India rewrites its trade playbook

For nearly a decade, India’s trade policy was defined as much by what it avoided as by what it pursued. Concerns over import surges, uneven gains from earlier agreements, and the political sensitivity of agriculture and manufacturing fostered a cautious approach to free trade agreements. That posture has now shifted. The conclusion of the India–New Zealand Free Trade Agreement, alongside a string of recent pacts with major partners, signals a clear recalibration. India is no longer sitting out the global trade architecture. It is attempting to shape it, selectively and strategically.

This shift is rooted less in ideology than in economic necessity. India’s ambition to sustain high growth, expand manufacturing, and generate employment cannot rest on domestic demand alone. Exports, services, and participation in global value chains are no longer peripheral to development strategy. They are central. At the same time, global trade itself has changed. Tariffs matter, but rules, standards, regulatory approvals, logistics, investment protections, and professional mobility now determine real market access. India’s new generation of FTAs reflects this reality.

The recent agreement with New Zealand offers a useful case study. On headline numbers alone, the partnership may appear modest. Bilateral trade volumes are limited, and New Zealand is not among India’s top export destinations. Yet the agreement’s significance lies less in scale and more in design. It reveals how India is using FTAs as instruments to secure credibility in high standards markets, attract long term investment, and embed itself in trusted trade networks, particularly in the Asia Pacific region.

The logic behind India’s broader FTA push is straightforward. Even relatively low tariff peaks of five to ten per cent can render Indian goods uncompetitive in overseas markets. Preferential access under FTAs helps correct this disadvantage. More importantly, trade agreements now serve as vehicles for addressing non tariff barriers that often pose greater obstacles than duties. Regulatory cooperation, customs facilitation, and recognition of standards are increasingly decisive.

India’s recent trade diplomacy reflects this shift in emphasis. Agreements with the United Arab Emirates and Australia are already in force. Pacts with EFTA countries and the United Kingdom have been signed, while negotiations with Oman and others are advancing. These agreements share common features, a focus on high income markets, greater attention to services, and an effort to balance market access with domestic sensitivities. The New Zealand FTA fits squarely within this emerging template.

One of the agreement’s more notable elements is investment. New Zealand’s stated commitment to facilitate USD 20 billion of investment into India over 15 years is significant not only for its scale but for its signalling value. Long horizon investment commitments reinforce confidence in India’s growth trajectory and policy environment, particularly in sectors such as infrastructure, agribusiness, and services that require stable regulatory frameworks.

Agriculture, often the most contentious aspect of Indian trade negotiations, has been handled with relative restraint. India has secured elimination of tariffs at modest peak levels while protecting its most sensitive sectors. Gains for fruits, vegetables, tea, coffee, spices, cereals, and processed foods align with India’s push to diversify agri-exports beyond bulk commodities. Mutual recognition of organic certification, once operationalised, could reduce compliance costs and help smaller producers access premium markets. That said, outcomes will ultimately depend on implementation and domestic capacity building.

Manufacturing sectors stand to benefit from improved market access across textiles, engineering goods, leather products, plastics, rubber, and pharmaceuticals. Zero duty access enhances India’s competitiveness in a market that places a premium on quality and regulatory compliance. While New Zealand is not a volume destination, success there carries reputational benefits. Penetration of high standards markets often serves as a stepping stone for Indian firms seeking wider acceptance in developed economies.

The agreement’s services and mobility provisions merit particular attention. Services exports have emerged as a cornerstone of India’s external sector, approaching USD 390 billion annually. Yet Indian professionals continue to face regulatory and visa barriers in many markets. Commitments under the New Zealand FTA on professional mobility, visa facilitation, and regulatory cooperation address these constraints directly. Coverage extending to doctors, chartered accountants, IT professionals, nurses, teachers, chefs, yoga instructors, and AYUSH practitioners reflects India’s growing confidence in exporting skills and services.

The inclusion of cooperation in AYUSH, wellness, tourism, and traditional knowledge points to a broader conception of trade policy. These provisions seek to convert cultural and knowledge assets into economic value while asserting intellectual property protections. Engagement with New Zealand’s indigenous Maori communities adds a distinctive dimension, underscoring respect for traditional knowledge systems and cultural exchange, themes that are increasingly salient in global governance debates.

Regulatory provisions further illustrate the agreement’s depth. Annexes covering pharmaceuticals and medical devices provide for expedited approval pathways and recognition of inspections from trusted regulators, reducing delays and compliance costs. Commitments on advance rulings, electronic documentation, and faster customs clearance aim to address procedural frictions that often erode the value of tariff concessions. Importantly, the agreement incorporates robust rules of origin to prevent circumvention, responding to criticisms levelled at some of India’s earlier trade pacts.

Perhaps the most strategically significant outcome is New Zealand’s binding commitment to amend its laws to expand geographical indication protection beyond wines and spirits to a broader range of Indian products. This brings New Zealand’s regime closer to the level of protection it offers the European Union. For India, enhanced GI recognition supports rural incomes, protects heritage products, and establishes an important benchmark for future negotiations.

Yet the renewed embrace of FTAs also brings risks and constraints. Utilisation rates for existing agreements remain uneven. Many Indian firms, particularly MSMEs, lack awareness, scale, or the ability to meet stringent standards. Without parallel investments in logistics, testing infrastructure, skilling, and trade facilitation at home, the gains from FTAs may remain concentrated among a limited set of exporters.

There is also the political economy of adjustment. Trade agreements intensify competition, and some sectors will face pressure. Managing these transitions requires transparency, phased liberalisation, and targeted support. Sustaining public and political confidence in trade policy will depend on whether the benefits are perceived as broad based rather than narrowly distributed.

The larger lesson of the India–New Zealand FTA is therefore not about one bilateral relationship alone. It reflects a deeper shift in how India approaches trade. FTAs are no longer viewed as concessions to external pressure, nor as symbolic gestures. They are being deployed as calibrated tools to secure market access, shape rules, attract investment, and support India’s integration into global value chains.

As India pursues its long-term development goals, trade agreements will increasingly influence the fortunes of its farmers, manufacturers, professionals, and service providers. The true test of this new trade playbook will lie not in the number of agreements signed, but in their effective use. On that measure, the New Zealand agreement suggests that India’s trade policy is becoming more confident, more sophisticated, and more closely aligned with its economic ambitions.

The author writes on economic affairs and public policy, with a focus on taxation, governance, and inclusive growth.