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 new report.
The report “India & New Zealand: a relationship ready for its next phase” by the India-New Zealand Business Councilsuggests Australia has left us in its dust in developing and cashing in on the trade opportunities with what is considered to be the world’s fastest-growing economy.
Urging New Zealand government, business, academic, cultural and sporting leaders to “get serious” about India, the report identifies many shortfalls in New Zealand’s 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 that with Europe, the UK and North Asia for India, currently 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 recent (non-prime) 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 to Australia, which had a specifically-tailored FTA (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”.
“However progress towards a growing and successful trade relationship with India can certainly be advanced in the medium term. As [Foreign] Minister [Nanaia] Mahuta has stated ‘there are other ways of strengthening relations with India.’
“These other ways are not alternatives to a comprehensive FTA, in which business will always be interested, but in the context of modern India, they are a prerequisite to achieving one.”
Among its many recommendations, the report urges the Government to develop a long-term strategy and implement and support a public/private partnership leadership model.
It suggests practical actions for strengthening relationships, boosting tourism and immigration (including more, and direct, airline services) and developing opportunities in the education, finance and primary production sectors. Other recommendations include raising public awareness of, and research into, understanding the diverse needs of India and the commercial, tax and employment regulatory settings. The report says initiatives in cultural and aid diplomacy would also be valuable in building the relationship.
New Zealand's greatest visibility in India is likely on the sports field, says the new report. Photo / photosport.nz
Rattray said an “all of government” approach was required. The report had been sent to all relevant government ministers and responses invited.
The report 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 India environment. The report cited big opportunities for New Zealand 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, with high GDP growth that would outstrip China’s.
India’s population included a deep pool of educated, skilled and highly mobile English-fluent youth, the report said.
Around 250,000 New Zealanders - 5 per cent of the population - claimed Indian heritage.
In 2020 the Ministry of Foreign Affairs and Trade issued a strategy paper “India-NZ 2025: Investing in the Relationship″. Its six relationship goals were still largely unfulfilled, said the report.
Australia had in 2018 released a “comprehensive, high-resolution” roadmap for advancing its economic relationship with India out to 2025. New Zealand could learn from Australia’s approach and subsequent success.
