By Manoj Kumar

NEW DELHI (Reuters) -India and New Zealand aim to sign a free trade agreement in the next two months, New Zealand’s Prime Minister Christopher Luxon said on Tuesday, a move that could expand bilateral trade in agricultural, aerospace and renewable energy sectors.

India and New Zealand have restarted negotiations for a trade pact after a decade-long hiatus, following a meeting between Prime Minister Narendra Modi and Luxon, who is on a visit to India. 

“Let’s drive this relationship forward, and I look forward to signing that agreement with Prime Minister Modi in 60 days,” Luxon told a gathering of business leaders.

Talks are taking place against a backdrop of mounting global trade tensions, after U.S. President Donald Trump’s decision to impose reciprocal tariffs on imported goods from several countries, including India. 

Looking to cushion the effect of U.S. policy, India is also accelerating efforts to secure trade agreements with the European Union and the United Kingdom. 

Bilateral trade between India and New Zealand grew by over 30% year-on-year to reach $1.2 billion in 2024, according to data from India’s trade ministry.

A proposed free trade agreement with New Zealand could bolster bilateral ties significantly in areas such as farm products, critical minerals, pharmaceuticals, and tourism, India’s Trade Minister Piyush Goyal said, suggesting trade could grow 10-fold in just a decade.

“The huge amount of opportunity in innovation that comes out of New Zealand can reach the whole world through India,” Goyal said. “Manufacturing (and) producing in India for the world at competitive prices can help us take this partnership to greater heights.”

However, analysts warn that trade negotiations could face delays due to differences over tariffs on dairy products and non-trade issues.

Indian negotiators have resisted pressure to lower tariffs ranging from 30% to 60% on agricultural products, particularly dairy, in free trade talks with several partners including the European Union and New Zealand, arguing it could threaten the livelihood of millions of small farmers.  

Goyal said both countries plan to accelerate negotiations while “respecting each other’s sensitivities”. 

“I’ve always said that no free trade agreement is ever negotiated with a gun on anybody’s head,” he said.

Luxon said New Zealand expected an enhanced partnership with India in the fields of aerospace and renewable energy, among others. 

(Reporting by Manoj Kumar, writing by Sakshi Dayal and Hritam Mukherjee; Editing by YP Rajesh, Rachna Uppal, Aidan Lewis)

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