New Zealand Labour Party Backs India FTA, Paving Legislative Path

The New Zealand Labour Party has officially announced its support for the Free Trade Agreement (FTA) with India, a significant step towards legislative approval. This decision comes after the FTA was concluded on December 22, 2022, but still requires passage in New Zealand’s Parliament to become law. The Labour Party’s backing is crucial as Prime Minister Christopher Luxon faces opposition from his coalition partner, the New Zealand First party.

Labour’s Support and Concerns

According to Shashi Tharoor, a member of India’s Congress party, the Labour Party’s recent support will “rescue” the trade deal. He noted that the decision follows a caucus meeting where Labour members agreed to back the enabling legislation despite their concerns regarding the exclusion of core dairy products from the agreement. Tharoor stated, “While the Labour Party expresses concern over the dairy deficit, they recognize that some progress is better than none.”

The Labour Party emphasized the importance of deepening ties with India, describing the deal as a vital opportunity for engagement with one of the fastest-growing major economies in the world. Tharoor highlighted that the ruling National Party has made political concessions to secure Labour’s support, including a one-year review mechanism to address dairy and environmental standards.

Impact of the FTA on Trade Relations

The FTA aims to eliminate tariffs on 100 percent of tariff lines, granting duty-free access for all Indian exports. This access is expected to enhance the competitiveness of India’s labour-intensive sectors, such as textiles, apparel, and engineering goods. According to India’s commerce ministry, the agreement will significantly benefit workers, artisans, women, youth, and micro, small, and medium enterprises (MSMEs) by integrating them more deeply into global value chains.

With the support of the National Party, ACT Party, and Labour Party, Tharoor predicts that the enabling legislation will pass with a “super-majority” in the first half of 2026. He noted, “We may be in business with New Zealand by the end of the year!” Despite New Zealand’s smaller economy, he believes that finalizing this FTA will symbolically reflect India’s efforts to expand its trade channels and diversify its economic partnerships.

The legislative process will now move to parliamentary committees, where further discussions will take place. If successful, the agreement will mark a notable milestone in India-New Zealand relations, fostering growth and cooperation across various sectors.