India free trade talks back on after agriculture ministers meet

Minister of Primary Industries, Nathan Guy. Photo / Michael Cunningham

Stalled free trade negotiations with India have taken a positive step forward with a commitment from the Indian Agriculture Minister, Radha Mohan Singh, to schedule the next round of talks following a meeting in New Delhi with his New Zealand counterpart, Nathan Guy.

Leading a business delegation to India to promote trade links and next year's Cricket World Cup, Guy told a business lunch in Mumbai that after "too long" since the ninth round of talks on a bi-lateral free trade agreement, work is now under way to schedule the 10th round.

"It's real. Officials are scrambling," Guy told BusinessDesk of plans for a 10th round of negotiations for an FTA, which the New Zealand government began pursuing in 2011 when it identified India as the first country to be targeted for development under its Newland Inc. strategy.

Despite a population similar to China's, two-way trade between India and New Zealand is barely $1.1 billion, compared to the explosion to more than $20 billion with China since an FTA was signed in 2008.

However, the talks foundered as the Indian economy weakened and the political fortunes of the Congress Party-led government of former Prime Minister Manmohan Singh deteriorated. The election of a new government, led by Prime Minister Narendra Modi, has raised hopes the talks might be reignited.

"We have had nine rounds of negotiations," Guy told his Mumbai audience. "The 10th round has taken too long to get going."

However, Mohan's statement was notable for its failure to mention the biggest sticking point in negotiations - a deal that would include New Zealand dairy access into India. The country is the world's largest dairy products producer, selling mainly to its domestic market, but its industry is based on inefficient, small-scale farms compared to New Zealand and there is widespread popular antipathy to trade liberalization that could harm India's domestic markets.

Mohan stressed the need for an "increase in India's exports to New Zealand", nominating agricultural commodities such as grapes, garlic, wheat, sugar and groundnuts as opportunities, and expressed interest in New Zealand's agricultural and fresh produce supply chain management technologies.

"India would also be interested in scientific exchanges in the fields of pasture management for sheep, management of mutton type sheep and exchange of programmes of experts from government sheep farms."

Guy said there was a "sense of purpose and desire from both sides to make progress on a bilateral FTA."

The announcements followed the signing of a memorandum of understanding between the India-New Zealand Business Council and the Indian peak business body, the Confederation of Indian Industry.

"We believe that this MoU will inject new life into our existing bilateral economic relationship and place it on a higher growth trajectory", said Sumit Mazumder, president - designate of CII.

The INZBC chair, Sunil Kaushal, said the MoU, signed during a trade mission to Sri Lanka and India to promote next year's Cricket World Cup in Australia and New Zealand, was an important step towards growing trade between the two countries.

New Zealand firms needed to be more proactive in seeking opportunities in the Indian economy, especially since the election of Prime Minister Modi, who is advancing a reform agenda for India.