NZ Labour Backs India FTA, Rescues Deal Opposed by Coalition Partner

India and New Zealand concluded the FTA on December 22, last year. However, it still needs to be passed in New Zealand's Parliament to become a law. Now the Labour Party's support of the FTA becomes vital as Prime Minister Christopher Luxon's coalition partner, New Zealand First, has opposed the trade deal.

"Following their caucus meeting yesterday, the New Zealand Labour Party has officially announced it will support the enabling legislation for the New Zealand-India Free Trade Agreement (FTA). This decision effectively "rescues" the deal for Prime Minister Christopher Luxon, as his coalition partner, New Zealand First, remains staunchly opposed and has invoked the "agree to disagree" clause," Tharoor said in a post on X.

Tharoor said that even though the Labour Party has expressed concern over the exclusion of core dairy products from the FTA, they have agreed that "some progress is better than none"

"Labour says it's a continuation of their long-standing efforts to deepen ties with India and that it would be irresponsible to block a deal with the world's fastest-growing major economy. Though they remain concerned about the "dairy deficit" (the exclusion of core dairy products from the FTA), Labour argued that some progress is better than none and that the deal provides a vital foothold for other sectors like education, tech, and wine," he said.

"The ruling National Party offered certain 'political concessions' to secure Labour's votes. A specific one-year review mechanism is built into the agreement. This allows for a formal pursuit of 'further improvements', specifically regarding dairy and environmental standards. The migration provisions, which are important for India, will also get special scrutiny," he added.

Tharoor said that now with the support of the National Party, ACT Party and Labour Party, the enabling legislation is expected pass with a "super-majority", which will be a "game changer" for India.

"The enabling legislation will now move through a parliamentary Committee process and is expected to pass with a "super-majority" (National + ACT + Labour) in the first half of 2026. We may be in business with New Zealand by the end of the year! NZ may be a small economy, but concluding an FTA with it will be a game-changer symbolically and signal that India is increasing its trade channels -- and widening its options," he said.

The FTA eliminates tariffs on 100 per cent of its tariff lines, providing duty-free access for all Indian exports. This market access enhances the competitiveness of India's labour-intensive sectors, including textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles, directly supporting Indian workers, artisans, women, youth and MSMEs and integrating them deeper into global value chains, according to the commerce ministry.

- ANI