India and New Zealand signed a free trade deal on Monday as they seek to boost exports amid global economic uncertainty made worse by the war in the Middle East.

Negotiations over the agreement concluded in December 2025, and will see India gain greater access for a range of products, including engineering goods, machinery and textiles, while also protecting its sensitive dairy sector.

“This forward-looking agreement will also facilitate $20 billion of investment into India,” New Delhi’s Commerce Minister Piyush Goyal said after signing the agreement alongside his New Zealand counterpart, Todd McClay.

New Delhi, in return, has offered to reduce tariff barriers in sectors such as forestry, lamb and wool, while granting quota-based access for fruits such as apples.

Two-way trade remains modest. Indian data showed merchandise trade at about $1.3bn in 2024-25, while total goods and services trade was estimated at roughly $2.4bn in 2024.

The deal was struck at a time when US President Donald Trump’s tariff war had upended global trade, forcing countries around the world to tap new markets.

The Middle East war has since delivered a global energy shock, disrupting production across multiple sectors and reinforcing the need to bolster trade ties and shed protectionist stances.

New Zealand Prime Minister Christopher Luxon said on Monday the “once-in-a-generation agreement” will give local exporters “unprecedented access” to the world’s most populous nation.

“It means more jobs on farms and orchards, it means more money coming into local communities, and it means more opportunities for your family to get ahead,” Luxon said in a social media post.

Indian Prime Minister Narendra Modi said it “marks a landmark moment in the India-New Zealand partnership” and that it would “strengthen our cooperation in agriculture, manufacturing, innovation and technology”.

However, parts of the agreement have sparked criticism in Wellington.

These include greater visa access for skilled Indians, with New Zealand officials telling AFP that the deal could see more than 20,000 Indian migrants entering the country.

The right-wing populist NZ First party has also pointed to concerns about a NZ$34bn (US $20bn) investment New Zealand is bound by the deal to make in India over a 15-year period.

Trade pact cuts fruit tariffs, boosts exports, visas

The FTA will lower tariffs on key fruit imports such as kiwifruit and apples, expanding opportunities for Indian exports and easing visa access as the nations deepen economic ties.

Concluded in December after about nine months of talks, the pact is one of the South Asian nation’s fastest trade deals, and will cut or remove tariffs on 95 per cent of New Zealand’s exports to India, including seafood, iron, steel and scrap aluminium.

In agriculture, India kept sensitive sectors such as dairy, coffee, sugar, spices, edible oils and rubber outside market access commitments to protect domestic producers, Goyal said.

That was a disappointment for New Zealand’s dairy industry, its largest export sector.

Under the deal, New Zealand will offer market access across 118 services sectors from the professional, audio-visual and computer-related to construction, telecoms and tourism.

The deal also provides a quota of 5,000 temporary employment visas for Indian professionals and 1,000 working holiday visas, while easing post-study work rights for Indian students, Indian officials said.

Tariff cuts over a period of time

The pact will lower tariffs on wine over 10 years and allow immediate duty-free access for dairy and other food ingredients meant for re-export, while phasing in duty-free access for bulk infant formula and other high-value dairy products over seven years, and halving a tariff on high-value milk albumins within a New Zealand-specific quota.

McClay said the deal would support New Zealand’s goal of doubling exports in 10 years.

“This deal will deliver thousands of jobs and billions of dollars in additional exports.”

More than half of New Zealand’s exports to India will become duty-free immediately, with tariffs on other products reduced over time, New Zealand said in a statement.

The deal is expected to boost key Indian export sectors such as textiles, leather, pharmaceuticals, engineering goods and automobiles, while allowing duty-free access to industrial inputs such as wooden logs, coking coal and metal scrap.