New Zealand FTA kicks in: Can zero tariffs boost India’s exports? Which sectors stand to gain? Expert weighs in

India’s free trade agreement (FTA) with New Zealand, which came into force on October 20, coinciding with Vijayadashami, could open up opportunities for Indian exporters across sectors, including engineering goods, automotive components, textiles, leather and pharmaceuticals.

Commerce and Industry Minister Piyush Goyal described the agreement as a “Vijay” for both countries, highlighting the potential for stronger bilateral trade ties.

However, translating duty-free access into sustained export growth will depend on competitive pricing, regulatory compliance and reliable supply chains, according to Saurav Kumar, managing director of Protiviti’s member firm for India.

India’s merchandise exports to New Zealand stood at approximately $1.1 billion in FY2025-26.

Kumar told LiveMint the agreement could help Indian businesses expand their presence in the market, particularly as geopolitical uncertainty prompts companies to diversify their supply chains and sourcing destinations.

“I see opportunities extending well beyond textiles, leather and engineering goods. Sectors such as automotive components, pharmaceuticals, processed foods, IT services, engineering consultancy, digital solutions and professional services could also benefit,” Kumar said.

Engineering goods, auto parts among potential beneficiaries

The removal of import duties could improve the price competitiveness of Indian products, particularly in sectors where margins are tight and buyers compare suppliers primarily on cost, Kumar said.

Engineering goods and automotive components could benefit from improved price positioning, while specialised machinery and other industrial products could also find opportunities in the New Zealand market.

However, tariff concessions alone would not guarantee an increase in orders.

The extent of the competitive advantage would also vary across product categories and depend on the trade arrangements available to competing countries, Kumar said.

Logistics, certification could limit gains

Despite lower tariffs, Indian exporters will continue to face challenges related to freight costs, shipment volumes, inventory management, certification and local distribution.

Businesses should not assume that zero-duty access would automatically make their products commercially viable in New Zealand, Kumar cautioned. Logistics and compliance costs could erode the savings from tariff reductions, particularly for smaller exporters.

“The key mistake would be to assume that zero-duty access automatically makes a product commercially viable. Freight costs, shipment volumes, inventory management, certification and local distribution can quickly erode the savings,” he said.

Kumar also highlighted evolving requirements around traceability, cybersecurity, data protection and product sustainability.

Technology could help businesses improve documentation and supply-chain visibility, but smaller exporters would need market-specific expertise and reliable distribution partners to navigate local requirements, as per Kumar.

Can New Zealand diversify India’s export markets?

New Zealand could emerge as an additional destination for Indian exporters amid global trade uncertainty, although its relatively small market means it is unlikely to replace larger export destinations, Kumar said.

“New Zealand could serve as an attractive additional market for Indian exporters, although I would not view it as a substitute for larger export destinations,” he said.

He identified specialised engineering products, automotive components and machinery as potential opportunities, arguing that Indian businesses should focus on product segments where they have a competitive advantage rather than pursuing export volumes alone.

Expanding into additional markets could help Indian companies reduce their dependence on a limited number of destinations and build more resilient export relationships.

What will determine the FTA’s success?

To capitalise on the agreement, Indian businesses will need to identify products in which they have a genuine competitive advantage, build relationships with local buyers and strengthen quality standards, cost efficiency and delivery performance, Kumar said.

The agreement’s impact should be assessed over the next two to three years through indicators such as export growth, repeat orders, the number of active exporters, export profitability and capacity utilisation, he added.

“From a manufacturing perspective, the true measure of success will be whether the FTA translates into sustained demand, improved utilization of existing capacity and profitable growth, rather than merely an initial rise in shipments,” Kumar said.