Establishing when New Zealand and India could discuss the start of formal trade negotiations is expected to come from Prime Minister Christopher Luxon’s visit to the subcontinent.
But reservations remain about what tangible progress Luxon can make in his first visit to India as the PM strives to honour his promise to deliver a free-trade agreement before the 2026 election.
The prospect of a deal with the world’s most populous nation sits at the centre of Luxon’s four days in India, leading one of the biggest-ever Prime Minister delegations which has a strong focus on air travel, education and sport.
Alongside a sit-down with Prime Minister Narendra Modi, Luxon will also deliver the inaugural address at India’s premier defence and security conference, just weeks before the Government is expected to unveil the next 15 years of domestic defence spending.
All will likely contribute to Luxon turbocharging his mantra of economic growth through stronger ties with India and his international investment summit, which are set against a backdrop of flagging support in the polls for National and the coalition Government amid persistent backpocket pain for Kiwis.
Much of Luxon’s delegation, which includes business and community leaders, leave Auckland via the Defence Force’s two 757s this morning. Some are flying commercially.
Luxon is expected to join the delegation in Singapore before the final leg to Delhi, choosing to stay in New Zealand for commemorations of the March 15 Christchurch terror attack.
Also not travelling with the delegation is Trade Minister Todd McClay, who will land in India a day earlier to hold discussions with his Indian counterpart, Piyush Goyal, ahead of Luxon’s arrival.
McClay will be a pivotal figure if Luxon is to fulfil his commitment during the 2023 election campaign to achieve a free-trade deal with India within his first term in Government, which many have doubted is possible.
Formal negotiations were last held nearly a decade ago. Dairy was a key point of contention, described as a “sensitive area” by Luxon, given it was New Zealand’s major export and India’s desire to protect its industry, which has the highest milk production in the world.
New Zealand’s visit comes amid peaking interest in India, which is said to become the world’s third biggest economy in the next decade as the country’s middle class grows. India is progressing trade talks on several fronts, including with Britain, the European Union and the United States.
Speaking to the Herald before he left, McClay believed the relationship between New Zealand and India was strong, citing several diminishing trade barriers including those applying to the profitable log trade, which would help advance the $300 million a year increase in trade observed over the past 15 months.
Quick to mention his four trips to India as minister since 2023, McClay said the engagement had led to conversations late last year about what a trade deal could look like.
“That in itself has got to be seen as a positive development,” he said.
While cautious in his comments about upcoming discussions, McClay said he was hopeful the two countries could establish a timeframe for when they might approach formal negotiations.
“I’d be very keen to get a framework where we can start engaging on the negotiation.”
He said there had been little talk of how dairy imports would be addressed.
India’s dairy industry, while quickly modernising, is full of small-scale farming outfits that might number only one or two cows. That, combined with strong lobbying efforts from larger local companies, complicated any desire to open up trade.
That being said, New Zealand’s annual milk production reportedly totalled just 10% of India’s consumption and demand was outstripping supply.
This week, Luxon accepted dairy would be a “very difficult part of the conversation” with India but he believed it was “insane” not to engage when gains could be made in other sectors.
Fonterra global external affairs group director Simon Tucker, who is part of Luxon’s delegation, said the dairy co-op supported New Zealand in establishing deeper trade links with India.
“Even if it’s a bit uncertain exactly when or how it’s going to play out, it feels like the right thing for New Zealand to be doing.”
However, Tucker didn’t see merit in progressing a comprehensive trade agreement that didn’t include dairy.
“The thought of doing a trade agreement which didn’t have New Zealand’s largest export sector involved, it seems like not something New Zealand should contemplate.”
Expectations of tangible outcomes on trade and in other areas are high.
India New Zealand Business Council chairman Bharat Chawla, also in the delegation, believed the least New Zealand should be able to achieve was confirming the start of official negotiations.
“That’s what is the minimum requirement, I think, out of this.”
Chawla saw further opportunities in areas such as education and tourism, two sectors New Zealand specialised in and which would serve as an attractive quality to an increasingly wealthy Indian population.
About 82,000 Indians visited New Zealand last year. Chawla believed that could increase to 500,000 if the right changes were made, including improving air travel between the two countries.
“The direct flights help a lot and that’s another low-hanging fruit,” he said.
An announcement of that kind wouldn’t be unreasonable to expect. Several representatives from New Zealand’s air travel industry were in the delegation, including outgoing Air New Zealand chief executive Greg Foran and chairwoman Dame Therese Walsh.
Luxon, in his emphasis on prioritising the country’s ties with India, has readily told voters how trade with India lagged under the previous Labour-led Governments, often claiming the relationship was non-existent.
He and McClay regularly point to former Foreign Minister Nanaia Mahuta’s comments at a press conference during a visit to New Zealand by External Affairs Minister Jaishankar in 2022, when she said a free-trade deal was not a priority.
