The recently concluded India–New Zealand Free Trade Agreement has sparked intense political debate in Wellington, exposing sharp divisions within the country’s ruling coalition. While both governments have hailed the pact as a landmark step toward deeper economic engagement, critics argue that the agreement falls short of delivering balanced benefits.
At the centre of the controversy is New Zealand Foreign Minister Winston Peters, who has openly criticised the deal’s substance and speed. His remarks have shifted the narrative from celebration to scrutiny, raising questions about trade-offs made on immigration, investment and core export interests.
As the agreement awaits domestic political navigation, the dispute highlights the broader challenge of reconciling strategic partnerships with domestic economic realities, particularly for sectors that form the backbone of New Zealand’s rural economy.
Winston Peters Calls Trade Pact “Neither Free Nor Fair”
New Zealand Foreign Minister Winston Peters said his party was “regrettably opposed” to the trade agreement with India, describing it as a low-quality deal that gives away too much while delivering limited returns.
According to Peters, the agreement makes serious concessions on immigration and investment without securing meaningful gains for New Zealand’s most important export sectors. He argued that the deal fails to meet the expectations of rural communities who depend heavily on trade outcomes.
His comments mark one of the strongest internal challenges to a major trade agreement in recent years and underscore the political sensitivity surrounding international economic negotiations.
Dairy Sector at the Heart of the Opposition
A major sticking point for New Zealand First is the exclusion of core dairy products from the agreement. Peters stressed that dairy exports such as milk, cheese and butter form a crucial pillar of New Zealand’s economy.
He pointed out that this agreement would be the first trade deal New Zealand has signed that excludes meaningful access for its flagship dairy products. This, he argued, makes the pact extremely difficult to justify to farmers and exporters.
With dairy accounting for a significant share of the country’s total goods exports, critics fear the agreement sets an uncomfortable precedent for future trade negotiations.
Government’s Case for the Trade Deal
Despite the criticism, the New Zealand government has defended the agreement as a major economic opportunity. Officials say the deal will eliminate or reduce tariffs on 95% of New Zealand’s exports to India.
More than half of these products are expected to become duty-free from the very first day of implementation, while Indian goods would gain full duty-free access to the New Zealand market.
Supporters argue that the agreement lays the foundation for long-term trade growth and deeper commercial ties between two complementary economies.
Prime Minister Luxon Highlights Economic Gains
Prime Minister Christopher Luxon has described the agreement as delivering wide-ranging and significant benefits for New Zealand. He emphasised India’s vast market size and rapid economic growth as key reasons for pursuing the deal.
According to Luxon, the agreement has the potential to generate jobs, expand exports and drive economic growth for New Zealand businesses.
The pact also fulfils an election promise made by Luxon’s National Party to conclude a free trade agreement with India within its first term in office.
India Welcomes the Agreement as Historic
Prime Minister Narendra Modi has described the agreement as a historic milestone achieved in a remarkably short period. He said the deal sets the stage for doubling bilateral trade within five years.
India has also welcomed long-term investment commitments from New Zealand across diverse sectors, viewing the agreement as a catalyst for deeper economic cooperation.
Indian officials have highlighted opportunities for innovators, entrepreneurs, farmers, students and small businesses, framing the pact as a win-win partnership.
Speed of Negotiations Draws Criticism
Winston Peters has questioned not only the substance but also the pace of the negotiations. He said his party had urged coalition partners not to rush into concluding a low-quality deal.
According to Peters, taking more time could have resulted in a fairer agreement that delivered stronger outcomes for both countries.
He accused supporters of prioritising speed and political optics over the hard work required to secure balanced concessions.
Immigration Provisions Raise Alarm
Another major concern raised by New Zealand First relates to immigration provisions within the agreement. Peters argued that the deal makes serious concessions unrelated to trade.
He claimed that New Zealand has offered significantly greater labour market access to India on a per capita basis than comparable agreements signed by other countries.
These provisions, he warned, could place additional strain on New Zealand’s labour market at a time of economic pressure.
Concerns Over Employment and Labour Market Impact
Peters expressed concern that the agreement could encourage increased migration from India despite existing unemployment challenges in New Zealand.
He argued that provisions relating to work rights for students and new employment visas could limit the ability of future governments to adjust labour market policies.
Critics fear that such commitments may reduce policy flexibility during periods of economic downturn.
Indian Safeguards on Sensitive Sectors
The Indian government has clarified that several sensitive sectors have been excluded from market access under the agreement. These include dairy, sugar, spices, edible oils and rubber.
Officials said these exclusions are necessary to protect Indian farmers and domestic industries from sudden competition.
This protective approach has reinforced concerns in New Zealand about the imbalance of concessions between the two sides.
Trade Volumes Remain Modest
Two-way trade between India and New Zealand currently stands at a relatively modest level compared to India’s overall global trade.
New Zealand exports to India are dominated by forestry and agricultural products, while India exports pharmaceuticals and manufactured goods.
Supporters of the deal argue that the agreement is designed to expand this base over time rather than deliver immediate dramatic gains.
Investment Commitments and Long-Term Vision
New Zealand has committed to investing billions of dollars in India over the coming years as part of the broader economic partnership.
Proponents say this investment will open new opportunities for New Zealand firms while strengthening strategic ties with one of the world’s fastest-growing economies.
Critics, however, question whether these long-term promises offset the immediate concessions made.
Peters Emphasises Respect for India
Despite his opposition, Winston Peters has stressed that his stance should not be interpreted as hostility toward India.
He described the India–New Zealand relationship as strategically important and said strengthening ties with New Delhi remains a priority.
Peters noted that his first overseas visit as foreign minister outside the Pacific region was to India, underscoring his commitment to bilateral engagement.
Coalition Tensions Come to the Fore
The disagreement over the trade deal has exposed fault lines within New Zealand’s coalition government.
While National Party leaders champion the agreement as a breakthrough, New Zealand First’s opposition highlights the challenge of maintaining unity on complex economic issues.
The outcome of this internal debate could shape how the agreement is implemented and communicated domestically.
Debate Over Fairness and Future Trade Policy
The controversy has reignited broader discussions about what constitutes a fair trade agreement for a small, export-dependent economy.
Questions around sectoral protection, labour mobility and national interest are now firmly in the public domain.
As the India–New Zealand trade deal moves forward, it will remain a defining test of how economic ambition is balanced against domestic priorities.
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About the Author:
Harshit Raj
