One of the biggest Moves in Economic Cooperation.
At Bharat Mandapam, India and New Zealand have signed a historic Free Trade Agreement (FTA). This agreement was signed between Piyush Goyal and Todd McClay.
This agreement will enhance economic relations as it will lower trade barriers, allow companies and citizens in both regions to access markets better and will provide long-term prospects of developing business and employment in both nations.
Indian Exports are 100% Duty-Free.
One of the major aspects of the agreement is that all Indian exports would be duty-free to New Zealand. This will render Indian products to be competitive in that market.
Sectors set to benefit:
- Textiles and garments
- Leather and footwear
- Engineering goods
- Processed food products
Previously, Indian goods were relatively costly due to tariffs of up to 10%. Exporters, particularly MSMEs and artisans, will be encouraged to increase production as more people will need their goods with duty-free access and thus, more jobs will be created.
Balanced Protection and Sector Protection.
India has followed a measured approach towards market liberalization:
- Approximately 70 percent of tariff lines are being opened.
- Nearly 30% will see immediate duty removal
- Remaining tariffs will be reduced gradually over time
The sensitive industries like dairy, agriculture and metals are safeguarded. Products such as apples, kiwi, and Manuka honey have got safeguards in the form of tariff rates quotas to avoid sudden importation spurts.
Services and Skilled Work Opportunities.
The agreement provides good returns in the services market where New Zealand has opened 118 service categories that include:
- Information Technology
- Education
- Financial services
- Tourism
India The new visa pathway enables up to 5,000 Indian skilled professionals to work in New Zealand up to three years. Yoga teachers, chefs, educators, health care workers and others are beneficiaries.
Students will also benefit through:
- There is no limit to admissions.
- Permission to work part time.
- Prolonged post-study work experiences.
Gains in Investment and Trade Facilitation.
New Zealand has undertaken to enable USD 20 billion investment in India with an objective of investing in sectors such as:
- Infrastructure
- Renewable energy
- Digital services
The agreement makes it easier to access markets in India with pharmaceuticals and medical devices as it acknowledges international standards of regulations. It also enhances the efficiency of trade by:
- Faster customs clearance
- Paperless documentation
- Transparent procedures
The steps will contribute to cost reduction and facilitate doing business.
Increase Agriculture, MSMEs and Cultural Exchange.
The FTA also encourages non trade cooperation:
Research and improved agricultural practices.
Increased opportunities of MSMEs and startups by global value chains.
Expansion in organic trade based on mutual recognition standards.
- It also incorporates the cultural exchange and traditional knowledge such as the AYUSH systems and creative industries which create new channels of soft power and niche exports such as tea, rice and spices.
- A Good Foundation to Future Growth.
- As bilateral trade is already increasing, this agreement will be able to boost trade volumes, exports, and jobs greatly. It also intensifies the Indian involvement with the developed economies, and diversifies its international trading relationships.
- States like Gujarat, Maharashtra, Tamil Nadu and Punjab will get opportunities to benefit by increased exports. All in all, the FTA provides a good ground on top of which the economic growth and further international cooperation can be sustained.
Exam-Focused Points
- A Free Trade Agreement was signed between India and New Zealand at Bharat Mandapam, New Delhi.
- Offers full Indian duty-free to export into New Zealand.
- India liberalizes tariff lines by 70 percent although sensitive areas are safeguarded.
- Has protection measures such as tariff rate quotas on certain farm imports.
- Indian professionals are allowed to work in 118 service sectors in New Zealand.
- Gives five thousand skilled laborers the freedom to labor up to three years.
- Enables 20 billion investment into India.
- Enhances MSMEs, agricultural cooperation and cultural exchange.