70% of Indian goods to enter New Zealand duty-free under FTA; big boost for MSMEs, says Piyush Goyal

Under the India–New Zealand FTA signed on April 27, 2026, approximately 70% of Indian goods will enter New Zealand without any import duty from the date of e...

What Happened

Under the India–New Zealand FTA signed on April 27, 2026, approximately 70% of Indian goods will enter New Zealand without any import duty from the date of entry into force, with 100% duty-free access phased in over the agreement's implementation period.
Key MSME-intensive sectors identified as beneficiaries include leather and footwear, textiles and apparel, AYUSH products, pharmaceuticals, medical devices, light engineering goods, and sports goods.
In the pharma and medical devices sector, the FTA includes a provision for mutual recognition of Good Manufacturing Practice (GMP) and Good Clinical Practice (GCP) inspection reports from comparable regulators — including the US FDA, European Medicines Agency (EMA), and UK's MHRA — reducing compliance costs and accelerating market entry.
Textiles and apparel — including garments, home textiles, man-made fibres, and traditional handloom products — will receive zero-duty access, boosting integration into global value chains and supporting employment in labour-intensive segments.
The agreement is expected to create fresh export opportunities for both organised exporters and small producers, with the Agra leather cluster specifically positioned to access New Zealand's high-income consumer market with zero duties on footwear, down from 5%.

Static Topic Bridges

MSMEs in India's Export Ecosystem

Micro, Small and Medium Enterprises (MSMEs) are defined under the MSMED Act, 2006, as amended by the Atmanirbhar Bharat package in 2020 (which revised investment and turnover thresholds). MSMEs contribute approximately 30% of India's GDP, 45% of total exports, and employ over 110 million people — making them the backbone of India's manufacturing and export base.

Revised MSME classification (2020): Micro — investment up to ₹1 crore, turnover up to ₹5 crore; Small — up to ₹10 crore investment, ₹50 crore turnover; Medium — up to ₹50 crore investment, ₹250 crore turnover.
Government support schemes: Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), MUDRA loans, Trade Receivables Discounting System (TReDS), and the Udyam Registration portal.
MSMEs historically face disadvantages in FTA utilisation due to limited awareness of rules of origin requirements, high compliance costs, and difficulty accessing trade finance.
The Foreign Trade Policy 2023-28 specifically aims to increase MSME participation in India's export growth.

Connection to this news: The New Zealand FTA's 70% immediate duty-free access removes the single largest barrier — tariff cost — for MSME exporters in labour-intensive sectors. Zero duties on leather footwear (from 5%), textiles, and AYUSH products directly benefit small and medium producers clustered in towns like Agra, Surat, Tirupur, and Panipat.

Tariffs, Non-Tariff Barriers, and Rules of Origin

A tariff is a tax imposed on imported goods by a customs authority. In FTA contexts, partner countries agree to reduce tariffs to zero or near-zero on agreed product lists. Non-tariff barriers (NTBs) include sanitary and phytosanitary (SPS) measures, technical barriers to trade (TBT), labelling requirements, and inspection regimes. Rules of Origin (RoO) determine whether a product qualifies for preferential tariff treatment by establishing how much of it was produced in the FTA partner country.

Poorly designed or complex RoO can prevent exporters from accessing FTA benefits — a key lesson from the India–Korea CEPA where Indian MSME utilisation remained low.
Mutual recognition agreements (MRAs) for regulatory standards — as negotiated in the pharma chapter of the NZ FTA — are a sophisticated NTB-reduction tool, directly reducing the cost of market access for compliant manufacturers.
WTO's Agreement on Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) Agreement establish global frameworks for non-tariff measures.
Geographical Indication (GI) tags, like Agra's leather footwear, provide brand identity that can command premium pricing in export markets.

Connection to this news: The India–New Zealand FTA addresses both tariff and non-tariff dimensions simultaneously — zero duties for goods and mutual GMP/GCP recognition for pharma — making it a more comprehensive market access package than simple tariff-reduction deals.

India's Pharmaceutical Sector and Regulatory Framework

India is the world's third-largest pharmaceutical producer by volume and the largest supplier of generic medicines globally, supplying approximately 20% of global generic drug volumes. The sector is regulated by the Central Drugs Standard Control Organisation (CDSCO) under the Drugs and Cosmetics Act, 1940.

India exports pharmaceuticals worth over USD 27 billion annually (2024-25); the USA, UK, South Africa, and Russia are top export markets.
GMP certification from CDSCO is required for domestic manufacturing; acceptance of equivalent foreign regulatory clearances (US FDA, EMA, MHRA) in the NZ FTA reduces the need for duplicative inspections.
The "Pharmacy of the World" tag reflects India's role in supplying affordable medicines to low- and middle-income countries; high-income markets like New Zealand represent a premium segment for Indian generic and branded generics.
AYUSH (Ayurveda, Yoga, Unani, Siddha, Homeopathy) products face high regulatory barriers in most developed markets; explicit recognition in the NZ FTA could create a template for other bilateral deals.

Connection to this news: The pharma and AYUSH provisions of the FTA open a high-income, quality-conscious market for Indian producers with globally recognised regulatory certifications, without requiring duplicative compliance — lowering market entry costs significantly.

Key Facts & Data

Share of Indian goods entering New Zealand duty-free immediately: approximately 70%; rising to 100% over implementation period
MSME contribution to India's exports: approximately 45%
MSME contribution to India's GDP: approximately 30%
India's pharmaceutical exports (2024-25): over USD 27 billion
Agra's share of India's leather footwear production: approximately 75%
India's leather industry export target by 2030: USD 50 billion
Duty on leather and footwear into New Zealand reduced from 5% to 0% on entry into force
Indian pharma GMP recognition equivalents accepted: US FDA, European Medicines Agency (EMA), UK MHRA
New Zealand per capita income: over USD 48,000 — a premium export destination
MSMED Act revised investment thresholds: 2020 (Atmanirbhar Bharat package)