India and New Zealand have concluded negotiations on a free-trade agreement, but its immediate impact on merchandise trade is likely to be limited given bilateral flows of just $2.1 billion in FY2025, according to a Global Trade Research Initiative (GTRI) analysis.The agreement, finalised on December 22 following a phone call between Prime Minister Narendra Modi and New Zealand Prime Minister Christopher Luxon, is India’s seventh trade pact in recent years and is expected to be signed in the first quarter of 2026.“Given the limited scale of bilateral trade, the India–New Zealand FTA is less a trade breakthrough than a framework for deeper cooperation,” said Ajay Srivastava, founder of GTRI, in the report prepared on the deal.Bilateral trade between the two countries stood at $2.1 billion in FY2025, including goods and services. India exported $711.1 million to New Zealand, led by aviation turbine fuel, textiles and clothing, pharmaceuticals and machinery. New Zealand’s exports to India, worth $587.1 million, were dominated by raw materials and farm-linked inputs such as wood products, scrap metals, coal and wool.Dairy, the most politically sensitive sector in the negotiations, remains commercially marginal. New Zealand’s dairy exports to India totalled just $1.07 million in FY2025. India, home to millions of small dairy farmers, has consistently resisted opening the sector.“India has preserved its policy space in sensitive areas, especially dairy, which remains outside the scope of meaningful market access,” Srivastava said.Services trade, though less visible, outweighs goods in value. New Zealand government data shows India exported $255.8 million in services to New Zealand in FY2025, while services imports from New Zealand reached $550 million, driven largely by education. India does not publish country-wise services trade data.The FTA spans 20 chapters, covering trade in goods and services, rules of origin, customs facilitation, dispute settlement and newer areas such as investment promotion, MSME cooperation, sustainability, intellectual property and traditional knowledge.Tariff concessions are asymmetrical. New Zealand will eliminate duties on 100% of its tariff lines from the date of entry into force, including around 450 lines that earlier attracted tariffs of about 10% on Indian exports such as textiles, apparel, ceramics and automotive components. India has offered market access on 70% of tariff lines, with sensitive farm products managed through tariff-rate quotas, minimum import prices and safeguard measures.“The structure of tariff concessions reflects India’s calibrated approach, opening selectively while protecting politically sensitive agricultural sectors,” Srivastava said.On services and mobility, New Zealand has committed in 118 services sectors and introduced provisions for student work rights, post-study visas and a temporary employment pathway allowing up to 5,000 skilled Indian professionals to work in the country at any time. India has offered services market access in 106 sectors.Investment is a key pillar of the pact. New Zealand has committed to facilitate $20 billion in foreign direct investment into India over 15 years, backed by a rebalancing mechanism similar to provisions in India’s agreement with EFTA countries.“An FTA alone will not unlock the full potential of India–New Zealand economic ties,” Srivastava said. “The real impact will depend on how both countries use it to strengthen supply chains, expand services trade, deepen education and skills partnerships, and leverage the Indian diaspora.”The report said doubling bilateral trade by 2030 would require stronger business engagement, improved connectivity, simpler visa regimes and mutual recognition of professional qualifications, particularly in IT, healthcare and aviation.