In a significant move to protect its domestic agricultural interests, India has firmly excluded its sensitive dairy sector from any tariff concessions in the newly upgraded trade agreement with New Zealand. The decision underscores the government's commitment to shielding local farmers from foreign competition and maintaining self-reliance in milk production.
Core of the Agreement: What India and New Zealand Agreed
The two nations officially exchanged instruments for the upgrade of the existing India-New Zealand Economic Cooperation and Trade Agreement on Wednesday. This administrative step brings the pact into force, but with a clear red line drawn by New Delhi. A senior Indian government official explicitly stated that no duty concessions have been extended by India on dairy products under this agreement.
This position is a continuation of India's long-standing policy. Dairy has historically been a deal-breaker in trade negotiations, given the sector's immense socio-economic importance. It provides livelihood to millions of small and marginal farmers, particularly women. The official emphasized that New Zealand, a global dairy export powerhouse, has acknowledged and accepted India's stance on this sensitive issue.
Strategic Exclusions and Key Concessions
While protecting dairy, the agreement does open doors in other areas. New Zealand has offered valuable tariff concessions on a range of Indian exports. These include products like onions, pharmaceuticals, and certain categories of fruits and textiles. This reciprocal arrangement aims to boost bilateral trade, which currently stands at a modest level compared to potential.
The upgraded pact also incorporates new chapters reflecting modern trade priorities. These include sections on Trade and Labour, and Trade and Environment. Furthermore, provisions for faster clearance of perishable goods at ports have been introduced, which could benefit India's agricultural exports.
Implications for India's Dairy Industry and Trade Policy
The exclusion of dairy from concessions is a major victory for Indian farmer unions and dairy cooperatives, who have consistently lobbied against opening the sector. They argue that cheaper imports, particularly from efficient producers like New Zealand, could devastate the local market and the rural economy.
This decision sends a strong signal about India's negotiation priorities in other ongoing and future trade talks, such as those with the United Kingdom and the European Union. It establishes that core sensitivities, especially in agriculture, are non-negotiable. The move is aligned with the government's vision of Atmanirbhar Bharat (self-reliant India) in critical food sectors.
The bilateral trade between India and New Zealand was approximately USD 1.20 billion in 2023-24, with India enjoying a trade surplus. The upgraded agreement is expected to further enhance this trade relationship, but within the carefully guarded boundaries set by India.
In conclusion, the upgrade of the India-New Zealand trade pact marks a careful balancing act. While seeking to deepen economic ties and expand exports in non-sensitive areas, India has successfully held its ground on protecting its vital dairy sector. This outcome highlights the country's strategic approach to trade diplomacy, where economic gains are pursued without compromising the interests of its massive agricultural community.
