India and New Zealand Strengthen Defence Ties as Trade Agreement Nears Completion
New Zealand’s long-standing ambition of a free trade agreement with India may finally be realized, with some significant carve-outs, following the signing of a new defence agreement.
India and New Zealand have inked a new Defence Cooperation Arrangement that seems to bring them closer to the desired free trade agreement, despite facing major obstacles.
“We have agreed to strengthen and institutionalize our defence and security partnership,” stated Indian Prime Minister Narendra Modi after discussions with New Zealand Prime Minister Christopher Luxon.
The new defence pact will enhance military collaboration, including joint training, port visits, and cooperation in the defence industry. The two countries are already cooperating in the Combined Task Force-150, a multinational naval unit safeguarding Indian Ocean trade routes from piracy and terrorism.
Both leaders highlighted their shared vision for a free, open, secure, and stable Indo-Pacific, alluding to the rising regional concerns about Beijing’s growing assertiveness.
Luxon also portrayed the agreement as a step towards economic security.
In the current global scenario, security is essential for prosperity, and India is a key partner of New Zealand in the Indo-Pacific,” Luxon remarked.
Does Defence Cooperation Open the Door to a Trade Deal?
New Zealand has been striving for an FTA with India for more than a decade, with previous negotiations collapsing in 2015 primarily due to disagreements on dairy exports.
However, Modi’s recent remarks suggest that negotiations might finally be making progress. He mentioned to local media that a mutually beneficial FTA could lead to increased investment and collaboration in dairy, food processing, digital payments, and pharmaceuticals.
Despite India’s historical reluctance to open its markets, especially in sensitive sectors like dairy, recent examples indicate that a compromise is achievable. Australia, for instance, signed an Economic Cooperation and Trade Agreement (ECTA) with India, excluding dairy but yielding significant trade benefits.
Furthermore, the two nations have committed to enhancing cooperation in critical sectors by signing agreements related to horticulture, forestry, education, and sports. Additionally, efforts will be made to facilitate direct flights between the two countries to cater to the sizable number of Indian tourists visiting New Zealand annually and New Zealanders traveling to India.
Signs of a Deeper Strategic Shift
One sign of India’s increasing interest in New Zealand is Luxon’s participation as a keynote speaker at the Raisina Dialogue, India’s prominent foreign policy conference. He became the first non-European leader to deliver such a speech.
Luxon used this opportunity to underscore the rising economic influence of the Indo-Pacific region, warning against depending too heavily on a few dominant trade partners—an observation relevant to both China and India.
He also cautioned about smaller Pacific nations making choices that could compromise their national sovereignty, an apparent reference to Beijing’s bilateral agreements with various Pacific island nations.
India’s significant size and geo-strategic importance allow for autonomy in an increasingly multipolar world, Luxon emphasized, reaffirming New Zealand’s enduring support for India’s permanent seat on a reformed UN Security Council.
