India-New Zealand FTA: Are Small Trade Deals Worth the Effort?

India-New Zealand FTA: Are Small Deals Worth the Effort?

$1.1 billion is less than 1% of India's goods trade. Doubling it by 2030 would still leave New Zealand a minor trading partner. Yet India spent negotiating time and political capital on this deal while its agreements with the US remain unfinished. The question is whether small trade deals are a useful hedge or a distraction.

The Case for Small

Deals as a Hedge Trade figures are national averages, but each export order is a business. Nearly half of India's exporting firms are MSMEs and in the current tariff environment they need options. With the threat of 100% US tariffs and no trade deal with Washington, every market where Indian goods enter duty-free gives exporters somewhere else to sell.

The New Zealand deal is also favourable on its terms. India secured 100% duty-free access, kept dairy out, excluded about 30% of its import lines, gained mobility concessions at a time when many Western countries are tightening visas and obtained a $20 billion investment commitment.

Labour-intensive exporters in textiles and gems benefit and so do capital-intensive ones in pharmaceuticals and machinery. Small deals can also be concluded quickly, which large ones rarely are.

The Case That They Are a Distraction

India's negotiating capacity is limited. The same trade officials handle the EU, the US, Canada and the UK. Time spent on a $1.1 billion market is time not spent on a US deal that affects many times more trade. Exporters also cannot easily switch markets.

A garment exporter who sells to the US cannot move those orders to New Zealand. The deal's value also depends on whether exporters actually use it, which requires MSMEs to handle rules of origin and certification. Investment pledges framed as commitments to "facilitate" are not guarantees.

And each small deal becomes a precedent that larger partners will cite in their own negotiations.

TAN's Position

TAN's position is that India is right to pursue several deals at once, provided each small deal is judged by specific measures and not by its headline figures. The main value of the New Zealand deal is as a template.

It shows that India can protect dairy, win mobility provisions and obtain investment commitments from a developed economy. The EFTA agreement did the same on a larger scale and the EU deal due to be signed in December follows a similar pattern of leaving hard issues out.

Each small deal tests approaches that India then uses in bigger negotiations. That value depends on three conditions:

• Measure utilisation: track what share of exports to New Zealand actually uses the preferential tariff and help MSMEs with rules of origin.
• Track the investment: publish progress on the $20 billion commitment each year.
• Protect negotiating capacity: do not let small deals take staff away from the major negotiations at critical stages.

What would change our view: if, two years after the deal takes effect, exporters are making little use of it and the investment commitment has produced little, the argument for small deals would be much weaker.