The government has confirmed the conclusion of free trade negotiations with India with significant wins for several industries - but limited gains for dairy.
But NZ First is withholding support - which means it is now in the hands of the opposition whether it passes or not.
Trade Minister Todd McClay says the new agreement - expected to be formally signed off next year - will eliminate or reduce tariffs on 95 percent of exports, with wins for kiwifruit, apples, meat, wool, coal, forestry, and more.
"It puts New Zealand exporters on an equal or better footing to our competitors across a range of sectors and opens the door to India's rapidly expanding middle class," he said.
Almost 57 percent of exports would be duty-free from day one of the agreement coming into force, he said, "increasing to 82 per cent when fully implemented, with the remaining 13 per cent subject to sharp tariff cuts".
Only limited gains were secured for dairy, with duty-free access for re-exports, bulk infant formula, and a 50 percent tariff cut for high-value milk albumins under a quota.
Dairy access to Indian markets was always going to be the holy grail for a free trade agreement with India - highly valuable but difficult to obtain.
McClay said dairy access would be future-proofed with a clause automatically triggering consultation for renegotiation of dairy access if India negotiated better terms with other comparable countries.
The deal would also be reviewed one year after it comes into force.
Christopher Luxon with Indian PM Narendra Modi during a meeting last year. Photo: Supplied / Prime Minister's office
Prime Minister Christopher Luxon said the gains from the deal were "wide-ranging and significant".
"We made a campaign commitment to New Zealanders to secure a Free Trade Agreement with India in our first term, and our countries have pursued this with determination," he said.
"Since the election, Todd McClay has visited India seven times. The foreign minister has visited India twice. Earlier this year, I led New Zealand's largest-ever trade mission to India. And New Zealand has hosted India's president and two ministerial visits from India.
"The result is a high-quality trade agreement with a trusted partner that will deliver deep and lasting benefits for New Zealand."
He said he had just spoken to India Prime Minister Narendra Modi, "who shares our excitement to further cement the strong relationship".
McClay also highlighted a kiwifruit quota nearly four times current exports, with a 50 percent tariff applying once the quota is reached; agreement for preferential market access for apples and mānuka honey; and geographical indication rules for specialist and iconic New Zealand product names.
The deal would also establish a process for 1667 three-year work visas a year, focusing on priority roles on the Green List like doctors, nurses, teachers, ICT and engineering jobs.
Up to 1000 places would also be provided on New Zealand's Working Holiday Scheme, matching Australia's FTA with India.
The agreement would also include a Treaty of Waitangi clause.
India FTA Key details:
- Duty-free access on almost 57 percent of NZ exports from day one, increasing to 82 percent when fully implemented, with the remaining 13 percent being subject to sharp tariff cuts
- Immediate tariff elimination on sheep meat, wool, coal and over 95 per cent of forestry and wood exports
- Duty-free access on most seafood exports, including mussels and salmon, over seven years
- Duty-free access on most iron, steel and scrap aluminium, over 10 years or less
- Duty-free access for most industrial products, over five to 10 years
- 50 per cent tariff cut for large quota of apples - nearly double recent average exports
- Duty-free access for kiwifruit within a quota almost four times our recent average exports, and tariff halved for exports outside of quota
- Duty-free access for cherries, avocados, persimmons and blueberries, over 10 years
- Tariffs on wine reduced from 150 percent to either 25 or 50 percent (depending on the value of the wine) over 10 years, plus a "Most Favoured Nations (MFN)" commitment
- Tariffs on mānuka honey cut from 66 percent to 16.5 percent over five years
- MFN status and liberalisation across services exports
- Duty-free access for dairy and other food ingredients for re-export from day one
- Duty-free access for bulk infant formula and other high-value dairy preparations over seven years
- 50 percent tariff cut for high-value milk albumins within a NZ-specific quota equal to current export volumes
The deal also includes chapters on Customs Facilitation and Clearance, Technical Barriers to Trade, Sanitary and Phyto-Sanitary Standards, Culture, Trade and Traditional Knowledge, Economic Cooperation, Trade and Sustainable Development.
India's economy is forecast to grow to NZ$12 trillion by 2030.
Two-way trade in 2024 was about $3.14b, with New Zealand exports making up about $718m of that - primarily in wool, logs and apples.
'A high quality trade agreement with a trusted partner'
The prime minister said this deal delivered on a campaign commitment made in 2023.
"Today is promise made. Promise kept.
"The result is a high-quality trade agreement with a trusted partner that will deliver deep and lasting benefits for New Zealand."
He explained that Australia's FTA with India cut New Zealand's share of the lamb market.
"This is a direct result of New Zealand sheep farmers facing a 33 percent tariff while Australian lamb entered duty free.
"Similarly, Australia has now drawn equal with New Zealand and other sectors too, and the bottom line is that their trade has grown, and as ours has fallen, I will not have New Zealand exporters being left behind and disadvantaged."
Luxon described the trade deal in one word: "Opportunity."
"This deal tears down the barriers to selling exports to 1.4 billion Indian consumers.
"This historic agreement removes or reduces tariffs on 95 percent of New Zealand's exports to India, amongst the highest of any Indian FTA."
McClay said it was a "challenging negotiation".
"But both sides have worked extremely hard, and in good faith throughout."
He said the result was a "very high quality trade agreement" that was good for the people of India and New Zealand.
In terms of reaction from the farming sector, McClay said a number of farming leaders he'd spoken to were "extremely optimistic about the opportunities."
"Of course, the dairy sector would have liked to have seen more.
"But they probably see that there are some opportunities there, and we have the ability to continue to improve the agreement over time, and we are committed to doing that."
He maintained it was a "comprehensive" free trade agreement according to conditions set by the WTO.
"Ninety-five percent of everything sells into that market has tariff elimination or reduction, that makes it a comprehensive agreement."
McClay said the most important aspect though was if India did extend better treatment to another similar country, then New Zealand has the ability to negotiate that it "makes us no worse off".
NZ First reacts
NZ First leader Winston Peters said his party did not consider the deal free nor fair.
"Regrettably, this is a bad deal for New Zealand. It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy."
In a statement released just before the deal was announced, Peters described it as a "low-quality deal".
New Zealand First exercised the agree to disagree provision of its coalition arrangements when Cabinet approval for the deal was sought last week, and made it clear that it would vote against enabling legislation if and when it was introduced to Parliament.
"While New Zealand is completely opening its market to Indian products under this deal, India is not reducing the significant tariff barriers currently facing our major dairy products," Peters said.
NZ First also expressed concerns about the proposed changes on migration. The trade deal creates a new employment visa for Indian citizens, and according to the party will likely generate greater interest in Indian migration to New Zealand during a tight labour market.
Peters said his party's approach to trade deals has been consistent, longstanding and principled.
"New Zealand First's longstanding approach has been to support those FTAs that deliver a good deal for New Zealanders and to oppose those that do not."
Luxon said he was confident the government would be able to pass the legislation, despite requiring Labour's support to do so.
"We've seen a lot of good bipartisan support for trade across the Parliament, and we'll continue to build the case for that."
Luxon also rejected the notion the deal was rushed through, despite NZ First urging the coalition not to rush it, and "to use all three years of this Parliamentary cycle in order to get the best possible deal" instead.
"More time doesn't drive a better deal. This is as good a deal as it gets, and I think we should be very, very proud of this deal."
He said he'd "tried to deal" with NZ First's objections, and "reassured them" about the parts that were in the interests of New Zealand.
"At the end of the day, this is going to be the third biggest economy in. In the world. This is an economy that New Zealand needs to be in."
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