Kiwi exporters savour Indian deal's potential

New Zealand is one step closer to reaching a free trade agreement with India and Kiwi companies are optimistic about their prospects in one of the world's fastest growing markets.

Indian Prime Minister Manmohan Singh expressed support for the deal this week during a visit by a high-level delegation, including Prime Minister John Key and Trade Minister Tim Groser.

Talks towards a FTA began last year, and Singh said the negotiations were proceeding well "and in the right direction".

Mike Daniell, chief executive of medical device manufacturer Fisher & Paykel Healthcare, said India was one of the firm's most buoyant markets. But tariffs on its exports to that country were quite high - between 5 and 9 per cent - and it would be good to see the duties gone, he said.

F&P Healthcare operates a distribution centre and sales office in the southern Indian city of Bangalore, with a staff of around 25.

"Since we established that office we've seen very good growth each year," he said.

"A lot of new hospitals are being built and we expect to see ongoing strong growth in India."

Rakon chief operating officer Graham Leaming said the Mt Wellington-based technology firm, which has a joint venture in Bangalore with India's Centum Electronics, would welcome the FTA.

"Our Bangalore facility has since quadrupled capacity and grown to 350 employees. Revenue from this JV will grow to around US$25 million this year," he said.

"An FTA would further enhance our ability to both share technology and increase sales of our products manufactured in New Zealand to India."

Such optimism is not limited to technology.

Fonterra manager trade strategy James McVitty said a comprehensive FTA that included dairy would help the company to develop partnerships with the Indian industry and provide benefits to both countries.

India was the largest producer of milk in the world, with 112 million tonnes in 2010, McVitty said.

Dairy consumer prices in India had been rising at 20 per cent per annum over the past three years due to the growth in demand outstripping the growth of domestic supply, he said.

"With increasing affluence across India, it will be a massive challenge for the dairy industry to double milk production over the next 15 years to meet forecast demand."

Fonterra expected India to become the fastest-growing dairy market in the world.

ANZ rural economist Con Williams said forestry and dairy, with logs, butter and milk powder, were at present the two big export sectors to India.

"So you've already got a beachhead for some of those products ... getting rid of some of those constraints will allow them to grow further and then perhaps allow others sectors such as kiwifruit and the like to also access that market," Williams said.

A report by ANZ in March said if all the present bilateral negotiations were successful New Zealand would have free access to more than half the world's population, accounting for nearly half of global gross domestic product.

"And that's a pretty big playground for New Zealand in terms of a marketplace," Williams said.

Beef and Lamb New Zealand chairman Mike Petersen said non-tariff trade barriers were one of the biggest issues.

"The requirements just to be able to access the market are too tough" Petersen said.

He said the potential of India was vast, with a free trade agreement that dealt with such issues.

"In many ways it's actually potentially a much, much bigger market for sheepmeat than China."

Petersen said it was important that an agreement was comprehensive.

"We wouldn't want to see any carve-outs, any concessions made because increasingly with the World Trade Organisation Doha round looking like it's going to be dead for a couple of years this is now the big game in town," he said.

"We don't want to set precedents anywhere, with any country that can be used against us in other negotiations around the world."