India-New Zealand FTA Ring-Fences Dairy Sector, No Import Access

Export-Only Dairy Processing Allowed, Domestic Farmers Protected

India has firmly safeguarded its domestic dairy sector under the newly concluded India–New Zealand Free Trade Agreement (FTA) , even as it allows a narrowly defined, export-oriented investment window. Commerce and Industry Minister Piyush Goyal clarified that the agreement does not permit any dairy imports into India , addressing apprehensions raised by farmer organisations and political stakeholders.

Export-Only Dairy Processing Framework

Under a ring-fenced investment arrangement , New Zealand companies may bring dairy raw materials or intermediate ingredients into India only for processing and re-export . The framework mandates that 100% of the processed output must be exported , with strict safeguards to prevent any diversion into the domestic market. Approvals will be routed through a fast-track mechanism applicable exclusively to export-oriented units, ensuring regulatory oversight and traceability.

No Tariff Concessions, Dairy Outside FTA Scope

The minister reiterated that no duty concessions have been offered on dairy imports and none are envisaged in the future. Dairy has been kept completely outside the FTA’s market-access commitments , reflecting its status as a highly sensitive sector that supports millions of small and marginal farmers . The agreement is expected to come into force next year, without altering India’s long-standing position on dairy protection.

Side Letter: Consultative, Not Binding

Responding to concerns about a side letter attached to the pact, Goyal clarified that it carries no binding obligation . It merely provides for consultations during future reviews, and only if India were ever to open its dairy sector to another comparable economy. He emphasised that dairy has consistently been a red-line issue for India in all trade negotiations, making such a scenario unlikely.

What to Note for UPSC Prelims?

• India has never opened dairy under any FTA

• New Zealand is a major global dairy exporter

• Side letters can enable consultations without commitments

• Dairy is politically sensitive due to farmer livelihoods

Limited Existing Trade

Despite New Zealand’s global stature, its dairy exports to India remain minimal— just over $1 million in FY2025 . The FTA’s design aims to encourage investment-led exports while preserving India’s domestic dairy ecosystem.