Indian Planning Commission are trying to implement. This is a programme to increase agricultural productivity and reduce waste to meet the increasing needs of a growing population that is also becoming wealthier with bigger demands on food supply thanks to sustained near double-digit growth.
Statistics show over 40% of farm and horticultural produce is lost because of poor harvesting techniques and post-harvest preservation processes and technologies. This is where New Zealand companies can enter in a big way, Mr Holborow said. Almost 90% of India’s fresh water is used for agriculture. Technology for water saving processes was another area that Indian farmers need help. A couple of New Zealand companies had already begun working on projects in the sector, he said.
India was also looking at an FTA with Australia, which Mr Holborow said would benefit New Zealand. Indian investment in Australia particularly in the IT and services sector would have a positive effect on New Zealand.
Meanwhile major Indian IT companies were already considering setting up operations here, he said.
Mr Holborow also sees possibilities of collaboration between the world’s biggest film production market – Bollywood – and New Zealand’s famed animation and post-production houses. “Relationships are emerging and there’s considerable potential,” he said.
“With its successful FTAs with the Asean and South Korea and a few more on the cards like Japan, Australia and New Zealand, India’s look east policy would certainly benefit business in this part of the world.”
--
A version of this article by the author also appeared in the National Business Review (NBR).
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