India is only New Zealand’s 19th-largest export market. It accounts for just 1% of exports. New Zealand is only 75th for Indian imports, 0.1%.
Yet, India and China are the world’s most populous nations. India has the fifth-largest economy and is on track to pass Japan and Germany and reach third by 2027 as it grows quickly.
New Zealand imports primarily pharmaceuticals, mechanical machinery, made-up textiles and pearls, precious stones and metals, considerably more than it exports. These are predominantly iron and steel, wool, fruit and nuts and a category called miscellaneous provisions.
Tariffs whack an average of 34.4% on New Zealand agricultural products to India, a protectionist market.
Something approaching a free-trade deal could make a sizeable difference, although breaking down barriers to dairy is not feasible in the foreseeable future.
The recent engagement history was poor. New Zealand entered free-trade agreement negotiations in April 2010 under John Key’s leadership. The last round of negotiations (the 10th round) was in Delhi in February 2015.
Meanwhile, in 2022, Australia, after a decade of tough negotiations, secured an agreement. It notably excluded dairy, beef and chickpeas, but it included coal, sheep meat, wool, lentils, lobsters and rare earths. A phased tariff reduction on various agricultural products including avocados, cherries, nuts, oranges and pears is taking place.
While Australian minerals were a crucial drawcard New Zealand lacks, this country dropped the ball on persisting with developing the India relationship and on high-level visits.
Ambitiously — and some say unrealistically — New Zealand Prime Minister Christopher Luxon before the last election pledged to achieve a deal. The coalition agreement with New Zealand First singles out India in a note on seeking free-trade agreements.
Mr Luxon said he would visit India within a year of entering government. While this is not happening, a visit is due early next year.
Mr Luxon has returned to New Zealand from the East Asian summit in Laos chuffed to have met and had talks with India’s Prime Minister Narendra Modi.
Mr Luxon received a surprising amount of access and connection for tiny New Zealand. He was in his element glad-handing. Being seated next to Mr Modi at the gala dinner was a bonus.
Trade Minister Todd McClay has visited India three times and has met his Indian counterpart six times. Foreign Affairs Minister Winston Peters has been to India and the Indian president has visited this country.
It is easy to forget just how tiny New Zealand is. Its five million people are a minuscule fraction of India’s nearly 1.5 billion people. India’s complexity is also easily overlooked. It helps to think of its mix of languages and cultures as diverse as Europe’s — from Greece to Scandinavia.
Cricket provides a strong connection. The countries begin a three-test series in India tomorrow, and several New Zealand cricketers and former cricketers are household names in India.
New Zealand also has a fast-growing Indian diaspora of 250,000-plus people, 5% of the population. India has become the largest source of international students.
The Indian strategic and political relationship is an important part of the equation. India is part of groupings and interests seeking to contain China.
India and New Zealand can work more closely on shared perspectives in the Indo-Pacific and Pacific regions.
While a free-trade agreement will be difficult to achieve — and certainly within the next two years — there is much to be gained from deepening the relationship. This includes increased trade, investment, and co-operation on regional and international issues.
