New Zealand Free Trade Agreement Begins: Can Zero Tariffs Boost Indian Exports? Which sectors can gain? Expert weighs | Today’s news

India’s Free Trade Agreement (FTA) with New Zealand, which came into force on October 20 to coincide with Vijayadashami, could open up opportunities for Indian exporters across sectors including engineering goods, auto components, textiles, leather and pharmaceuticals.

Commerce and Industry Minister Piyush Goyal described the deal as a “Vijay” for both countries and highlighted 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, India managing director of member firm Protiviti.

Exports of goods from India to New Zealand were approximately USD 1.1 billion in FY2025-26.

Kumar told LiveMint that the deal could help Indian businesses expand their market presence, especially as geopolitical uncertainty forces companies to diversify their supply chains and acquire destinations.

“I see opportunities extending far beyond textiles, leather and engineering goods. Industries such as auto components, pharmaceuticals, processed food, IT services, engineering consulting, digital solutions and professional services could also benefit,” Kumar said.

Engineering goods, auto parts among potential beneficiaries

Removing import tariffs could improve the price competitiveness of Indian products, especially in industries where margins are thin and buyers compare suppliers primarily on cost, Kumar said.

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

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

Read also | India-New Zealand Free Trade Agreement to take effect: What’s in the deal for New Delhi

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

Logistics, certification could limit profits

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

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

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

Kumar also highlighted the evolving requirements around traceability, cyber security, data protection and product sustainability.

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

Can New Zealand diversify India’s export markets?

New Zealand could become another 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 consider it a substitute for larger export destinations,” he said.

He identified specialized engineering products, auto parts and machinery as potential opportunities and argued that Indian businesses should focus on product segments where they have a competitive advantage rather than focusing solely on exports.

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

What will determine the success of the FTA?

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

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

“From a manufacturing perspective, the real measure of success will be whether the FTA translates into sustained demand, better utilization of existing capacity and profitable growth, rather than just an initial surge in supply,” Kumar said.