Labour leader Chris Hipkins this week described Mahuta’s comments as “probably off-the-cuff” and said they didn’t reflect the then-Labour Government’s position but instead pointed to India’s reluctance to progress trade talks.
“Us putting it at the top of our list when they were saying they don’t want to negotiate one would have been somewhat futile.”
He condemned the Government’s attacks as “pathetic” and called for a more bipartisan approach to foreign policy.
Labour MP Damian O’Connor, formerly the Trade Minister, said it was incorrect to say an Indian trade deal wasn’t a priority. However, he referenced the “limited resource” available to the then-Government, which was negotiating several other agreements.
“The idea of then sitting down and getting a complex free trade agreement with India was completely unrealistic.”
Mahuta, speaking to the Herald last week, said it was “churlish” to suggest Labour had downgraded the relationship with India while in power.
“There was no expectation that we would push hard on a free trade agreement because they had already identified it wasn’t their priority,” she said.
“We did the best we could under the settings, which were seeking to gain access to a fast-growing market through good diplomatic relationships in the first instance, which I believe we did forge, and secondly, where there were bespoke opportunities of mutual advantage, we were seeking them out.”
Suzannah Jessep, New Zealand’s deputy High Commissioner to India between 2016-2019, noted how New Zealand’s relationship with India in the past decade had been informed by Aotearoa’s desire to sign comprehensive trade deals.
“It wasn’t so much that India wasn’t important, it’s just that it was really obvious to many of us in the system that getting a comprehensive deal across the line wasn’t going to be possible,” she said.
“Anyone, no matter who would have been in Government over that period, would have probably made a similar assessment.”
Jessep, also the Asia NZ Foundation chief executive and a delegation member, believed Luxon’s obvious public drive to deepen the relationship would play well with India, where clear ambitions trumped subtle overtures.
However, she felt the commitment to secure a deal in 2026 might complicate matters.
“If India thinks we really, really, really want it, then of course, it ramps up the cost of achieving it so I think that’s why we’re seeing some of the messaging around the FTA soften.”
Early on Tuesday morning (New Zealand time), Luxon will be making the inaugural address at the Raisina Dialogue, India’s premier defence and security conference, which has been attracting increasing global interest.
International relations professor David Capie, the director of Victoria University of Wellington’s Centre for Strategic Studies, said the address offered Luxon a chance to showcase New Zealand’s interest in expanding defence links with India.
Luxon had been reticent to foreshadow what areas his speech might go into, suggesting the two countries could perform more joint defence exercises together. Despite an impending announcement on the future of New Zealand’s defence spending, Capie said he wasn’t expecting much detail in the speech.
Capie was more intrigued to assess Luxon’s comments concerning New Zealand’s long-standing support for the international rules-based order, an approach designed to keep global superpowers in check which Capie believed was waning amid challenges from Russia, China and now the US under President Donald Trump.
New Zealand and India had several common interests regarding defence, according to Capie. The primary example was China, whose actions in the South Pacific and the Himalayas had concerned New Zealand and India respectively.
However, he warned a more powerful India would come with its challenges concerning security, much like New Zealand’s relationship with China has prompted.
“I’m quite sure that as India gets bigger and more influential in the world, there will be points of friction and difference.”
A visit to India wouldn’t be complete without some high-profile cricketers to grease the wheels and open doors for Kiwi businesses.
Luxon’s trip is no different. Co-leading the business delegation is former Black Cap Ross Taylor, a very familiar face to Indian cricket fans after about seven Indian Premier League seasons and his standing as an all-time great of New Zealand and international cricket.
Also in the community delegation is Mumbai-born Black Cap Ajaz Patel, renowned for his success in cricket’s longest format and perhaps best known for achieving the bowling holy grail of taking 10 wickets in one innings at Mumbai’s Wankhede Stadium in 2021 during a test match between New Zealand and India, becoming just the third bowler to achieve the feat.
A few cricket-themed events are likely to be in Luxon’s schedule in recognition of the Prime Minister’s love for the game and cricket’s religion-like following in India.
Taylor told the Herald the relationship between India and New Zealand was clear in a sporting context, pointing to the array of Indian Black Caps like Patel, Rachin Ravindra and Ish Sodhi.
Taylor hoped his connections in the subcontinent could prove useful for other members of the business delegation. In November, Taylor started a company that was about to begin exporting Marlborough sauvignon blanc and pinot noir wines into India.
The Black Caps recently fell to India in the final of the Champions Trophy, which would have likely felt like retribution to the Indians after the Kiwis became the first team to achieve a clean sweep win in a test series in India.
Taylor joked the loss might have helped Luxon’s cause.
“If we’d won, it could have been a little bit harder,” Taylor laughed.
Adam Pearse is a political reporter in the NZ Herald press gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
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