New Zealand’s economy is expected to see gradual benefits from its free trade agreement with India, with gains projected to increase over time as tariff reductions are fully implemented, according to analysis released by the Ministry of Foreign Affairs and Trade (MFAT).
The economic assessment was published alongside the full text of the agreement and outlines both short-term and long-term impacts of the deal. While a number of Indian import duties will be removed immediately, tariffs in several key sectors will be phased out progressively over a period of up to 10 years.
Economic modelling prepared for MFAT indicates that once the agreement is fully implemented in 2037, more than 80 percent of New Zealand exports to India are expected to be duty free. The gradual reduction in tariffs is intended to provide businesses time to adjust while expanding market access for a range of goods and services.
The ministry noted that initial gains from the agreement are likely to be modest, reflecting India’s current income and consumption patterns as well as the relatively low base of existing trade between the two countries. As a result, increases in trade volumes are expected to build gradually over time rather than immediately following the agreement’s entry into force.
According to the National Interest Analysis report, by 2037 — approximately 10 years after the agreement takes effect and tariff reductions are fully completed — New Zealand’s annual gross domestic product is projected to be 0.07 percent higher than it would be without the agreement. In 2024 dollar terms, this equates to an estimated annual increase of about $401 million.
Officials said the long implementation timeline reflects the phased approach to market opening, particularly in sectors where tariffs are being reduced incrementally. This structure is designed to balance expanded trade opportunities with domestic industry considerations.
The modelling also suggests that export growth will be spread across multiple sectors as market access improves. Over time, businesses are expected to benefit from lower duties, improved competitiveness and broader access to India’s consumer market. However, the report emphasized that the pace of gains will depend on how quickly exporters take advantage of new opportunities and expand their presence.
Trade expert Stephen Jacobi said the agreement may not deliver the same immediate impact as New Zealand’s earlier trade deal with China, but still represents a positive step for exporters and long-term economic growth. He noted that securing new trade agreements has become more challenging, making expanded access to large markets increasingly significant.
He added that India remains one of the largest markets with growth potential, and gradual improvements in access could support diversification of export destinations. While the short-term impact may be limited, the cumulative benefits over time are expected to contribute to trade expansion and economic activity.
The analysis highlighted that trade between New Zealand and India currently remains relatively small, which contributes to the modest initial projections. However, as tariffs are reduced and businesses adapt to new conditions, the agreement is expected to support deeper commercial ties and increased bilateral trade.
MFAT said the agreement provides a framework for long-term engagement, with potential benefits extending beyond goods trade to services, investment and broader economic cooperation. The phased approach is intended to support sustained growth while allowing industries time to adjust to changing market dynamics.
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