India-New Zealand FTA: What the new deal actually changes

India and New Zealand are finalising their Free Trade Agreement (FTA), which will come into effect on 20 October 2026.

The agreement is one of major expansion of economic ties between the two countries, but what does it actually change for businesses and consumers? The easiest way to explain the deal is with only one number: 100%.

As of the day the agreement comes into force, every Indian export to New Zealand will have duty-free access across tariff lines. Indian exporters will finally see the customs duty which previously made some products costlier in the New Zealand market disappear.

What does India get?

The immediate winner are Indian exporters. New Zealand will remove tariffs on Indian goods including textiles and apparel, leather and footwear, gems and jewellery, engineering goods, processed foods, ceramics and carpets, and pharmaceuticals, automobiles, and auto components.

This is especially important for labour-intensive industries. The lower tariff can make an Indian product competitive against products from countries that already enjoy preferential access to New Zealand.

The agreement also provides Indian manufacturers with access to some inputs at zero duty, including wooden logs, coking coal and metal waste and scrap, which could reduce input costs for certain industries, but the potential benefit will be defined by international prices, exchange rates, and business' ability to pass on the savings.

What does New Zealand get?

This is where the headline figure needs more context. India has not opened up its entire market to New Zealand goods. India has offered tariff concessions on 70.03% of its tariff lines, and 29.97% of its tariff lines are excluded. However, these concessions cover products accounting for about 95% of the value of bilateral trade with New Zealand. So, claiming that India has removed duties on "95% of New Zealand goods" would be misleading.

The correct explanation is that India's tariff concessions cover products representing around 95% of bilateral trade with New Zealand, while nearly 30% of India's tariff lines are outside the concessions.

What about dairy?

Dairy is one of the most important exceptions. Products such as milk, cream, whey, yoghurt and cheese have been kept outside India's tariff concessions. Other sensitive agricultural products, including onions, chickpeas, peas, corn, almonds and sugar, are also among the exclusions.

That means that New Zealand dairy products will not suddenly enjoy unrestricted tariff-free access to the Indian market as the FTA begins.

This is significant given dairy has been a sensitive issue in India's trade negotiations.

Will New Zealand products become cheaper?

For some products tariffs will fall, although the impact will not be uniform across products. About 30% of India's tariff lines which have been offered to New Zealand will see duties immediately eliminated. Another 35.60% will have tariffs gradually eliminated over periods of three, five, seven, or ten years. A further 4.37% will see tariff reductions with no elimination. There are also tariff-rate quotas for selected products such as apples, kiwifruit, Mānuka honey and albumins. In short, some products receive preferential treatment through specific terms rather than unrestricted tariff-free access.

So, consumers might see changes in the prices or availability of some imported products, but an FTA does not automatically mean a product will become cheaper in shops. Import costs, freight, exchange rates, taxes, margins and domestic market conditions will also factor into the final price.

The bigger picture

The agreement goes beyond tariffs.

India and New Zealand have also included provisions in the agreement relating to services, investment and movement of people. New Zealand has committed to facilitating up to US$20 billion of investment into India over 15 years.

The two countries have also set an ambition to double bilateral trade over five years, but these are targets and commitments, with actual trade and investment dependent on business decisions, economic conditions and demand in both markets.

The India-New Zealand FTA, in short, is not simply a story about "tariffs going to zero". It is a carefully constructed opening of two markets, with wider and immediate scope for Indian exports to New Zealand, and more selective and phased access for New Zealand exports to India. For Indian businesses the immediate question is how effective they can utilise the new duty-free access. For Indian consumers the more relevant question will be which products see lower costs as the new tariff rules begin to operate.