A decade after stalled negotiations, New Zealand is once again pushing for a bilateral Free Trade Agreement (FTA) with India, with textiles emerging as a significant area of potential collaboration. Trade Minister Todd McClay’s recent visit to New Delhi signals a renewed commitment to restarting talks, particularly in light of India’s recent trade agreements, notably the Economic Cooperation and Trade Agreement (ECTA) with Australia.
While previous discussions faltered due to disagreements over sensitive sectors like dairy and agriculture, the evolving global trade landscape and New Zealand’s new coalition government have spurred a renewed interest in exploring a mutually beneficial trade pact. McClay himself has emphasised the importance of securing an FTA with India during his term.
For the textile industries of both nations, this renewed engagement presents exciting possibilities. India’s textile exports to New Zealand currently form a small but notable part of the trade relationship, included within a broader category of “textile articles.” These could encompass a range of products, from yarns and fabrics to finished garments and home textiles. A formalised FTA could significantly boost these exports by reducing or eliminating tariffs, making Indian textiles more competitive in the New Zealand market.
Conversely, New Zealand, while not a major textile producer in the same volume as India, offers unique, high-quality wool and other natural fibres. These premium materials could find a receptive market within India’s growing demand for high-end textiles and sustainable fashion. This potential synergy between India’s manufacturing prowess and New Zealand’s specialised fibre production could create valuable opportunities for both countries.
The existing trade figures, with India’s exports to New Zealand at $538 million and imports at $335 million in FY24, highlight the current sub-optimal level of trade. While India’s exports are diversified, including pharmaceuticals, mineral fuels, and importantly, textiles, its imports from New Zealand consist largely of mineral fuels, wood, iron, steel, and kiwi fruit. This signifies a clear opportunity for diversification and growth within the textile sector.
The earlier suspension of talks in 2015 centred on India’s reluctance to open its dairy market. However, the recent statements from both New Zealand’s Foreign Affairs Minister Winston Peters and Trade Minister McClay suggest a shift in approach, with a growing recognition of the broader benefits of a trade partnership with India. The success of the India-Australia ECTA, which grants Australia preferential access to certain sectors, including those related to agriculture, has likely played a role in this shift. This agreement serves as a tangible example of the potential gains from such partnerships, further motivating New Zealand’s pursuit of an FTA with India.
As India finalises its Standard Operating Procedures (SOPs) for future FTA negotiations and manages ongoing talks with the UK and the EU, the prospect of weaving a stronger trade relationship with New Zealand, particularly within the textile sector, presents a compelling opportunity for mutual economic growth and collaboration. A well-negotiated agreement could unlock significant potential for both nations, creating new markets for textile producers and fostering innovation and exchange within the industry.
