India-New Zealand Free Trade Agreement: Key things to note

The India-New Zealand Free Trade Agreement (‘India-NZ FTA’), ratified by both countries on 21 September 2026, marks a significant milestone in bilateral economic relations between the two countries. The India-NZ FTA is set to come into force on 20 October 2026. This article provides a broad overview of the Agreement.

Trade in goods

A key feature of this FTA is New Zealand’s commitment to provide 100% duty-free market access across all tariff lines covering India’s current exports, thereby bolstering Indian exports to New Zealand by making Indian products competitive in the New Zealand market. Similarly, many of New Zealand’s products imported into India are likely to become cheaper.

It is to be noted that preferential tariff benefits under the India-NZ FTA will be available only to goods that qualify as originating under the Rules of Origin[1] set out under this Agreement. Broadly, a product will be regarded as originating if it:

a.       is wholly obtained or produced either in India or New Zealand; or

b.      satisfies the applicable Product Specific Rules and all other requirements prescribed under the agreement.

The above is applicable equally for exports from India to New Zealand as well as for imports from New Zealand to India. The origin criteria are examined in greater detail below.

Wholly obtained goods

Wholly obtained goods[2] include plant and agricultural products grown and harvested within the territory of a Party, live animals born and raised there, products obtained from such animals, fish and marine products harvested under specified conditions, minerals extracted from the territory, waste and scrap fit only for raw material recovery, and goods manufactured exclusively from such products. These provisions are particularly relevant for agricultural, marine and natural resource-based products where origin can be established based on the source of the goods. Wholly obtained products are automatically conferred origin under the India-NZ FTA. 

Goods which satisfy the Product Specific Rules

The purpose of the Product Specific Rules is to ensure that even if goods are not wholly originating in the Party country, still origin status can be conferred on them provided sufficient manufacturing or processing takes place within the territory of the Parties.

Such Product Specific Rules conferring origin have been set out for specific product classifications[3]. Depending on the product concerned, these rules may require any of the following conditions to be fulfilled:

        i.            achievement of a minimum Qualifying Value Content (that there should be a minimum value addition in New Zealand / India); or

      ii.            a prescribed change in tariff classification (that there must be a change in classification of non-originating inputs qua the output. Depending on product, such a change could be required at the Chapter level, Heading level, or Sub-heading level), or

    iii.            a combination of both (i) and (ii) above, or

    iv.            some other specific condition as has been set out in the Product Specific Rules.

The India-NZ FTA’s Rules of Origin are highly product specific and vary greatly between products. Further, the same is linked to the classification of the product. Thus, it is important to check and determine which is the origin condition applicable to product concerned, before deciding to avail the benefit.

Operations carried out must be beyond ‘minimal operations’

It is also important to bear in mind that the Rules of Origin further clarify that in order to confer origin, activities beyond minimal operations as mentioned in the Rules must be carried out. Thus, mere carrying out of minimal operations[4] like simple packaging, labelling, sorting, repacking, simple assembly, dilution, polishing or mixing will not confer origin benefit, irrespective of whether or not the products satisfy the Product Specific Rules.

Direct Consignment   

Furthermore, a fundamental condition for availing preferential tariff treatment is compliance with the direct consignment requirement[5]. Originating goods must generally be transported directly from the exporting country to the importing country. However, recognising the realities of international shipping and logistics, the agreement permits transit through one or more third countries, provided the goods remain under customs control and do not undergo any operations other than those necessary for preservation, transportation, consolidation of loads, repacking, relabelling, etc.

Proof of Origin

In order to avail the benefit under the India-NZ FTA, either of the following proof of origin must be submitted[6]: 

a.       A Certificate of Origin issued by an authorised issuing authority in the country of export; or

b.       An origin declaration filled by a ‘status holder’ in India or an ‘approved exporter’ in New Zealand.

Retrospective issuance of Proof of Origin

The Agreement also permits retrospective issuance of proof of origin in exceptional circumstances, but not later than 12 months from the date of import[7].

Third party Invoicing

Third party invoicing is a popular method in which business is conducted presently. The agreement also provides that preferential tariff treatment shall not be denied merely because it involves non-party invoicing module[8].

Goods in Transit / storage

It is most vital to note that the Agreement also contains transitional provisions dealing with goods that are already in transit when the FTA enters into force[9]. That is, even if goods are shipped prior to 20 October 2026, as long as the same are presented for customs clearance on or after 20 October 2026, they can claim benefit of FTA.  Thus, importers into India and exporters from India can make use of this provision even in respect of goods already shipped or in-transit.

Trade in services

 Under the India-NZ FTA, New Zealand has formally committed to not maintaining any cap on the number of Indian student visas. It also guarantees minimum work of 20 hours per week, during the Indian students’ study in New Zealand. The Agreement also provides up to three years’ post study work opportunities for Science, Technology, Engineering, or Mathematics bachelors and Masters graduates as well as up to four years for Doctorate holders.

New Zealand has also undertaken to establishes a new Temporary Employment Entry (TEE) visa for stay up to three years with a quota of 5,000 visas at a given time. AYUSH practitioners, yoga instructors, chefs, music teachers, as well as IT professionals, engineers, etc., can apply for this visa.

Investment under the India-NZ FTA

Another key feature of the India-NZ FTA is New Zealand’s commitment to facilitate investment of USD 20 billion into India over a period of 15 years. Both India and New Zealand have agreed to co-operate to bolster investments[10] by conducting information exchanges to identify investment opportunities, develop strategies and programs to promote investments, incentivize joint investments ventures, facilitate skill development etc.  The Agreement also envisages the establishment of an Investment Desk to support investment activities. The agreement also incorporates a rebalancing mechanism which enables India to take remedial measures in case the investment commitments are not realised.

Conclusion

Overall, the India-NZ FTA presents significant opportunities for Indians both in respect of trade of goods as well as services. Importers and exporters intending to avail the benefit of the India-NZ FTA are advised to examine the Agreement closely, as a thorough understanding of its provisions is essential for securing the preferential benefits offered by the same.

It is important to note that Indian importers claiming preferential tariff benefits will also need to comply with the requirements of Section 28DA of the Customs Act, 1962. The same mandates that Indian importers keep the information as required under the Form-I prescribed by the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 handy in case the Customs Authorities require it to ascertain the origin of the goods. A robust origin compliance mechanism will therefore be essential for businesses seeking to effectively utilise the benefits available under the India-New Zealand FTA.

[The authors are Partner and Principal Associate, respectively, in Customs practice at Lakshmikumaran & Sridharan]

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[1] Chapter 3 to the India-NZ FTA

[2] Article 3.3 of the India-NZ FTA

[3] Annexure 3A to the Agreement

[4] Article 3.7 of the India-NZ FTA

[5] Article 3.14 of the India-NZ FTA

[6] Article 3.15 of the India-NZ FTA

[7] Article 3.15.10 of the India-NZ FTA

[8] Article 3.17 of the India-NZ FTA

[9] Article 3.29 of India-NZ FTA

[10] Chapter 9 of India-NZ FTA