India, New Zealand aim to conclude FTA talks in 60 days

India and New Zealand have decided to set an ambitious sixty-day timeline for wrapping up negotiations for the bilateral free trade agreement (FTA) relaunched this week after a gap of ten years. 

The FTA must target a ten-fold growth in bilateral trade in ten years time, Commerce Minister Piyush Goyal said at an economic forum organised by industry body FICCI on Tuesday.

New Zealand Prime Minister Christopher Luxon backed Commerce Minister Piyush Goyal’s proposal for a sixty-day timeline for concluding talks for the FTA which is likely to include all elements of a comprehensive pact such as goods, services and investments. “Let’s drive this relationship forward, and I look forward to, with Prime Minister Modi, signing that agreement in 60 days time,” Luxon said at the meet.

India and New Zealand had suspended negotiations on a proposed FTA in 2015 after five years of talks due to disagreement over some issues including opening up of the Indian dairy sector. As the dairy sector supports millions of farmers in India, New Delhi is not keen to lower barriers. However, dairy is the top export item for New Zealand and thus its area of primary interest.

The two countries decided to resume negotiations for an FTA in the backdrop of US President Donald Trump threatening trade partners, including India, with reciprocal tariffs which may be announced on April 2. New Delhi also resumed FTA talks with the UK recently and set a year-end timeline for concluding FTA talks with the EU.

When asked if New Zealand was prepared to tackle differences with India on inclusion of the dairy sector in the proposed trade pact this time round, New Zealand Trade Minister Todd McClay said that negotiators would be constructive. “Both sides understand the sensitivities and will be constructive and find a good way,” he said speaking to reporters on the sidelines of the economic forum.

The New Zealand PM highlighted the need to explore new frontiers and sectors where New Zealand holds a competitive advantage. “India for us is a game changer…We all recognise that there is a lot more that these two countries should be doing together. When we look at the trading relationship today at $3 billion, there’s a huge opportunity for us here,” Luxon said.

Agri-tech, dairy, food processing, pharmaceuticals, renewable energy, critical minerals, forestry, horticulture, tourism, and sports are some of the areas where the two countries could cooperate, Goyal said. “There are hardly any areas where we compete with each other, and the few areas of sensitivity can be navigated with mutual respect. Given our different levels of development, there are limitless possibilities…,” the Minister added.

The two leaders agreed, within the context of the trade agreement negotiations, to also launch negotiations on an arrangement facilitating the mobility of professionals and skilled workers between the two countries, while also addressing the issue of irregular migration, according to a joint statement.

In their bilateral meeting on Monday, Prime Minister Narendra Modi and Luxon also agreed, within the context of the trade agreement negotiations, to launch negotiations on an arrangement facilitating the mobility of professionals and skilled workers between the two countries and discussions for early implementation of cooperation in the digital payments sector, it added.

A major challenge in the renewed FTA talks will be the disparity in tariff structures, according to an analysis done by research body GTRI. “New Zealand’s average import tariff is only 2.3 per cent, with over half of its tariff lines already duty-free… India’s average tariff stands at 17.8 per cent, meaning it would have to make significant reductions, making a traditional FTA less attractive for India,” it said.