New Zealand's coalition government has been hit by internal dissent following the finalization of a landmark Free Trade Agreement (FTA) with India. The country's Deputy Prime Minister and Foreign Affairs Minister, Winston Peters, has publicly declared his party's strong opposition to the deal, labeling it "neither free nor fair" for New Zealand.
Coalition Discord Over Key Terms
Peters, who leads the New Zealand First party, a crucial partner in the ruling coalition, stated his party is "regrettably opposed" to the agreement announced recently. He argued the FTA concedes too much, particularly on immigration rules, while failing to secure adequate benefits for New Zealand's critical export sectors. The core of his criticism centers on dairy, a pillar of the New Zealand economy.
"While New Zealand is completely opening its market to Indian products under this deal, India is not reducing the significant tariff barriers currently facing our major dairy products," Peters explained. He emphasized that this makes the pact indefensible to rural communities. The deal notably excludes major dairy exports like milk, cheese, and butter, which collectively accounted for around $24 billion, or 30% of New Zealand's total goods exports in the year to November 2025.
A Rushed Deal or Strategic Move?
Peters revealed that the disagreement had reached the highest levels of government. When Cabinet approval was sought last week, New Zealand First invoked the "agree to disagree" clause in its coalition agreement. He confirmed his party would vote against any enabling legislation in Parliament. He accused the senior coalition partner, the National Party, of preferring a "quick, low-quality deal" over undertaking the hard negotiations needed for a balanced agreement.
He further highlighted political uncertainty, noting it was unwise to sign a deal without a guaranteed parliamentary majority. Peters claimed his party had urged using the full three-year parliamentary term to negotiate a better outcome.
India-NZ FTA: The Key Provisions
Despite the political controversy, the FTA itself represents a significant upgrade in bilateral relations. Finalized during New Zealand Prime Minister Christopher Luxon's visit to India in March 2025, the agreement aims to deepen economic ties. Key benefits for India include:
- Zero-duty access for Indian exports in the New Zealand market.
- Boost for labour-intensive sectors like textiles, apparel, leather, and footwear.
- Advantages for manufacturing segments including engineering, automobiles, electronics, and pharmaceuticals.
- Expanded access for Indian services in IT, finance, education, tourism, and construction.
The agreement breaks new ground on mobility. New Zealand has opened 118 services sectors and, for the first time, included annexes on student mobility and post-study work visas. Indian students can work 20 hours a week and gain post-study visas for up to four years. The deal also sets quotas for skilled professionals and working holiday visas for Indian youth.
On investment, New Zealand committed to investing $20 billion in India over 15 years, targeting manufacturing, infrastructure, and innovation. Agricultural cooperation is also enhanced, with better access for Indian fruits, vegetables, coffee, and spices. India, meanwhile, has protected its sensitive sectors, including dairy, sugar, and edible oils.
Opposition Not a Critique of India
Peters was careful to distinguish his criticism of the deal's terms from criticism of India itself. He asserted his party is "deeply committed" to advancing strategic ties with India, noting his first major visit as Foreign Minister was to India. He said he has communicated his party's stance directly to India's External Affairs Minister, Dr. S. Jaishankar, for whom he expressed the "utmost respect."
"We have made clear... that our opposition to the deal is not a critique of the Government of India or its negotiators," Peters stated, framing it as a principled difference within New Zealand's coalition politics. He cited his party's consistent stance on trade deals, referencing past negotiations with South Korea and China.
The public rift sets the stage for a contentious parliamentary debate in New Zealand, even as both governments officially celebrate a new chapter in economic partnership. The deal's future now hinges on domestic political maneuvering in Wellington.
