India’s engineering exports to New Zealand set to double after FTA

India's engineering exports to New Zealand reached USD 140.5 million in 2025–26, a growth of approximately 8 per cent from USD 129.8 million in the previous ...

What Happened

India's engineering exports to New Zealand reached USD 140.5 million in 2025–26, a growth of approximately 8 per cent from USD 129.8 million in the previous fiscal, led by automobiles, industrial machinery (especially for the dairy sector), medical and scientific instruments, and metal-based products.
Following the signing of the India–New Zealand Free Trade Agreement (FTA), which provides 100 per cent duty-free market access to all Indian goods from the date of entry into force, engineering exports are projected to double to USD 280–300 million over the next five years.
New Zealand has also committed to invest USD 20 billion in India over the next 15 years as part of the broader FTA framework.
The two countries aim to grow bilateral trade from USD 1.3 billion currently to USD 20 billion.

Static Topic Bridges

Free Trade Agreements: Types, Provisions, and India's FTA Architecture

A Free Trade Agreement (FTA) is a trade bloc arrangement in which member countries agree to reduce or eliminate tariffs, import quotas, and preferences on most (or all) goods and services traded between them. FTAs can be "goods-only" or "comprehensive" (covering goods, services, investment, intellectual property, and technical barriers to trade). India has been pursuing a "FTA 2.0" strategy since 2020, focusing on Comprehensive Economic Cooperation Agreements (CECAs) and Comprehensive Economic Partnership Agreements (CEPAs) with strategic partners.

Types: Free Trade Agreement (FTA) → Preferential Trade Agreement (PTA) → Comprehensive Economic Cooperation Agreement (CECA) → Comprehensive Economic Partnership Agreement (CEPA).
India's active FTAs/CEPAs: UAE-CEPA (2022), Australia-ECTA (2022), Mauritius-CECPA (2021), Japan-CEPA (2011), South Korea-CEPA (2010), ASEAN-FTA (goods: 2010; services: 2015).
India–New Zealand FTA provides 100% duty-free access for all Indian goods to New Zealand from day one of entry into force.
New Zealand's commitment: USD 20 billion investment in India over 15 years.
Bilateral trade target: USD 20 billion (from current USD 1.3 billion).

Connection to this news: The India–New Zealand FTA eliminates the tariff barrier that previously disadvantaged Indian engineering goods (automobiles, machinery, medical instruments) relative to competitors from countries with existing trade deals with New Zealand.

Engineering Exports and EEPC India

India's engineering sector is the largest component of merchandise exports, contributing approximately 24–26 per cent of total goods exports. The Engineering Export Promotion Council (EEPC India), established in 1955, is the apex body for promoting engineering exports under the Ministry of Commerce and Industry. Engineering exports cover a wide range: capital goods, industrial machinery, auto components, iron and steel products, electronics, and medical devices.

India's total engineering exports in 2024–25: approximately USD 109–112 billion (approximately 26% of total merchandise exports).
Key export markets: USA, China, UAE, Germany, UK, Singapore.
EEPC India: established 1955; functions as an Export Promotion Council (EPC) under EXIM Policy.
New Zealand sub-categories driving growth: automobiles, dairy-sector industrial machinery, medical/scientific instruments, aluminium and zinc products.

Connection to this news: The FTA's zero-duty access makes Indian engineering goods immediately price-competitive in New Zealand relative to suppliers from countries without an FTA with New Zealand, directly driving the projected doubling of exports.

India–Australia ECTA: A Comparable Precedent

The India–Australia Economic Cooperation and Trade Agreement (ECTA), signed May 2, 2022, and in force from December 29, 2022, was India's first comprehensive FTA with a developed economy in over a decade. Under ECTA, Australia provided duty-free access on 98.3 per cent of Indian tariff lines (covering 96.4% of India's exports to Australia) immediately upon entry into force; India provided preferential access on 70.3 per cent of its tariff lines. The ECTA serves as a template for India's FTA strategy with other Oceania economies, including New Zealand.

India–Australia ECTA: signed May 2, 2022; in force December 29, 2022.
Australia duty-free access for India: 98.3% of tariff lines immediately.
Major Indian beneficiary sectors under ECTA: textiles, leather, jewellery, engineering goods, pharmaceuticals.
India–Australia bilateral trade target: USD 45–50 billion by 2035.

Connection to this news: The India–New Zealand FTA mirrors the ECTA approach — 100% immediate duty-free access for Indian goods — and signals India's growing ability to conclude ambitious trade deals with Oceania economies.

WTO Most Favoured Nation (MFN) Principle and FTA Exceptions

Under World Trade Organization (WTO) rules, the Most Favoured Nation (MFN) principle (Article I of GATT 1994) requires that any trade advantage granted to one country must be extended to all WTO members. FTAs are permitted as exceptions under Article XXIV of GATT, provided they cover "substantially all trade" (generally interpreted as at least 90 per cent of trade by value) and are notified to the WTO. India notifies all its FTAs to the WTO Committee on Regional Trade Agreements.

MFN principle: GATT Article I — non-discrimination cornerstone of WTO.
FTA exception: GATT Article XXIV — permits preferential tariff elimination if covering substantially all trade.
Services FTA exception: GATS Article V.
India is a founding member of the WTO (January 1, 1995).
WTO has 166 members as of 2024.

Connection to this news: The India–New Zealand FTA, by granting 100% duty-free access exclusively to each other, is a preferential arrangement permitted under Article XXIV — it derogates from MFN obligations and is therefore required to cover substantially all trade to be WTO-compliant.

Key Facts & Data

India–New Zealand bilateral trade (current): USD 1.3 billion; target: USD 20 billion.
India's engineering exports to New Zealand (2025–26): USD 140.5 million (up ~8% YoY).
Projection post-FTA: USD 280–300 million within five years.
New Zealand investment commitment: USD 20 billion in India over 15 years.
FTA benefit: 100% duty-free access for all Indian goods from day one of entry into force.
Key export sectors: automobiles, dairy-sector machinery, medical/scientific instruments, iron/steel/aluminium products.
India–Australia ECTA (comparable): signed May 2, 2022; in force December 29, 2022.
India's total engineering exports: ~USD 110 billion (approximately 26% of total merchandise exports).