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New Zealand Prime Minister Christopher Luxon is on an official visit to India until March 20, aiming to strengthen economic ties and enhance security cooperation in the Indo-Pacific region. His visit highlights New Zealand’s renewed commitment to deepening its engagement with India.
Accompanied by one of the largest political and business delegations to ever travel with a New Zealand premier, Luxon’s visit is expected to open new avenues for trade and investment between the two nations. During his stay, he will meet Prime Minister Narendra Modi in New Delhi, interact with business leaders in Mumbai, and deliver the keynote address at the prestigious Raisina Dialogue on March 17, making history as the first non-European leader to do so.
Trade at the Center of Discussions
A key focus of Luxon’s visit is strengthening trade relations, an area he believes was overlooked by the previous Labour government. “Since coming into office, I have signalled that strengthening our relationship with India is a key priority for my government,” he stated.
New Zealand’s trade with India is significantly lower than its trade with China, standing at just over NZ$2 billion compared to NZ$38 billion with China. Recognizing the untapped potential in India’s booming market, New Zealand is eager to revive negotiations for a Free Trade Agreement (FTA) that had stalled in 2015 due to concerns over dairy exports.
On March 17, both nations announced the relaunch of FTA negotiations. “We are delighted to announce the launch of India-New Zealand Free Trade Agreement (FTA) negotiations. This marks a significant milestone in our partnership, reflecting our shared vision to deepen trade ties and expand economic opportunities,” Commerce Minister Piyush Goyal said.
Understanding India-New Zealand Trade Relations
Trade between India and New Zealand amounted to $1.75 billion in 2023-24. New Zealand exported $1.29 billion worth of goods and services to India, while imports from India stood at $1.47 billion, creating a trade deficit of $178.16 million.
India is New Zealand’s 15th largest trading partner for both exports and imports. The primary exports from New Zealand to India include wool, iron and steel, aluminium, fruits and nuts, wood pulp, and recovered paper. India, in turn, exports pharmaceuticals, machinery, textiles, vehicles, apparel, and precious metals to New Zealand.
The biggest services export from New Zealand to India is education. Around 8,000 Indian students are currently enrolled in New Zealand universities, strengthening people-to-people ties between the two countries. However, New Zealand’s overall investment in India remains minimal, with only US$79.02 million invested between 2000 and 2023, accounting for just 0.01% of India’s total inward foreign direct investment (FDI). In contrast, Australia invested US$1.1 billion in India during the same period.
Historical Ties Between India and New Zealand
India and New Zealand share a long history of cultural and diplomatic ties. Indian migration to New Zealand began in the 19th century, and today, around 300,000 people of Indian origin call New Zealand home. Indian festivals such as Diwali and Holi are widely celebrated across the country, reflecting the strong cultural bonds between the two nations.
Diplomatic relations were formally established in 1950 when India set up a Trade Commission in New Zealand, later upgraded to a Consulate General in 1952. Over the years, high-level visits have helped strengthen ties, including those by Indian Prime Ministers Indira Gandhi (1968) and Rajiv Gandhi (1986), President Pranab Mukherjee (2016), and President Droupadi Murmu (2024). New Zealand’s Prime Minister John Key visited India in 2016, while Deputy Prime Minister Winston Peters traveled to India in 2024 to underscore the importance of bilateral relations.
New Zealand has recognized India as a priority partner through policies such as the “Opening Doors to India” initiative in 2011 and the “India-NZ 2025 – Investing in the Relationship” strategy in 2020. These policies laid the foundation for expanding trade and diplomatic engagement.
The Path Ahead for India-New Zealand Relations
While the revival of FTA negotiations is a major step, experts suggest that a Comprehensive Economic Partnership (CEP) might be a more practical approach. Unlike FTAs, which mainly focus on reducing tariffs, CEPs include provisions for services, investment, dispute resolution, and regulatory cooperation, making them more attractive for India.
A closer relationship with India could also help New Zealand address its skilled labor shortages. However, for this to happen, both countries need to establish mutual recognition of qualifications and structured training programs for key service sectors, according to Rahul Sen, a senior lecturer at Auckland University of Technology.
Additionally, the COVID-19 pandemic highlighted the importance of economic risk diversification. For New Zealand, reducing its heavy dependence on a few trading partners is crucial. Beyond traditional agricultural exports, potential growth areas include forestry, financial technology, digital services, renewable energy, and traditional medicine.
New Zealand is also falling behind Australia in engaging with India’s education sector. While Australian universities such as Deakin and Wollongong are setting up campuses in India under the National Education Policy 2020, New Zealand institutions have yet to establish a significant presence. Given India’s young population and increasing demand for quality education, this is a missed opportunity.
Christopher Luxon’s visit to India signals New Zealand’s renewed interest in strengthening economic and strategic ties. As India continues to emerge as the world’s fastest-growing major economy, New Zealand is eager to ensure that it does not miss out on the opportunities that come with closer trade and investment ties.
