New Zealand to Sign India Free Trade Agreement Next Week Despite Coalition Rift Over Migration
New Zealand is set to sign a landmark free trade agreement with India next week, opening up a market of 1.4 billion people to New Zealand exporters in what the government has described as a once-in-a-generation opportunity. But the deal arrives with a significant political complication — the government’s own coalition partner opposes it, leaving National to seek Labour’s support to pass the legislation required to bring it into force.
Trade and Investment Minister Todd McClay confirmed on Monday that legal verification of the agreement had been completed and that the formal signing ceremony would take place in New Delhi on 27 April. RNZ reported that a large contingent of Indian and New Zealand business representatives would attend the signing. McClay said the deal would eliminate or reduce tariffs on 95 per cent of New Zealand exports to India, which he described as one of the highest levels secured in any Indian trade agreement.
The deal, concluded after nine months of negotiations that began in March 2025, would deliver immediate duty-free access for 57 per cent of New Zealand exports from day one. That figure rises to 82 per cent once the agreement is fully implemented. Among the headline wins, sheep meat, wool and the vast majority of forestry and wood products would face zero tariffs immediately. Seafood including mussels and salmon would become duty-free over seven years. Kiwifruit exporters would gain access to a quota nearly four times the size of current export volumes, while the 150 per cent tariff on wine would be cut to between 25 and 50 per cent over ten years. Mānuka honey would see its tariff cut from 66 per cent to 16.5 per cent over five years. The government’s full release outlined the sector-by-sector gains in detail.
Services were also part of the package, with New Zealand firms gaining broad market access including in financial services, e-payments and FinTech. The agreement also includes provision for up to 1,667 skilled worker visas a year on three-year, non-renewable terms, along with 1,000 Working Holiday Scheme places annually for Indian citizens.
It is that immigration component that has fractured the coalition. New Zealand First leader and Deputy Prime Minister Winston Peters raised strong objections to the skilled worker provisions, warning that the arrangement could result in “tens of thousands” of people arriving and taking opportunities away from New Zealanders. NZ First invoked the coalition’s agree-to-disagree provisions before the deal was finalised, meaning it officially dissociates itself from the agreement. McClay confirmed the split publicly, saying the visa pathway was tightly constrained. “They have the ability to apply for a visa, come and work here for three years, and at the end of the three years, they must return home,” he said.
Prime Minister Christopher Luxon was direct in pushing back against Peters’ characterisation, saying the NZ First leader was “wrong” about the trade agreement, just as he had been wrong about the China free trade agreement years earlier. But Peters’ opposition creates a practical problem. The FTA requires changes to the Tariff Act to take effect, and without NZ First’s votes, the government does not have enough support in Parliament to pass that legislation on its own. That puts Labour in an unusually powerful position on what is ostensibly a government-led initiative.
Labour leader Chris Hipkins has not yet committed the party’s support. Labour said it was reviewing the full text of the agreement after expressing concern that it had been brought into discussions late. Hipkins also raised concerns about the potential for migrant exploitation under the skilled worker visa provisions. He stated previously that signing a free trade agreement without majority backing would be “recklessly irresponsible,” a comment that underscores the political tightrope the government must walk between now and any ratification vote.
McClay said he remained confident Labour would ultimately support the deal, pointing to the broad export benefits it would deliver for New Zealand industries. Business groups and exporters have broadly welcomed the agreement, and McClay said the government’s projections suggested tens of millions of dollars in additional export earnings if the deal was ratified and fully implemented.
India is the world’s most populous country and one of its fastest-growing major economies, and New Zealand has long sought deeper trade ties with it. The two countries’ trade relationship has historically been modest relative to New Zealand’s ties with China, Australia and the United States, but the government has argued that the sheer scale of the Indian market represents a strategic diversification opportunity at a time when over-reliance on any single trading partner carries increasing risk. The Middle East conflict and the disruption it has caused to global supply chains has only reinforced that argument in recent months.
If the agreement is signed next week as planned and Parliament subsequently passes the required legislation, New Zealand would become one of only a small number of countries to have secured a comprehensive free trade agreement with India. Australia concluded its own agreement with India in 2022, though on terms considerably narrower than what New Zealand has now negotiated. McClay said New Zealand’s deal was more ambitious and would deliver more for exporters than Australia’s equivalent arrangement.
The political path to ratification remains uncertain, and the coming weeks will test both Labour’s willingness to back a government trade initiative and the broader coalition’s ability to manage the ongoing tensions with NZ First. For New Zealand’s farming, horticulture, forestry and services sectors, however, the prize on offer is substantial — if Parliament can get there.
Do you think the India free trade agreement is good for New Zealand? Share your thoughts in the comments below.