Report highlights New Zealand’s missed opportunities

India-New Zealand Business Council chairman Earl Rattray in India.

New Zealand has been asleep at the economic wheel in recognising the “vital” importance of a strong relationship with India, soon to be the world’s third-largest economy, suggests a recent report.

The report India & New Zealand: a relationship ready for its next phase by the India-New Zealand Business Council suggests Australia has left us in its dust in developing and cashing in on trade opportunities with what is considered to be the world’s fastest-growing economy.

Urging government, business, academic, cultural and sporting leaders to “get serious” about India, the report identified many shortfalls in our strategic approach to India, ranging from 40 years of diplomatic engagement neglect, low cultural and commercial visibility on the Indian sub-continent, to considering a country with 28 states and eight union territories as one big market.

The report says 15 years of trying to negotiate a conventional trade agreement with India has “delivered nothing”, noting India “is different, accordingly it requires a different approach”.

Council chairman Earl Rattray told the Herald “you cannot copy and paste” trade agreements typical of those with Europe, the UK and North Asia for India, the world’s fifth biggest economy.

“India is an economic universe of its own. India is not China,” said the former Fonterra director who has dairy farming interests in India.

While encouraged by “an uptick” in ministerial visits to India, Rattray said it was nearly a decade since a New Zealand prime minister had visited, and there had been only four formal prime ministerial visits in 40 years.

New Zealand’s diplomatic engagement and outposts in India — “vital” to advance a relationship — was under-resourced and under-funded, compared with Australia, which had a specifically-tailored free trade agreement with India, achieved “on top of already very healthy lateral trade”.

The report said restarting talks for a comprehensive NZ-India FTA was “unlikely to be successful at this time”.

The report urged the Government to develop a long-term strategy and implement and support a public/private partnership leadership model.

It said NZ-India trade figures had declined since 2015. Total services and merchandise exports to India in 2020 were worth $1.7 billion. Merchandise exports to India earned $430m in 2022, dominated by wood products, metals and wool, with contributions from high-value dairy ingredients such as whey proteins and lactose, kiwifruit, apples and pears, sheep meat and meat by-products.

Dairy exports have been held up as roadblocks to a successful NZ-India FTA — India is a big dairy producer — but the council said the failure was more to do with New Zealand trying to fit its high-quality FTA model to a unique Indian environment. The report cited big opportunities in non-commodity trade including aviation, tourism and travel, healthcare and technology.

India’s main trading partners were the US and China, with Australia its 10th largest with more than US$25b in bilateral trade. Multiple forecasts said India, thought to have passed China’s population, would be the world’s third-largest economy within five years, providing high GDP growth that would outstrip China’s.