New Zealand Prime Minister Christopher Luxon on Saturday welcomed the Free Trade Agreement (FTA) with India, days after his country’s foreign minister expressed strong reservations. Luxon described the deal as a landmark achievement for his government and a key step toward future growth.
Luxon said, “We said we’d secure a Free Trade Agreement with India in our first term, and we’ve delivered.” Emphasising its economic potential, he added that the deal would mean “more jobs, higher incomes and more exports by opening the door to 1.4 billion Indian consumers.”
The New Zealand leader said that the agreement was part of his government’s broader agenda, saying, “Fixing the basics. building the future.”
However, the agreement recently threw open differences within New Zealand’s ruling coalition as foreign minister Winston Peters criticised the deal as “neither free nor fair.”
Peters, who leads the New Zealand First (NZF) party, went on to say that he had conveyed his party’s concerns to India’s external affairs minister S Jaishankar, noting that he held “utmost respect” for him despite opposing the deal.
Deal announced after Modi–Luxon talks
The FTA was announced earlier this week after talks between Prime Minister Narendra Modi and Luxon. Both leaders said the agreement could potentially double bilateral trade within five years and lead to investments worth $20 billion in India over the next 15 years.
Negotiations for the deal began in March. At the time of the announcement, Modi and Luxon said the agreement reflected the “shared ambition and political will to further deepen ties” between the two countries.
NZ minister says, ‘low-quality deal rushed through’
Peters argued that the agreement gave too much away without securing enough in return for New Zealand. He said NZF had warned its coalition partner against rushing the negotiations without broad political backing.
“New Zealand First urged its coalition partner not to rush into concluding a low-quality deal with India, and to use all three years of this Parliamentary cycle in order to get the best possible deal,” Peters wrote in a lengthy post on X.
He further alleged that speed was prioritised over substance, saying, “National preferred doing a quick, low-quality deal over doing the hard work necessary to get a fair deal that delivers for both New Zealanders and Indians.”
A major point of contention for Peters is the treatment of the country’s dairy industry. He said while New Zealand had fully opened its market to India, the move was not matched by reduced tariff barriers on Indian imports of key dairy products.
“This is not a good deal for New Zealand farmers and is impossible to defend to our rural communities,” Peters said, adding that the India FTA would be “New Zealand’s first trade deal to exclude our major dairy products – including milk, cheese and butter.”
As reported earlier by Hindustan Times, agriculture and dairy emerged as sensitive areas during negotiations for the Free Trade Agreement (FTA). People familiar with the discussions said both sides agreed to keep these contentious sectors outside the scope of the talks in order to expedite progress on the trade deal.
Notably, trade in goods and services between India and New Zealand stood at $2.07 billion in 2024, with Indian exports accounting for $1.1 billion of the total. Key exports included pharmaceuticals from India and forestry and agricultural products from New Zealand.
According to an Indian government release, currently, New Zealand is India’s second-largest trading partner in Oceania.
Migration and labour market worries
Peters also claimed that parts of the agreement focused less on two-way trade and more on easing the movement of Indian workers to New Zealand and increasing investment flows into India. He claimed the level of labour market access granted to India had not been extended to partners such as Australia or the UK.
Raising concerns about domestic employment, he said, “New Zealand First looks at all proposed changes on migration from the same standpoint: do they protect the ability of New Zealanders to find meaningful employment as well as the integrity of our immigration system?”
According to Peters, the India deal “fails that test” by creating a new employment visa category specifically for Indian citizens, which he said could drive increased migration interest “at a time when we have a very tight labour market.”
