Free Trade with New Zealand

Our country had sought various ways to avoid the crisis created by US President Trump's declaration of a tariff war by imposing a 50 percent tariff on Indian products. In line with the saying that when one door closes, another opens, one of the main ways that India has adopted to overcome this crisis is the proactive pursuit of Free Trade Agreements (FTAs) and the diversification of its trade partners. Even though India does not have the purchasing power of the United States, economists had predicted that the impact of the American decision could be countered by aggressively pursuing new Free Trade Agreements (FTAs) with other nations and boosting exports to diversify away from the US.

As part of this, India was holding talks related to entering into trade agreements with many foreign countries. The biggest gain for India in this was the finalisation of the India-New Zealand Free Trade Agreement. The agreement is to be signed within seven to eight months. Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Lacson had a telephone conversation as part of the finalisation of the agreement.

New Zealand will not impose tariffs on any Indian product from the date of entry into force of the agreement. Moreover, it has been decided to double the existing bilateral trade to $5 billion in the next five years. New Zealand will also implement temporary visas for Indian professionals as part of the agreement. Initially, 5,000 visas will be granted annually. The move, which has led to the finalisation of the free trade agreement with New Zealand, is fueling India's efforts to counter Trump's use of tariff hikes and visa bans as key weapons against other countries. India currently exports 8,284 items to New Zealand. When the agreement comes into effect next year, the import duty of 2.2 percent to 10 percent imposed by New Zealand on these products will be completely eliminated. This, in turn, will lead to lower prices and thereby increase sales.

95 percent of the products imported by India from New Zealand will be given a 70 percent tax exemption as part of the free trade agreement. As part of protecting the interests of Indian farmers, India will not give duty exemption on dairy products, onions, sugar, spices, edible oil, rubber, etc. The benefits that India will get as part of this agreement include $ 20 billion in foreign direct investment from New Zealand over the next 15 years, and the opportunity for Indian students in New Zealand to work for 20 to 25 hours. With more countries coming forward for such a tax-free agreement with India, Trump's tariff war may be like shooting blanks