New Zealand’s Prime Minister Seeks Support for India Trade Deal

The recently signed India-New Zealand Free Trade Agreement (FTA) requires bipartisan support as it heads to the New Zealand Parliament. Indian Prime Minister Narendra Modi finalized the deal earlier this week, but coalition partner New Zealand First has withheld its backing, prompting Prime Minister Christopher Luxon to seek support from the Opposition Labour Party.

Under the terms of the FTA, New Zealand will offer thousands of temporary work visas each year for professionals from India in fields such as IT, engineering, and healthcare. Additionally, Indian students will benefit from enhanced post-study work opportunities and Working Holiday visas. The negotiation process, which resumed in March 2025 after nearly a decade-long pause, has drawn attention due to its rapid progression.

India is actively pursuing trade agreements with various nations, including the United States and the European Union, having already signed pacts with the United Kingdom and Oman. This surge in trade negotiations reflects India’s strategy to expand its export markets, particularly in response to recent tariff increases imposed by the Trump administration on Indian imports to the US.

Despite the progress represented by the FTA, India remains firm on protecting its dairy sector. Following the FTA announcement, Indian Commerce Minister Piyush Goyal reiterated that India would not negotiate its dairy market, reinforcing the view of India as a “protectionist” nation. This stance, however, shifts the focus of the trade agreement from dairy to fostering economic ties between India and New Zealand amidst global uncertainties.

New Zealand First leader Winston Peters has voiced strong opposition to the deal, arguing it compromises New Zealand’s interests, particularly regarding immigration. Peters stated, “Regrettably, this is a bad deal for New Zealand. It gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy.” He highlighted that New Zealand’s dairy exports, which include milk, cheese, and butter, totaled $24 billion, accounting for approximately 30% of the country’s total goods exports in the year leading to November 2025.

Peters contends that the FTA is more focused on facilitating the movement of people from India to New Zealand rather than enhancing two-way trade. He expressed concerns that an influx of workers from India could exacerbate existing pressures in the New Zealand labor market, citing high unemployment rates among locals.

This trade deal has already begun to create tensions within the National-led government. The Labour caucus meeting scheduled for early 2026 will be crucial, as the party evaluates its position on the FTA. Labour’s trade spokesman, Damien O’Connor, has indicated support for an agreement with the world’s most populous nation, describing it as “worth supporting.”

Prime Minister Luxon finds some solace in the fact that the ACT Party, another coalition partner, has not expressed significant opposition to the trade agreement. The discord surrounding the FTA has a layer of irony, as Peters serves as Foreign Minister and oversees the Ministry of Foreign Affairs and Trade. The ministry emphasizes that closer collaboration with India supports New Zealand’s commitment to a stable, rules-based trading environment and mutual interests in security and prosperity.

According to forecasts, India’s GDP is projected to reach around NZ $12 trillion by 2030, positioning it among the world’s largest economies. The Ministry of Foreign Affairs and Trade anticipates that the impact of the NZ-India FTA will increase over time, suggesting a potential misalignment between Peters and the ministry’s objectives.

The FTA is set to be formally signed in early 2026, with parliamentary approval likely to be delayed until after the next general election later that year. This timeline suggests the agreement will become a pivotal issue in the upcoming campaign. Trade Minister Todd McClay has already branded the deal as “historic,” while Prime Minister Luxon has positioned it as a key element of his electoral strategy.

In the past, Luxon criticized Labour for neglecting India by failing to reignite trade talks. The former Labour government had prioritized the dairy sector in its negotiations, which stalled the FTA. Luxon seized the opportunity to restart discussions, leading to the current deal. He stated, “The Foreign Minister has visited India twice. Earlier this year, I led New Zealand’s largest-ever trade mission to India. The result is a high-quality trade agreement with a trusted partner that will deliver deep and lasting benefits for New Zealand.”

This rhetoric has left Labour in a defensive position, yet the successful delivery of the agreement is essential for the National government. The India-New Zealand FTA stands as a significant milestone in strengthening bilateral relations between the two nations.