Christopher Luxon wants to strike a trade deal with Narendra Modi's India.
Prime Minister Christopher Luxon is heading to India, taking along one of the largest delegations a New Zealand PM has ever travelled with.
The fanfare makes sense, given we currently export $718 million worth of goods to India annually, but we don’t have a formal free trade agreement (FTA).
With the world’s largest population and on track to become the world’s third-largest economy by 2030 – starting negotiations on that deal has been a priority for Luxon.
He even promised in the 2023 election campaign to finalise a deal within his first term of Government.
But brokering an agreement with India once and for all has been a shortfall of successive governments.
New Zealand and India previously entered into FTA negotiations in April 2010. The last round of negotiations (the 10th round) happened in Delhi in February 2015.
In early 2023, MFAT deputy secretary trade and economic Vangelis Vitalis told a parliamentary select committee that New Zealand was in a difficult position when it came to trade agreements with India because of the significance of dairy in both countries.
“India is a critical partner of ours and the Australians have a free trade agreement. That FTA does not include dairy … it is impossible for NZ to do an FTA that does not include dairy… because it is such a significant part of our export profile,” Vitalis said.
Newstalk ZB political editor Jason Walls told The Front Page he’d be surprised if Luxon returned with a deal.
" I don’t think that they will. The New Zealand First-National coalition agreement just says to ‘prioritise’ getting a free trade agreement with India, it doesn’t say to ‘get one’, which is smart, because India is a hard market to crack.
“We have been trying to get on top of the dairy issues from their perspective for decades and haven’t been able to do it,” he said.
Walls said there are many iterations of deals we make with other countries, including FTAs, but also multilateral agreements and something called a strategic comprehensive partnership – which Luxon signed with Vietnam last month.
" It’s actually quite significant because in countries like Vietnam. They’re a communist country and you need to work with the Government if you’re a business, and having these sorts of deals means that New Zealand is one of the preferred partners and there are only about 10 of those in the world.
“It’s not a ‘free trade agreement’ because they’re not working to lower tariffs. But what it is working to do is facilitate a relationship. So, trading deals and free trade agreements are important, but they’re not everything,” he said.
India New Zealand Business Council chairman Bharat Chawla, who is part of Luxon’s massive delegation, told The Front Page he hopes it’s the start of a very strong relationship.
" The relationships are strong. We talk about cricket a lot of the time. The first foreign coach for India was John Wright if I’m not wrong. The relationships are there, but we never thought to make that relationship stronger for the trade side.
“We always went to India with a transactional relationship. We never build a relationship before we start a transaction. A lot of agreements with India have been done lately, or in the last 10 years ...
“[From] 2010 to 2015 we did a lot of rounds. That was pretty good. But from 2016 to 2023, nothing happened or not much happened. So, when you start and stop, we restart again from zero,” he said.
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