Food products from New Zealand such as meat, seafood, fruits, honey and wine, known across the world for its superior quality, are set to be cheaper in India after the free trade agreement between the countries come into effect, even as dairy items such as milk, cheese and yoghurt will continue to face tariff barrier.
According to the contours of the FTA announced on Monday, some of the items will see duty elimination immediately while for others, the reduction is going to be staggered over a period.
For instance, sheep meat (lamb) will get immediate duty relief, but for seafood items such as salmon and mussels, the duty-free status will be reached in seven years. For wine, tariffs will be reduced from 150 per cent at present to 25-50 per cent (depending on the value of the wine) over 10 years.
Tariffs on Manuka honey will be cut from 66 per cent to 16.5 per cent over five years.
NZ trade minister Todd McClay said the deal opens up the market for burgeoning Indian middle class for exporters of his country.
McClay also highlighted a kiwi fruit quota nearly four times current exports, with a 50 per cent tariff applying once the quota is reached, apart from an agreement on preferential market access for apples and Manuka honey; and geographical indication rules for specialist and iconic New Zealand product names.
India has also agreed to provide duty-free access for dairy and other food ingredients for re-export from day one.
The FTA has been largely welcomed by the exporters across NZ and India.
Executive director Joshua Tan of ExportNZ, a pan New Zealand business association, said many exporters have been looking at India for years as a potential market.
“The problem is that prohibitive tariff barriers, often 30 per cent to 60 per cent and up to 150 per cent for wine, have limited what businesses can realistically do in India. This new agreement begins to bring those barriers down, gives exporters more certainty and more options,” he said.
Quid pro quo
The duty-free market access to India for food items such as apples, kiwis and Manuka honey will be linked to the delivery of agriculture productivity action plans committed by the island country under the FTA.
At present, India has a 50 per cent import duty on apples. Under the agreement, India is giving duty concessions to apples with a quota and a minimum import price (MIP) in order to protect the interest of domestic farmers.
NZ has also agreed to facilitate geographical registration (GI) of Indian goods such as basmati rice, Darjeeling tea and Mysore silk on the island.
Exporters upbeat
Federation of Indian Export Organisations (FIEO) president S.C. Ralhan said the FTA will enhance the competitiveness of Indian products in the New Zealand market and provide a major boost to employment-generating sectors.
Think tank GTRI, however, cautioned that an FTA alone is unlikely to unlock the full potential of India-New Zealand economic ties, as trade volumes remain modest.
“New Zealand could expand dairy and horticulture exports to India even at MFN tariffs (duties which are in force at present), while India could scale up exports of pharmaceuticals, textiles and IT services to New Zealand. Wellington could also diversify by growing education, tourism and aviation training services for Indian students and professionals,” GTRI founder Ajay Srivastava observed.