New Zealand Prime Minister Christopher Luxon has strongly backed the recently announced Free Trade Agreement (FTA) with India, calling it a major economic milestone for his government, even as the deal has sparked internal disagreement within New Zealand’s ruling coalition.
Speaking on Saturday, Luxon described the agreement as a key step toward long-term growth, saying it would deliver “more jobs, higher incomes and more exports” by opening access to India’s 1.4-billion-strong consumer market. He said the FTA aligns with his government’s broader agenda of “fixing the basics and building the future.”
The Prime Minister reiterated that securing a trade deal with India was a core promise of his first term in office. “We said we’d deliver a Free Trade Agreement with India, and we’ve delivered,” Luxon said, highlighting the deal’s potential to boost employment and export opportunities for New Zealand businesses.
Coalition Tensions Over the Deal
Despite Luxon’s endorsement, the FTA has exposed divisions within the governing coalition. New Zealand Foreign Minister Winston Peters, who leads the New Zealand First (NZF) party, has openly criticised the agreement, calling it “neither free nor fair.”
Peters said he conveyed his concerns directly to India’s External Affairs Minister S. Jaishankar, while maintaining respect for him. He argued that the deal was rushed and failed to secure adequate benefits for New Zealand, particularly in key sectors.
FTA Announced After Modi–Luxon Talks
The India–New Zealand FTA was announced earlier this week following talks between Prime Minister Narendra Modi and Christopher Luxon. Both leaders stated that the agreement could double bilateral trade within five years and attract investments worth up to $20 billion in India over the next 15 years.
Negotiations for the deal began in March 2025, with both sides emphasising shared political will and a commitment to deepening economic ties.
Concerns Over Dairy and Agriculture
A major point of contention raised by Peters is the exclusion of New Zealand’s dairy sector from the agreement. He said the deal does not reduce tariff barriers on key dairy exports such as milk, cheese, and butter, despite New Zealand opening its market to Indian goods.
Peters described the agreement as New Zealand’s first trade deal to exclude major dairy products, calling it difficult to defend to rural communities and farmers.
Officials familiar with the negotiations said agriculture and dairy were sensitive areas, and both countries agreed to keep them outside the scope of the deal to ensure progress on the broader agreement.
Migration and Labour Market Concerns
Peters also raised concerns about provisions related to labour mobility and migration, claiming the agreement places greater emphasis on facilitating the movement of Indian workers to New Zealand than on reciprocal trade benefits.
He argued that the creation of a new employment visa category for Indian citizens could strain New Zealand’s labour market at a time when domestic employment conditions remain tight.
“Any changes to migration must protect opportunities for New Zealanders and maintain the integrity of our immigration system,” Peters said, adding that the India FTA, in his view, fails to meet that standard.
Trade Ties at a Glance
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. India is currently New Zealand’s second-largest trading partner in Oceania, according to official data.
