New Delhi

TheIndia-New Zealand Free Trade Agreement (FTA) is set to come into force on October 20, aimed at doubling bilateral trade by 2030. Indian exporters are set to receive duty-free access to New Zealand across all tariff lines.

This is expected to improve the competitiveness of Indian products in sectors including textiles and garments, leather and footwear, gems and jewellery, engineering goods and processed foods, according to an article in Khalsa Vox news website.

Removing customs duties makes Indian products cheaper relative to competing imports in the New Zealand market, potentially creating opportunities for exporters seeking to expand their presence there.

Another important aspect of the agreement is that New Zealand has committed to investments worth $20 billion in India over the next 15 years. The two countries have also set themselves the goal of doubling bilateral trade by 2030.

Once the FTA kicks in on October 20, the changes will unfold in stages. Some tariffs will disappear immediately, while others will decline over several years and certain agricultural concessions will remain subject to quotas and safeguards, the article observes.

For Indian consumers, the most visible impact could eventually be felt in imported products such as kiwi fruit, apples and Manuka honey. However, the agreement does not throw open the Indian market across the board. Sensitive sectors, including dairy and several agricultural products, remain protected.

India has agreed to reduce or eliminate tariffs on around 70 per cent of its tariff lines covering imports from New Zealand. Some products will receive immediate duty-free access. These include wood, wool, sheep meat and raw hides.

Rather than allowing unrestricted imports at sharply reduced duties, India has created tariff-rate quotas for some agricultural products. These allow specified quantities to enter the country at lower tariffs while retaining safeguards around larger volumes, the article points out.

Kiwi fruit is one of the notable beneficiaries. In the first year of the agreement, up to 6,250 tonnes of New Zealand kiwi fruit will be eligible for duty-free entry into India. The quota will progressively rise to 15,000 tonnes by the sixth year. The concession, however, will be subject to conditions including a minimum import price and seasonal requirements.

However, in the case of apples for which also a quota has been fixed will attract a 25 per cent duty which is half the current 50 per cent tariff that is being levied. Here too, minimum import prices and seasonal conditions will apply.

The quota mechanism allows India to provide greater market access to New Zealand while limiting the potential impact of cheaper imports on domestic fruit growers.

However, an important aspect of the trade deal is that India has chosen not to open up its sensitive dairy sector to lower tariffs. Certain other agricultural products have also been excluded in order to protect the livelihoods of millions of small farmers across the country.