India–New Zealand Free Trade Agreement Set to Boost Bilateral Investments: An Explainer

On Monday India declared ending of negotiations of a free trade agreement which it had signed with New Zealand, the 18 th signing that the country has made as far as the bilateral trade and investments are concerned.

The India-New Zealand FTA would be signed within the next three months and most probably it would be enforced next year.

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Other destinations and nations that India signed such agreements include the four country European bloc EFTA, Japan, Korea, Oman and Australia.

India has signed trade agreements with Mauritius, UAE, Australia, EFTA and UK since 2014.

What is a Free Trade Agreement (FTA)?

It is an economic agreement between two or more nations in which they discuss to either cease or go a long way to lower custom duties on the utmost level of goods traded between them, in addition to cutting down of non-trade barriers on a huge worth of imports between the partner nations and liberalization of rules to encourage exports of services and investments between them.

Benefits of FTAs

The entry into the markets of the partner countries with zero-duty assists in the diversification and expansion of the export markets. Foreign investment to promote local production is brought through such agreements. They enable entry to raw materials, intermediate products and capital goods to value-added production.

FTAs signed by India so far

India has signed trade agreements with Sri Lanka, Bhutan, Thailand, Singapore, Malaysia, Korea, Japan, Australia, the UAE, Mauritius, the 10-country bloc ASEAN (Association of Southeast Asian Nations), and the bloc EFTA (Iceland, Liechtenstein, Norway, Switzerland) of four European countries.

Moreover, India is also in discussion of trade agreements with some of its trading partners, such as the US, New Zealand, European Union (EU), Chile, Peru, and Israel.

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India-New Zealand FTA

New Zealand will receive zero-duty in all Indian goods including labour-intensive industries such as textiles, plastic goods, leather and engineering goods.

New Zealand has made a promise to invest (FDI) USD 20 billion within a period of 15 years.

India has been able to win the tender in a wide spectrum of high-value service areas such as IT, IT-enabled services, professional services, education, financial services, tourism, construction and other business services.

The FTA Opens Skilled Employment Pathways by introducing a new Temporary Employment Entry Visa pathway of Indian skilled professionals in the skilled professions, with a quota of 5,000 visas per time with a maximum stay of three years.

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