Given little chance to win by the bookmakers the Black Caps held their nerve in a tense finish after MS Dhoni and Ravindra Jadeja took the game deep on the second day of the rain affected match and looked at one point likely to pull off a stunning comeback.
In the end a moment of brilliance from Martin Guptill, who up until then had a World Cup he would want to forget, getting a direct hit to run-out Dhoni in the penultimate over, decided the match.
From there the Black Caps finished the game off to win by 18 runs.
Matt Henry (3-37) and Trent Boult (2-42) ripped the heart out of India's top order and spinner Mitchell Santner struck two crucial blows in the middle overs.
After inching their way to 239 on a difficult wicket to bat on, quality bowling from Henry and Boult had India at 5 for 3, with India's two key batsmen Rohit Sharma and Virat Kohli both out early.
To add to India's pain Jimmy Neesham took the catch of his life at backward point taking it one-handed low to the ground after a full-length dive to get rid of Dinesh Karthik and leave India at 4 for 24.
Rishabh Pant added 47 runs with Hardik Pandya to somewhat arrest the slide.
Pant made 32 before his wild heave off Santner found Colin de Grandhomme near the mid-wicket boundary.
Pandya, struggling with a hip injury, also made 32 before throwing away his wicket.
Jadeja injected fresh excitement into the match with his brave counter-attack that left his team needing 90 runs off the last 10 overs with four wickets in hand.
He and Dhoni (50) kept India afloat in the chase which was eventually derailed when both fell in successive overs.
The win was largely thanks to a brilliant start with the ball from the Black Caps.
The day before half-centuries from captain Kane Williamson and Ross Taylor helped the Black Caps to a modest 239 for eight against India in the rain-hit first Cricket World Cup semi-final at Old Trafford on Wednesday.
Resuming on the reserve day at 211-5, New Zealand added 28 runs from the remaining 23 deliveries as Taylor top-scored with a gutsy 74.
It did not seem like a match-winning total, but the at times scratchy innings from Taylor and Williamson revealed their true worth once India went out to bat.
Williamson won the toss on Tuesday and opted to bat at a venue where teams batting first had won all five previous matches in the tournament.
India's new ball pair of Bhuvneshwar Kumar (3-43) and Jasprit Bumrah, both of whom began with maiden overs, bowled with impeccable discipline while spinner Jadeja was also very economical with the ball and characteristically superb in the field.
Yuzvendra Chahal conceded 63 runs in his 10 overs but claimed the important wicket of Williamson who made 67, his fourth 50-plus score of the tournament including two centuries.
India's trusted five-bowler policy nearly backfired with Pandya hobbling off the field due to a hip injury before returning to complete his full quota of 10 overs on Tuesday.
Hosts England play defending champions Australia in the second semi-final on Thursday.
With Reuters
