Key tips China-sized benefits in India deal

John Key. Photo / Natalie Slade

The Prime Minister will be pushing for a free trade agreement with India which he says could be as beneficial for New Zealand as the soaring trade with China.

John Key will begin his first official visit today to India with a visit to the Taj Mahal before the more serious business of meetings begins.

Mr Key said the primary aim of the trip was to further foster an increasingly strong relationship between the two countries, as well as add momentum to free trade negotiations.

Mr Key was invited to visit India by Prime Minister Manmohan Singh after the pair held their first formal meeting at the East Asia Summit last year.

He said that despite the rush of countries to India's door, New Zealand was held in high regard. The highest status had been given to his visit, which was officially a state visit.

Both countries were also Commonwealth members.

"That's a sign they're taking the visit seriously and that they see New Zealand as a good potential long-term partner. They're the largest democracy in the world and share similar values and legal and political systems. So I think it's a place where we can do business."

He said a free trade agreement could have similar benefits to the China-NZ free trade agreement for some industries. Fonterra said it would be on the same scale as the China deal.

"It's not just in food, either. There are also areas such as film, education, aviation where we see real opportunities. If you consider the population India (1.2 billion) it's about the same as China.

"Our trade with China this year was about $13 billion and with India it was about $1 billion. So there are huge opportunities for us."

India is being wooed by many larger countries, including the United States. It has about 10 free trade agreements with other countries and is in the final stages of negotiating with the European Union.

Australia and India have just begun their negotiations.

Coal and wood are the biggest exports from New Zealand to India.

But its middle class is increasing, lifting demand for other consumer goods and services from which New Zealand could profit.

Mr Key also expected to announce further developments in co-operation between the two countries in areas such as aviation and filming, which would secure more Bollywood filming in New Zealand and the potential for more tourists.

As well as adding political momentum to the trade talks, the Prime Minister's visit will help build business links.

The delegation will include 25 business delegates, many of whom have links in India.

They include Fonterra, Pipfruit NZ, National Steel, Zespri, Rakon and Fisher & Paykel. The Airways Corporation and CTC Aviation Training Ltd will also attend.

India New Zealand Business Council chairman Wenceslaus Anthony said it was a critical time as India's markets opened up to other countries.

India is New Zealand's seventh biggest trading partner with two-way trade worth $1.25 billion.

The Government believes a free trade agreement could increase that to $3 billion by 2014.