TL;DR: New Zealand ambitiously pursues a free trade agreement with India, facing challenges due to India’s protectionist policies and the need for sustained diplomacy to access its fast-growing economy.
New Zealand’s government is ambitiously pursuing a free trade agreement with India, the world’s fastest-growing large economy. This initiative, while commendable, faces significant challenges due to India’s long-standing protectionist trade policies, particularly concerning agricultural products.
India has maintained these policies since gaining independence in 1947, fostering an economy heavily regulated by the government, which stifled entrepreneurship and imposed high trade barriers. However, reforms in the 1990s began to unleash the entrepreneurial spirit within India, leading to substantial economic growth reminiscent of China’s economic boom under Deng Xiaoping.
Despite these economic strides, agriculture remains a sensitive sector for India, heavily protected due to its critical role in supporting the livelihoods of millions. My experience as New Zealand’s high commissioner to India highlighted the complexities of enhancing commercial relationships in this environment, despite efforts to ease restrictions on agricultural exports.
Efforts to strengthen business ties included bolstering NZ/India Business Councils and exploring opportunities in various sectors, yet bureaucratic challenges persisted. Today, India boasts a booming economy, and Australia’s recent success in securing an FTA with India, after years of dedicated diplomacy, offers a template for New Zealand.
Achieving an FTA with India requires a nuanced approach, deepening bilateral relations through sustained effort and resource deployment. Critics argue New Zealand’s economy may not support the extensive efforts required, suggesting a focus on China might suffice. However, the pursuit of an FTA with India represents a strategic move to diversify trade relations and access a vast and growing market.
As we navigate the complexities of international trade, New Zealand must be prepared to invest in this long-term endeavour, aiming not just for economic gains but for a stronger, more diverse international partnership.
