PM John Key confident about trade talks after meeting with India's PM Modi

Prime Minister John Key is welcomed in New Delhi by India's PM Narendra Modi. Photo / Pool

Indian Prime Minister Narendra Modi has indicated he will visit New Zealand - with John Key confident his current trip to India has given trade talks momentum.

Key has also admitted his two trips to India in eight years is "a bit on the light side" - saying he has visited China six times in comparison.

"I personally think if you had to roll the clock forward in a decade and ask yourself, where is India going to sit, it's going to be a very, very significant player," he said after meeting the Indian Prime Minister.

Modi is famous for hugging other world leaders in greeting, including US President Barack Obama and French President Francois Hollande, but Key received only a handshake when being officially welcomed amidst great pomp and ceremony at the President's House in New Delhi.

Key later told New Zealand media that he felt he had achieved the prime objective for the trip, which was to jump start free trade negotiations that have struggled over 10 negotiation rounds since 2010.

"I think there is some political goodwill. He looks like he is going to pay a visit to us in New Zealand. I thought it was really good, constructive, warm chemistry there.

"He wants to make progress relatively rapidly, and he wants it to be comprehensive."

While Key directly addressed free trade negotiations in his statement to media after talks with Modi, including over lunch, the Indian Prime Minister only briefly mentioned wanting to work closely towards early conclusion of a comprehensive "economic cooperation agreement".

Key said that meant the free trade negotiations, and while less focused on trade than his own comments, they were still showed "tremendous progress".

"They were the most forward-leaning statements around a free trade agreement that we have heard out of the Indian Government. He wants to make progress relatively rapidly, and he wants it to be comprehensive.

"Now, like all of these things, obviously the recognition is it takes some time to work through the system and there are sensitivities and we'll have to work on that.
Without doubt, we are making progress."

Dropping steep agricultural tariffs would be extremely controversial in India, the world's largest producer and consumer of milk with millions of small-scale farmers.

Key's argument on that front is that the likes of Fonterra won't put India's small-scale farmers out of business, but through collaboration that comes after an FTA could boost productivity.

"If you look at why their GDP per capita stats are so low, it's because they still have hundreds of millions of citizens who are fundamentally in abject poverty, and they live in rural communities and agriculture is the basis of those communities.

"And the fastest way to move them out of poverty in the first instance is to improve productivity on the farm. And that's what New Zealand absolutely can do. [Modi] has seen that in China and what we are doing over there in terms of technology transfer."

India could also prefer to concentrate on the Regional Comprehensive Economic Partnership (RCEP) trade negotiations, involving 16 countries including New Zealand.

Key said because of the number of countries involved, his view was it was probably going to be faster to get a bilateral deal over the line.

The Prime Minister and his trade delegation will fly home tomorrow afternoon Indian time.

The trip was cut short after the Air Force's Boeing 757-200 had a faulty micro-switch, causing two take off attempts from a refuelling stop in Townsville to be aborted.

Key said he was happy the Air Force had been cautious, and called in a replacement plane.

"If it has a safety warning light that says, don't fly, history tells you very dumb politicians try and get them to overrule that."